Texas State Sales and/or Use Tax on Glider bought out of state

I bought a glider in Canada 3 years ago, brought it back to Texas
where it is now hangared. It has been re-registered with new FAA N-
number etc.

I recently (after owning the plane for 3 years) received a letter from
the Texas Comptroller of Public Accounts saying I owe Texas sales tax
and/or Use Tax. They graciously say they are willing to forgive any
late payment penalty and interest if paid by May 30th.

Since I bought the plane out of state/country, do I still owe sale or
use tax?
Any insight (especially from a CPA) would be appreciated.

You'll need advice about Texas tax law from someone else, but I'll
mention my experience since it might be germane in Texas. I bought a
plane several years ago while I lived in Ohio. After about a year I
got a bill from the state for sales tax, even though I had made the
purchase in a different state. I paid the bill, along with an
explanation of who I bought it from etc. Six months later they sent
my payment back saying I owed nothing since I had bought it from a
private party, not a dealer. The fact I had bought in a different
state was irrelevant. This was a happy surprise, and it might be the
same in Texas. Fred

Sales taxes are usually designed as consumption/use taxes so the
jurisdiction where you use the item is the one where you will owe
taxes. For convenience, the authoritioes collect sales taxes on most
items at point of sale, working on the assumption that you will use it
in the same jurisdiction. However, for major purchases, if they
become aware of the transaction, they will put mechanisms in place to
track you down. A good example is automobiles. When you go to
licence it in your jurisduction, they nail you for the sales tax. For
aircraft, the process of exchanging information between federal
authorities and local authorities is slow so it is not uncommon to see
delays of years. I live in Canada and we experience the same thing.
When I bought a sailplane within the province, I waited 2 years to get
a tax bill from the province.

Some "sales" taxes are desdigned as value added taxes, rather than
consumption taxes. In Europe, they are used to this concept. In
Canada, we have the GST which is a federal sales tax that only applies
to commercial sales, not private sales. The purchaser pays the tax
but the vendor gets a credit for similar taxes paid on the inventory
so the net tax to the feds is only on the "value added" to the
product. It may be that in Ohio whether it is a consumption sales tax
or a value-added sales tax that they have made a policy decision to
only charge the tax on new sales. This is the policy in Canada so
while I paid the provincial sales tax (PST), I was not required to pay
the federal general sales tax (GST).

Isn't tax policy facinating? ...

Stephen

In Indiana these are called casual sales and there
is no tax. However, it does not extend to aircraft;
I'm not sure about used automobiles, but I beieve these
are tax free. If one buys a new car from a dealer
and has a trade-in, the tax is only on the difference
between the trade-in price and the new car price.
Subsequent per annum taxes on vehicles are based on
the blue book price; such prices on aircraft are based
on the year of manufacture and the gross landing weight
without regard to manufacturer, condition, or other
considerations.

At 22:18 04 May 2007,
wrote:
Sales taxes are usually designed as consumption/use
taxes so the
jurisdiction where you use the item is the one where
you will owe
taxes. For convenience, the authoritioes collect sales
taxes on most
items at point of sale, working on the assumption that
you will use it
in the same jurisdiction. However, for major purchases,
if they
become aware of the transaction, they will put mechanisms
in place to
track you down. A good example is automobiles. When
you go to
licence it in your jurisduction, they nail you for
the sales tax. For
aircraft, the process of exchanging information between
federal
authorities and local authorities is slow so it is
not uncommon to see
delays of years. I live in Canada and we experience
the same thing.
When I bought a sailplane within the province, I waited
2 years to get
a tax bill from the province.

Some 'sales' taxes are desdigned as value added taxes,
rather than
consumption taxes. In Europe, they are used to this
concept. In
Canada, we have the GST which is a federal sales tax
that only applies
to commercial sales, not private sales. The purchaser
pays the tax
but the vendor gets a credit for similar taxes paid
on the inventory
so the net tax to the feds is only on the 'value added'
to the
product. It may be that in Ohio whether it is a consumption
sales tax
or a value-added sales tax that they have made a policy
decision to
only charge the tax on new sales. This is the policy
in Canada so
while I paid the provincial sales tax (PST), I was
not required to pay
the federal general sales tax (GST).

Isn't tax policy facinating? ...

Stephen

In Texas your sailplane is considered personal property and as such no
taxes are due. I'll talk to folks in the club over the weekend and
post a bit more information.

ASW27 BV