California Tax exemption - gone after Oct 1st

I got this note from my aircraft tax consultant (I used his services
when purchasing a glider). It looks like tax exemption after keeping
aircraft out of state for 90 days will be gone starting Oct 1st.

Limus

---- Cut here ---
With the passage of the new California State Budget, individuals will
no longer be afforded the opportunity to legally avoid sales/use tax
on the purchase of Aircraft and Vessels (all tangible personal
property) after September 30, 2004. The changes in the law were
introduced last year as AB 694, which was moved to the inactive
calendar on September 12, 2003. Early this year, February 18, 2004,
the same law change was introduced as AB 2107 which was subsequently
attached to the State budget negotiations in mid May. Unfortunately,
California's new state budget encompasses the changes outlined in AB
2107 and AB 694. The assembly approved the new language on July 28,
2004, and the Senate approved the language on July 29, 2004, and was
signed by Governor Schwarzenegger on July 31, 2004. The new law (now
found in SB 1100) will read as follows:

"SB 1100, Committee on Budget and Fiscal Review. Taxation.

(1) Existing law imposes specified taxes, including sales and use
taxes that are administered by the State Board of Equalization, and
personal income and corporate taxes collected and administered by the
Franchise Tax Board. This bill would require the State Board of
Equalization and the Franchise Tax Board to administer tax amnesty
programs during the period beginning February 1, 2005, and ending on
March 31, 2005, inclusive, or during any other 2-month period ending
before June 30, 2005, as provided. (2) The Sales and Use Tax Law
imposes a tax on the gross receipts from the sale in this state of, or
the storage, use, or other consumption in this state of, tangible
personal property. Under existing law, there is a presumption that
tangible personal property shipped or brought into this state by the
purchaser was purchased from a retailer for storage, use, or other
consumption in this state. This bill would, until July 1, 2006, expand
this presumption to a vehicle, vessel, or aircraft, if that vehicle,
vessel, or aircraft is (1) purchased by a California resident, (2)
subject to California's registration or property tax laws during the
first 12 months of ownership, or (3) used or stored in this state more
than 1/2 of the time during the first 12 months of ownership. This
bill would provide that the expanded presumption may be controverted
by documentary evidence, as specified. This bill would specify that
its provisions do not apply to a vehicle, vessel, or aircraft that is
purchased, or that is subject to a binding purchase contract, on or
before October 1, 2004. This bill would provide that the expanded
presumption does not apply to aircraft or vessels brought into this
state, on or after the operative date of the bill, for the purpose of
repair, retrofit, or modification, except as specified.

SEC. 2. Section 6248 of the Revenue and Taxation Code is amended to
read: 6248. (a) On and after the effective date of this section there
shall be a rebuttable presumption that any vehicle, vessel, or
aircraft bought outside of this state, and which is brought into
California within 12 months from the date of its purchase, was
acquired for storage, use, or other consumption in this state and is
subject to use tax if any of the following occur: (1) The vehicle,
vessel, or aircraft was purchased by a California resident as defined
in Section 516 of the Vehicle Code. (2) In the case of a vehicle, the
vehicle was subject to registration under Chapter 1 (commencing with
Section 4000) of Division 3 of the Vehicle Code during the first 12
months of ownership. (3) In the case of a vessel or aircraft, that
vessel or aircraft was subject to property tax in this state during
the first 12 months of ownership. (4) The vehicle, vessel, or aircraft
is used or stored in this state more than one-half of the time during
the first 12 months of ownership. (b) This presumption may be
controverted by documentary evidence that the vehicle, vessel, or
aircraft was purchased for use outside of this state during the first
12 months of ownership. This evidence may include, but is not limited
to, evidence of registration of that vehicle, vessel, or aircraft,
with the proper authority, outside of this state. (c) This section
does not apply to any vehicle, vessel, or aircraft used in interstate
or foreign commerce pursuant to regulations prescribed by the board.
(d) The amendments made to this section by the act adding this
subdivision do not apply to any vehicle, vessel, or aircraft that is
either purchased, or is the subject of a binding purchase contract
that is entered into, on or before the operative date of this
subdivision. (e) (1) Notwithstanding subdivision (a), aircraft or
vessels brought into this state for the purpose of repair, retrofit,
or modification shall not be deemed to be acquired for storage, use,
or other consumption in this state. (2) This subdivision does not
apply if, during the period following the time the aircraft or vessel
is brought into this state and ending when the repair, retrofit, or
modification of the aircraft or vessel is complete, more than 25 hours
of air time in the case of an airplane or 25 hours of sailing time in
the case of a vessel are logged on the aircraft or vessel by the
registered owner of that aircraft or vessel or by an authorized agent
operating the aircraft or vessel on behalf of the registered owner of
the aircraft or vessel. The calculation of air time or sailing time
logged on the aircraft or vessel does not include air time or sailing
time following the completion of the repair, retrofit, or modification
of the aircraft or vessel that is logged for the sole purpose of
returning or delivering the aircraft or vessel to a point outside of
this state. (3) This subdivision applies to aircraft or vessels
brought into this state for the purpose of repair, retrofit, or
modification on or after the operative date of this subdivision. (f)
The amendments made by the act adding this subdivision shall become
operative on October 1, 2004. (g) The Legislative Analyst's office
shall conduct a study of the economic impacts of the amendments made
to this section by the act adding this subdivision, and shall report
its findings to the Legislature on or before June 30, 2006. (h) This
section shall remain in effect only until July 1, 2006, and as of that
date is repealed.

SEC. 3. Section 6248 is added to the Revenue and Taxation Code, to
read: 6248. (a) On and after July 1, 2006, there shall be a rebuttable
presumption that any vehicle bought outside of this State which is
brought into California within 90 days from the date of its purchase,
and which is subject to registration under Chapter 1 (commencing with
Section 4000) of Division 3 of the Vehicle Code, was acquired for
storage, use, or other consumption in this State."

Simply stated, California purchasers of aircraft and vessels have
until the end of September to purchase an aircraft or vessel, or at
minimum enter into a binding contract to purchase such property to
qualify for an exemption under existing law. Purchases that occur
between October 1, 2004, and June 30, 2006, will be subject to the new
law change and will not qualify for a sales and/or use tax exemption.
This new law does not jeopardize sales/use tax exemptions for aircraft
or vessels used in commercial interstate or foreign commerce or
aircraft and vessels used in common carriage.

I think this has to do with powered aircraft only. Used gliders are
exempt from having to pay sales tax in California. Keeping a powered
plane out of the state for 3 months was how you avoided sales tax on
the purchase price. Surprised it took the state this long to figure
out they were loosing money. Then again, we are talking about
politicians and they are not the sharpest knives in the drawer....
Brian


(Limus A.) wrote in message . com...
I got this note from my aircraft tax consultant (I used his services
when purchasing a glider). It looks like tax exemption after keeping
aircraft out of state for 90 days will be gone starting Oct 1st.

Limus

---- Cut here ---
With the passage of the new California State Budget, individuals will
no longer be afforded the opportunity to legally avoid sales/use tax
on the purchase of Aircraft and Vessels (all tangible personal
property) after September 30, 2004. The changes in the law were
introduced last year as AB 694, which was moved to the inactive
calendar on September 12, 2003. Early this year, February 18, 2004,
the same law change was introduced as AB 2107 which was subsequently
attached to the State budget negotiations in mid May. Unfortunately,
California's new state budget encompasses the changes outlined in AB
2107 and AB 694. The assembly approved the new language on July 28,
2004, and the Senate approved the language on July 29, 2004, and was
signed by Governor Schwarzenegger on July 31, 2004. The new law (now
found in SB 1100) will read as follows:

"SB 1100, Committee on Budget and Fiscal Review. Taxation.

(1) Existing law imposes specified taxes, including sales and use
taxes that are administered by the State Board of Equalization, and
personal income and corporate taxes collected and administered by the
Franchise Tax Board. This bill would require the State Board of
Equalization and the Franchise Tax Board to administer tax amnesty
programs during the period beginning February 1, 2005, and ending on
March 31, 2005, inclusive, or during any other 2-month period ending
before June 30, 2005, as provided. (2) The Sales and Use Tax Law
imposes a tax on the gross receipts from the sale in this state of, or
the storage, use, or other consumption in this state of, tangible
personal property. Under existing law, there is a presumption that
tangible personal property shipped or brought into this state by the
purchaser was purchased from a retailer for storage, use, or other
consumption in this state. This bill would, until July 1, 2006, expand
this presumption to a vehicle, vessel, or aircraft, if that vehicle,
vessel, or aircraft is (1) purchased by a California resident, (2)
subject to California's registration or property tax laws during the
first 12 months of ownership, or (3) used or stored in this state more
than 1/2 of the time during the first 12 months of ownership. This
bill would provide that the expanded presumption may be controverted
by documentary evidence, as specified. This bill would specify that
its provisions do not apply to a vehicle, vessel, or aircraft that is
purchased, or that is subject to a binding purchase contract, on or
before October 1, 2004. This bill would provide that the expanded
presumption does not apply to aircraft or vessels brought into this
state, on or after the operative date of the bill, for the purpose of
repair, retrofit, or modification, except as specified.

SEC. 2. Section 6248 of the Revenue and Taxation Code is amended to
read: 6248. (a) On and after the effective date of this section there
shall be a rebuttable presumption that any vehicle, vessel, or
aircraft bought outside of this state, and which is brought into
California within 12 months from the date of its purchase, was
acquired for storage, use, or other consumption in this state and is
subject to use tax if any of the following occur: (1) The vehicle,
vessel, or aircraft was purchased by a California resident as defined
in Section 516 of the Vehicle Code. (2) In the case of a vehicle, the
vehicle was subject to registration under Chapter 1 (commencing with
Section 4000) of Division 3 of the Vehicle Code during the first 12
months of ownership. (3) In the case of a vessel or aircraft, that
vessel or aircraft was subject to property tax in this state during
the first 12 months of ownership. (4) The vehicle, vessel, or aircraft
is used or stored in this state more than one-half of the time during
the first 12 months of ownership. (b) This presumption may be
controverted by documentary evidence that the vehicle, vessel, or
aircraft was purchased for use outside of this state during the first
12 months of ownership. This evidence may include, but is not limited
to, evidence of registration of that vehicle, vessel, or aircraft,
with the proper authority, outside of this state. (c) This section
does not apply to any vehicle, vessel, or aircraft used in interstate
or foreign commerce pursuant to regulations prescribed by the board.
(d) The amendments made to this section by the act adding this
subdivision do not apply to any vehicle, vessel, or aircraft that is
either purchased, or is the subject of a binding purchase contract
that is entered into, on or before the operative date of this
subdivision. (e) (1) Notwithstanding subdivision (a), aircraft or
vessels brought into this state for the purpose of repair, retrofit,
or modification shall not be deemed to be acquired for storage, use,
or other consumption in this state. (2) This subdivision does not
apply if, during the period following the time the aircraft or vessel
is brought into this state and ending when the repair, retrofit, or
modification of the aircraft or vessel is complete, more than 25 hours
of air time in the case of an airplane or 25 hours of sailing time in
the case of a vessel are logged on the aircraft or vessel by the
registered owner of that aircraft or vessel or by an authorized agent
operating the aircraft or vessel on behalf of the registered owner of
the aircraft or vessel. The calculation of air time or sailing time
logged on the aircraft or vessel does not include air time or sailing
time following the completion of the repair, retrofit, or modification
of the aircraft or vessel that is logged for the sole purpose of
returning or delivering the aircraft or vessel to a point outside of
this state. (3) This subdivision applies to aircraft or vessels
brought into this state for the purpose of repair, retrofit, or
modification on or after the operative date of this subdivision. (f)
The amendments made by the act adding this subdivision shall become
operative on October 1, 2004. (g) The Legislative Analyst's office
shall conduct a study of the economic impacts of the amendments made
to this section by the act adding this subdivision, and shall report
its findings to the Legislature on or before June 30, 2006. (h) This
section shall remain in effect only until July 1, 2006, and as of that
date is repealed.

SEC. 3. Section 6248 is added to the Revenue and Taxation Code, to
read: 6248. (a) On and after July 1, 2006, there shall be a rebuttable
presumption that any vehicle bought outside of this State which is
brought into California within 90 days from the date of its purchase,
and which is subject to registration under Chapter 1 (commencing with
Section 4000) of Division 3 of the Vehicle Code, was acquired for
storage, use, or other consumption in this State."

Simply stated, California purchasers of aircraft and vessels have
until the end of September to purchase an aircraft or vessel, or at
minimum enter into a binding contract to purchase such property to
qualify for an exemption under existing law. Purchases that occur
between October 1, 2004, and June 30, 2006, will be subject to the new
law change and will not qualify for a sales and/or use tax exemption.
This new law does not jeopardize sales/use tax exemptions for aircraft
or vessels used in commercial interstate or foreign commerce or
aircraft and vessels used in common carriage.