REFLECTOR: AIRCRAFT SALES, USE TAXES

[Al Gietzen]

I registered my airplane shortly after I got the kit back in 1997.  Shortly
thereafter I received a notice from the county that I had to pay property
tax on my airplane.  I wrote them a letter saying I didn't have an airplane;
all I had was rolls of fiberglass cloth, jugs of resin, assorted nuts and
bolt and parts.  I suggested I would let them know when I had an airplane.

 

Have never heard from them again.

 

Al (Please don't tell anyone)

 

-----Original Message-----
From: reflector-bounces at tvbf.org [mailto:reflector-bounces at tvbf.org] On
Behalf Of Scott Baker
Sent: Sunday, February 05, 2006 8:29 AM
To: Jim Agnew; Velocity Aircraft Owners and Builders list
Subject: Re: REFLECTOR: FLORIDA OFFICIALS GOING AFTER AIRCRAFT SALES, USE
TAXES

 

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 <mailto:jim_agnew_2 at yahoo.com>  

To: Velocity Reflector <mailto:reflector at awpi.com>  

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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