REFLECTOR: FLORIDA OFFICIALS GOING AFTER AIRCRAFT SALES, USE TAXES

Sun Feb 5 12:50:30 CST 2006

Richard,

Good idea but doesn't work.  When you move (domicile) the plane in a new
state, the new State wants to collect use/excise tax, which is in lieu
of Sales Tax.  Then of course, they'll want to nick you every year for
personal property taxes as well.   And, if the FAA finds out that your
registration isn't accurate...that's a whole new set of problems.  It's
a lot of work being a tax-dodger.  

Chuck Jensen

-----Original Message-----
From: reflector-bounces at tvbf.org [mailto:reflector-bounces at tvbf.org] On
Behalf Of Richard J. Gentil
Sent: Sunday, February 05, 2006 12:22 PM
To: Velocity Aircraft Owners and Builders list
Subject: Re: REFLECTOR: FLORIDA OFFICIALS GOING AFTER AIRCRAFT SALES,
USE TAXES

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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