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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. |
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