REFLECTOR: FLORIDA OFFICIALS GOING AFTER AIRCRAFT SALES, USE TAXES

Richard J. Gentil richard at naples-air-center.com
Sun Feb 5 11:21:46 CST 2006


Well that or everyone just first register their newly finished Velo in 
NM, and move a week later. ;-)

Richard

Grigore Rosu wrote:

> But what if one sells the kit?  I guess that the final builder, the 
> one who registers the airplane is the one who pays the taxes.  If that 
> is true, then paying sales taxes right after receiving the kit is a 
> bit risky, because statistics say that only 8% of builders finish 
> their airplane.  Of course, I believe I'll be one of those 8%, but you 
> never know.
>
> Grigore
>
>
>
> On Sun, 5 Feb 2006, Scott Baker wrote:
>
>> In this world nothing can be said to be certain, except death and 
>> taxes. Benjamin Franklin
>>
>> Just about every state with a sales tax applies the tax towards 
>> aircraft purchases.  Buyers of Velocity kits sometimes think that the 
>> act of receiving the aircraft in from another state obsolves them of 
>> paying sales tax in the state in which they reside.  Wrong.  It only 
>> means that the seller (i.e. Velocity, Inc.) need not collect the tax 
>> - you are still obligated to pay your local tax collector.
>>
>> The FAA shares its aircraft registration database with state tax 
>> agencies.  Until Velocity builders actually register their aircraft 
>> (obtain an N-number) - the tax man probably does not know that your 
>> Velocity exists.  Soon after you apply for your N-number, expect a 
>> letter from the local tax agency offering their congratulations on 
>> your "new" purchase - and to please provide evidense that you have 
>> paid sales tax (either in your home state or in the state in which 
>> you purchased the aircraft).  Credit is given to sales tax paid in 
>> other states.
>>
>> Smart owners will march down to the tax collectors office soon after 
>> they receive their kit - and with factory invoice in hand to document 
>> the $60,000 purchase price of their "aircraft" - pay the local sales 
>> tax and say "Have a nice day!"  Most local tax officials will think 
>> that $60K is the total price of the aircraft - and fail to realize 
>> that builders have upcoming expendatures in equipment (engine, 
>> propeller, avionics).  If you are lucky,, getting your name on the 
>> tax roll at the onset might keep the assessor's office from 
>> performing an audit after the aircraft is completed.  Ask me no 
>> questions, I will tell you no lies.
>>
>> A quick note about parts versus labor - and what is taxable.  Believe 
>> it or not, many states apply sale tax to "fabrication labor" (as 
>> opposed to labor for repairs, which is generally not taxable).  Let's 
>> say you ignored the sales tax issue until the aircraft becomes 
>> registered.  The local tax office calls to say that since they cannot 
>> find "Velocity" in their aircraft price guides - please make yourself 
>> available for an appraiser, who will take a close look at the 
>> aircraft and have you complete a questionairre regarding the 
>> aircraft's components (engine make, model, hours; radio equipment; 
>> etc).  The appraiser compares your aircraft to other Velocity models 
>> that are listed in Trade--a-Plane ... and calculates you have a 
>> $150,000 aircraft.  "Yes, that's true", you say - but I only have 
>> $80,000 worth of parts invested in the aircraft.  The reply from the 
>> tax people could be - "That's nice, but you still owe taxes on the 
>> $70,000 worth of work you put into the aircraft."  This is another 
>> reason, in my opinion, to pay the sales tax on the kit soon after it 
>> arrives - and hope the local tax office does not follow up with 
>> annual appraisals.
>>
>> No one likes paying taxes.  Consult a tax specialist to learn what 
>> you might do to legally lower or eliminate taxes by registering the 
>> aircraft in another state - or in the course of a business with a 
>> resale license.  For some this is an option - and for others, not.
>>
>> One last comment - you are not going to win an argument with the 
>> sales tax people.
>>
>> Scott Baker
>>
>>
>>
>>
>> ----- Original Message -----
>>  From: Jim Agnew
>>  To: Velocity Reflector
>>  Sent: Saturday, February 04, 2006 11:19 AM
>>  Subject: REFLECTOR: FLORIDA OFFICIALS GOING AFTER AIRCRAFT SALES, 
>> USE TAXES
>>
>>
>>  Take Note!
>>
>>
>>  ~~~ AOPA Close to Home ~~~
>>  FLORIDA OFFICIALS GOING AFTER AIRCRAFT SALES, USE TAXES
>>  Members are alerting AOPA to a recurring situation in Florida where
>>  the state, in reviewing its information on recent FAA aircraft
>>  registrations, is aggressively seeking sales or use taxes from new
>>  aircraft owners who may not have already paid. Typically, for newly
>>  constructed experimental aircraft, owners are only required to pay tax
>>  on the parts, not the builder's labor. However, if you register the
>>  aircraft before completion, you can be responsible for taxes as of the
>>  registration date unless you prove otherwise. As always, check with
>>  your financial advisor for details. AOPA's Pilot's Guide to Taxes
>>  ( http://www.aopa.org/members/files/guides/tax_guide.html ) has a 
>> listing
>>  of Web sites for revenue departments in all states and phone numbers
>>  to aid you or your accounting professional.
>>
>>
>>
>>
>>  James F. Agnew Jim_Agnew_2 at Yahoo.Com Tampa, FL Velocity 173 Elite 
>> Aircraft Completed & Flying
>>
>>
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