Second-hand kit purchase issues FL-TX

"Lou" wrote
Let me rephrase that for you, "Anybody who depends
on Usenet for accurate tax advice without hiring a pro, is
an idiot.

The point of this excersize is to gain knowledge from other people's
experiences to be able to ask meaningful questions of the taxing authority.
Nobody said anything about total reliance on usenet.

My point exactly, get all the information you can but when it comes
time to make your desicion, contact a professional. It's worth the
$60-70-80 to ask the question.

"reader" wrote in message
news
I'm buying a second-hand GlaStar kit from Florida and I'm in Texas.

1. Does anyone know if there are sales tax or property tax implications
regarding the purchase? I am picking it up myself and hauling it to Texas.

2. Is there a standard "bill of sale" I can use for the purchase? EAA or
AOPA? - I'm a member of both.

Cheers

"Tex"


I suspect I would use the FAA standard Bill of Sale. You will need it when
you apply to the FAA to register the aircraft. You will need something to
show that you purchased a kit to license a kitplane with the FAA. We just
went through that here with a gentleman in the chapter who built a kit. The
kit company was going to send him the "bill of sale" but went bellyup before
doing so. Not only did he not get a bill of sale, but he didn't get all of
the kit either. When it was finally finished and ready to fly, the FAA
wouldn't issue him a Certificate of Registration, without which they
wouldn't issue a Certificate of Airworthiness, without which they wouldn't
let him fly the durn thing!

Highflyer
Highflight Aviation Services
Pinckneyville Airport ( PJY )

PS: The Pinckneyville Flyin is coming up May 19, 20, and 21. This is the
10th annual RAH flyin at PJY. Be sure to send Mary an email at
if you are coming or you may not get any food! She is
ordering tight this year! :-)

"reader" wrote in message
. com...
What about sale/use tax on stuff purchased out of state from a private
party (not retail)? Most people don't pay sales tax on mail-order
purchases from out of state, but an airplane will eventually be registered
and the state might ask if sales tax had been paid. How does one get
around that issue or minimize tax liability?


In Illinois you had best have a receipt or bill of sale with the price on
it. Otherwise they will pick an absurd "market value" and charge the "use
tax" based on that. For an airplane you need the tax receipt to register
the airplane and if you fail to register there is a hefty fine. They do not
care where or from whom you purchased it. They want their tax!

Highflyer
Highflight Aviation Services
Pinckneyville Airport ( PJY )

How would this work for a plans built?
Would they use the tax paid for the materials?

I've read on the Cozy mailing list or the Canard Flyers list that in Texas
it was sufficient to state that all applicable taxes have been paid for a
plans-built. On the same list, it was mentioned that Massacusets wanted a
sales tax on all materials purchased from out of state.

I called the state comptrollers office and was told no taxes were due
because this was an "occasional sale" which means neither the seller nor I
are in the business of selling stuff. I did explain the stuff in question
was going to be used for an airplane. Since I wanted something in writing,
they directed me to write an email to the comptroller's office, and I'm
awaiting their response.

So I suppose it depends on whom you buy stuff from... a retail outfit-taxes
due, individual seller-no taxes. I'll post the 'official' response when I
get it.

reader wrote:
I've read on the Cozy mailing list or the Canard Flyers list that in Texas
it was sufficient to state that all applicable taxes have been paid for a
plans-built. On the same list, it was mentioned that Massacusets wanted a
sales tax on all materials purchased from out of state.

I have a buddy here in Texas (he lives just north of Houston) who just
ordered a quick-build kit for an RV-8 and everyone is suddenly now
advising him he's going to have to pay "use tax" on the out-of-state
purchase of the kit and parts themselves. Seems that Texas is starting
to ramp up on trying to collect "use tax" on any out-of state
mail-order, online, and phonecall purchases of *any kind of
merchandise* for which the purchase price is on their radar screens. At
nearly $27K for the whole RV-8 quickbuild kit bought all at once, I can
imagine that amount is certainly going to be on someone's radar screen.
Now just how the state is going to track a sale of parts bought in
Oregon (home of Vans) I don't know.

Now just how the state is going to track a sale of parts bought in
Oregon (home of Vans) I don't know.

When he applies for a N number the state money collectors will be alerted

Texas most definitely has some strange rules on taxes with regards to
aircraft (and a few other things as well). The "use tax," as opposed
to a sales tax, is just another name for a sales tax on something
bought out of state (or in-state where no sales tax was collected).
It's basically the difference between what would have been due on an
in-state purchase and what was paid out of state. [For example, if I
buy a car out of state and pay 5% sales tax there, then bring it into
Texas, I owe an additional 3 1/2% "use tax."]

In the best case, there is no tax on "occassional sales" between
private individuals within the state. That should be his starting
arguement. However, if he bought it from the factory, then that will
not stand. It's a business-related sale. He can argue the "no tax on
internet sales" issue. That's the next best shot. However, there are
two problems there for anyone living in Texas.

First, a line item was added about 10 years ago that specifically
presumes aircraft to be business property and therefore tax is due. He
will have to prove that he has absolutely no business use for the
plane. [Interestingly, the line item to the tax code doesn't even
allow for proving otherwise. It says if you own your own plane, you
must be using it for business. However, they have no desire to see
anyone fight this in court and will back down if you can prove
otherwise.]

The second problem may or may not exist for any particular individual:
If the individual has any tax certificate in their own name, then any
purchase they make may be deemed by the state to be a business purchase
and tax is due. This means that in theory, since I own a small
business and hold an assigned business tax number in my name (DBA),
that if I give my neighbor $10 for an old tennis racket, it's a
business purchase and I owe use tax. In practice, of course, they only
find out about items during an audit, or big ticket items such as
aircraft and automobiles. Their computer program looks each year at
all autos and aircraft that are newly registered within the state, and
a card stating "you owe tax" will be sent (whether you eventually wind
up owing the tax or not).

Don Lewis n FTW wrote:
When he applies for a N number the state money collectors will be alerted

Ahh, I see.

jmk wrote:

In the best case, there is no tax on "occassional sales" between
private individuals within the state. That should be his starting
arguement. However, if he bought it from the factory, then that will
not stand. It's a business-related sale. He can argue the "no tax on
internet sales" issue. That's the next best shot. However, there are
two problems there for anyone living in Texas.

First, a line item was added about 10 years ago that specifically
presumes aircraft to be business property and therefore tax is due. He
will have to prove that he has absolutely no business use for the
plane. [Interestingly, the line item to the tax code doesn't even
allow for proving otherwise. It says if you own your own plane, you
must be using it for business. However, they have no desire to see
anyone fight this in court and will back down if you can prove
otherwise.]

Me and my flying partner own a 172 we bought from out of state from an
individual. The first year of ownership, the county tax assessor sent
us an affadavit to sign that swears the plane is personal use only and
not related to business, which is true, our plane is purely an
expensive toy. We were not charged any sales or use tax. I had presumed
the tax assessor simply discovered our plane when he or his staff
personally visits the airport every January looking for business
aircraft to tax, since the affadavit showed up during the very first
January we owned the plane.


The second problem may or may not exist for any particular individual:
If the individual has any tax certificate in their own name, then any
purchase they make may be deemed by the state to be a business purchase
and tax is due. This means that in theory, since I own a small
business and hold an assigned business tax number in my name (DBA),
that if I give my neighbor $10 for an old tennis racket, it's a
business purchase and I owe use tax. In practice, of course, they only
find out about items during an audit, or big ticket items such as
aircraft and automobiles. Their computer program looks each year at
all autos and aircraft that are newly registered within the state, and
a card stating "you owe tax" will be sent (whether you eventually wind
up owing the tax or not).

My buddy who's building the new RV-8 will probably fall into that
category. He owns a small restaurant and I think it is a sole
proprietorship, not a corp.