Second-hand kit purchase issues FL->TX

[reader]

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"

[Lou]

reader wrote:
> 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 can't be specific, but when I lived in Fl we used to get around sales
tax for car sales by having the seller right out a receipt for $50. No
one ever asked for the sales tax until it was time to transfer the
title. I'm going to guess that there is no title for the kit, but to be
on the safe side get the reciept. Also, when someone would transfer a
car title from a Fl owner to anywhere, it had to have a notary stamp.
Lou

[reader]

"Lou" wrote
> I'm going to guess that there is no title for the kit,


That's correct. It's just a pile of parts at this point.

[Dave S]

Bryan Martin wrote:
> If Texas is anything like Michigan,

Texas is not anything like Michigan. If the airplane is corporate owned
(LLC, S-Corp or whatever the flavor/name may happened to be), then they
levy taxes on it, but I dont recall hearing my hangarmates having to pay
taxes on non-corporate, non-commercial, personal use aircraft.

Dave

[Lou]

In some states it's called a sales and/or use tax. If you can prove you
paid sales tax somewhere your covered. If you can't the state tells you
what its worth. Get a reciept, even if for $50, $100, $200 so you can
control the tax you pay.
Lou

[reader]

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?

[Lou]

Get a reciept, make it low along with a picture of the parts. This way
you will pay a tax but it will be for the parts cost not the value of
the finshed plane. You may want to check with your state to see if
they even have a use tax, or find a neighboring state that doesn't and
register it there. No one said you had to register it where you live,
just have it registered.

[Rich S.]

"Lou" > wrote in message
oups.com...
> No one said you had to register it where you live,
> just have it registered.

Many states, including Washington, require in-state registration if the
aircraft is within the state for more than thirty days. Anybody who depends
on Usenet for accurate tax advice is . . . er . . . liable?

Rich S.

[Big John]

The School District where I hangered my plane years ago here in
Housston came around and looked through the door cracks (or openmed
the doors if unlocked) and got the tail number and went and got the
registered owner from OK City and sent them a tax bll for schools.

If they don't get you one way they'll get you another :o(

Big John
`````````````````````````````````````````````````` ```

On Wed, 01 Feb 2006 03:12:20 GMT, "reader" > wrote:

>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"
>

[Lou]

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

[reader]

"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.

[Lou]

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.

[Highflyer]

"reader" > wrote in message
om...
> 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! :-)

[Highflyer]

"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 )

[Lou]

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

[reader]

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.

[One's Too Many]

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.

[Don Lewis n FTW]

> 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

[jmk]

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).

[One's Too Many]

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.

[Lou]

I took this off the Illinois tax website:
Tax Rate
The rate is 6.25% of the purchase price or fair market value,
whichever is greater.
If you acquire the aircraft by purchase from a person or business
that is not in the business of selling aircraft at retail, you must pay
tax on the aircraft's purchase price. If the aircraft's purchase
price is less than the fair market value, you must pay tax on the
aircraft's fair market value on the date acquired or the date brought
into Illinois, whichever is later. If you acquire a share of an
aircraft, tax is based on the purchase price or fair market value of
the share acquired. There is no provision for a trade-in allowance
under Aircraft Use Tax. The tax due is based on the fair market value
of the aircraft or share of the aircraft.


I like the words "which ever is greater"

[reader]

I got a written response from the State of TX: No tax is due because this
falls under the "occasional sale" exemption. Second hand kit, both of us
individuals, neither engaged in the business of selling stuff.

QUOTE:
The purchase of an aircraft kit and/or aircraft parts and materials may be
exempt as an occasional sale under Tax Code Section 151.304(b)(1) provided:

1) the seller has not made more than two sales of taxable items (not just
parts for an aircraft) subject to sales tax within a 12-month period, and
the seller is not engaged in the business of selling taxable items (not just
aircraft parts) and 2) neither the seller nor the buyer has been issued a
sales tax permit or the equivalent by Texas or any other state.

In other words the purchase, in one or two transactions in a 12-month
period, of parts and materials to build an aircraft by an individual who
does not hold a sales tax permit from another individual who also does not
hold a sales tax permit, is exempt from Texas sales and use tax as an
occasional sale. However, the subsequent purchase of such parts and
materials by the same purchaser from the same seller will be subject to
Texas use tax if brought or delivered into Texas. See Rule 3.316 on
occasional sales.

END QUOTE

[jmk]

<<1) the seller has not made more than two sales of taxable items (not
just
parts for an aircraft) subject to sales tax within a 12-month period,
and
the seller is not engaged in the business of selling taxable items (not
just
aircraft parts) and 2) neither the seller nor the buyer has been issued
a
sales tax permit or the equivalent by Texas or any other state. >>

Right... That first one gets you into the "occasional Sale" arena.
The second is that little nasty that I referred to, where anyone
holding a valid sales tax permit is presumed to be making a business
transaction, no matter what or why the purchase was made. There is a
little additional wording in there somewhere (used to be subsection h)
that says if it's an airplane, the it *IS* purchased for business use.

But, as is true for most folks, if you can get by #1 and #2, then no
tax is due. [First plane I ever bought, they sent me the request for
Use Tax a good 5 years after the purchase. To agree that it was
Occasional Sale (second part of the rules hadn't been written in back
then) they wanted to seller to sign this notarized affidavit. Well, he
was elderly then, and selling due to ill health, and moving...
Probably cost me almost as much to track him down and get it signed as
the tax would have been. <G>