Buying an airplane out of state -- tax question

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Jon Huxley

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jonhuxley
So I'm thinking of making an offer on a flying machine. I'm based in California, and the seller and airplane are based in Florida. How does this work with the Sales tax? I will be picking it up in Florida and flying it back to SoCal. Do I pay Florida sales tax, and if so will the California Board of Equalization come asking for sales tax as well? If I have to pay Sales tax, Florida has a lower rate, so it would be desirable to pay Fl sales tax instead of Ca sales tax. Also Florida is a "fly-away" State, meaning no sales tax is due if aircraft is moved out of state within 10 days of the purchase, but the wording is not too clear and might not apply if the seller is a private individual and not a broker(?), which is the case here. Anyway, I have all my ducks in a row except for the tax implications. I know the answer here is going to be, "go pay a tax consultant", but someone here must have gone through this recently.
 
Jon,
I won't say "go call a tax consultant" :) but --- I had the joy of a similar experience - with a hard lesson. I purchased my plane out of TX and reside in Colorado. I registered my plane with the FAA - looked for any Colorado registration, found it wasn't a requirement so thought all was well and good. Then a few years (literally 3 years) later, the CO Dept of Revenue is mailing me notices to let me know that I owe taxes, plus penalties, plus interest for the 2 years and 9 months. It was not a pleasant experience. When I spoke with the people the answer I got was it was my responsibility to find out. Even though there is no registration, I was expected to pick up the phone and call them or try to figure out on their website how to post it.

I'd strongly suggest searching for Aircraft Sales Tax within your states tax code and maybe even calling them in advance. Remember, they can also be taxed at city and county levels too.

I wish I had better advice for you - other than get your research done sooner - not later.

Good luck

Dean
 
Florida has a "fly away" exemption that allows you to avoid paying tax there.
You must pay the California USE tax when you get the plane to California.
 
flyingron said:
Florida has a "fly away" exemption that allows you to avoid paying tax there.
You must pay the California USE tax when you get the plane to California.
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CA says you must, just depends on where the plane is "based" and by that I mean what you put on your registration, like if you used a PO box in a tax free state for business mail or something, or whY you enter on fuel pumps you put your N number in, what's on hangar lease, some don't REQUIRE a N number. That's normally how they target people they think they can get money from.

Ofcourse don't do anything "illegal", your milage may vary, consult your lawyer, chocking hazard on small parts, etc. and yeah the commies in CA need all the money they can steal.
 
Jon Huxley said:
So I'm thinking of making an offer on a flying machine. I'm based in California, and the seller and airplane are based in Florida. How does this work with the Sales tax? I will be picking it up in Florida and flying it back to SoCal. Do I pay Florida sales tax, and if so will the California Board of Equalization come asking for sales tax as well? If I have to pay Sales tax, Florida has a lower rate, so it would be desirable to pay Fl sales tax instead of Ca sales tax. Also Florida is a "fly-away" State, meaning no sales tax is due if aircraft is moved out of state within 10 days of the purchase, but the wording is not too clear and might not apply if the seller is a private individual and not a broker(?), which is the case here. Anyway, I have all my ducks in a row except for the tax implications. I know the answer here is going to be, "go pay a tax consultant", but someone here must have gone through this recently.
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You are certainly welcome to contact a tax professional, but unless you are trying to avoid paying the CA use tax (very difficult if you are living in CA and intend to operate the plane there), there is really no need. It’s all pretty straight forward.

As others have said, you will be exempt from Florida tax, but will have to pay the CA use tax.

The seller should provide a form for you to fill out certifying that you are taking the airplane out of FL. That is what happened when I bought my Beech 18. I would ask the seller about this.

As for CA, you really don’t need to do anything. The Bureau of Equalization will find you. A few months after the FAA registration shows you as the new owner, the BOE will send you a form to fill out with the applicable info to calculate the tax due. There is nothing for you to do in advance. They come to you. (I went through the process when I bought an airplane while living in San Diego).



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Hi.
CA will find you if you fly / land there, and you will have to pay Tax every year, depends on the County on how much, and sales / Use tax when you buy it.
Many try to get away with it and they end up paying tax, penalty, interest... If your bird is considered an antique / old you can display it once a month and save the County / yearly tax. They were talking about doing away with that, verify that the antique still applies?
 
James331 said:
CA says you must, just depends on where the plane is "based" and by that I mean what you put on your registration, like if you used a PO box in a tax free state for business mail or something, or whY you enter on fuel pumps you put your N number in, what's on hangar lease, some don't REQUIRE a N number. That's normally how they target people they think they can get money from.
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The rule for a California resident avoiding the use tax is that the aircraft is purchased for use outside the state of California. It doesn't suffice to just register it with an out of state addresses. THey snoop around the airports looking for people who haven't paid.
 
flyingron said:
The rule for a California resident avoiding the use tax is that the aircraft is purchased for use outside the state of California. It doesn't suffice to just register it with an out of state addresses. THey snoop around the airports looking for people who haven't paid.
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Do they break into hangars?

Sounds like a dangerous job


Sounds like standard issues thieves to me
 
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I bought my Zodiac in May, 2016, from a dealer in Carson City, NV. The sales contract required that I pay Nevada sales tax, which I did. The dealer explained that since I live in the City and County of San Francisco, the tax people in Nevada will advise the California Board of Equalization of the sale and send the amount I was taxed in Nevada to the California BoE. I'd then get a bill from the Board of Equalization in two or three months for the difference between the Nevada sales tax I paid when the sale closed, and the sales tax rate for San Francisco County (8.5%). When I received the BoE bill, it asked for the county the airplane is kept in, and I owed the difference between the Nevada rate and the tax rate of the county the airplane is based in (not the registrant's home address). Since the airplane is based at Oakland in Alameda County, the amount I owed the Franchise Tax Board was based on the 9.25% Alameda County sales tax.
 
flyingron said:
They have the collusion of the airports (so no, putting it in a hangar won't hide it).
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I would NOT use any airport that violated my 4A rights.

I've always had some passive security in my hangars, never had someone go into one unless we spoke first, which has been hangar mx related everytime.
 
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flyingron said:
The rule for a California resident avoiding the use tax is that the aircraft is purchased for use outside the state of California. It doesn't suffice to just register it with an out of state addresses. THey snoop around the airports looking for people who haven't paid.
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Yup. They gots ways of finding you. I bought a plane in Florida. Registered it in Washington, but flew it to and hung around in California for awhile before taking it home. A year or so goes by and the Property tax folk wanna know where their money is. I got that resolved pretty easy. About a year after that the Sales tax folk wanna know where their money is. They wanted all kinds of dates, receipts and other 'proof' that it was there less than 6 month.

EDIT: I didn't actually register it in Washington. I registered it with the FAA with my Washington address. I hangared and registered it in Oregon. It was about 3-4 years later Washington calls and says, 'where's our money.' The guy I went and talked to about it was retired and had a temporary job with Washington to do just this. Go sniffing around and see what he could find.
 
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James331 said:
CA says you must, just depends on where the plane is "based" and by that I mean what you put on your registration, like if you used a PO box in a tax free state for business mail or something, or whY you enter on fuel pumps you put your N number in, what's on hangar lease, some don't REQUIRE a N number. That's normally how they target people they think they can get money from.

Ofcourse don't do anything "illegal", your milage may vary, consult your lawyer, chocking hazard on small parts, etc. and yeah the commies in CA need all the money they can steal.
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This is completely incorrect and how people get busted with big tax bills and penalties trying to avoid the CA tax.

CA tax code is complicated and extremely liberal in many ways.

Even if you are a legally non-CA resident, but you work in CA (Military for example)you may still be liable for the CA use tax if you purchase an aircraft and bring it into the state. Even if you try and get creative with where you register the aircraft.

It’s not just fuel sales. Airport report the n-#s of based aircraft to the BOE. Some Towers record n#s of landing aircraft and that data gets to the BOE.
 
Hi.
No need to go into the hangars, if you fly it they can find you on the internet, FAA registry, flightradar, flightaware... and find pics from airport amateur photographers that post them....
 
Fearless Tower said:
As for CA, you really don’t need to do anything. The Bureau of Equalization will find you. A few months after the FAA registration shows you as the new owner, the BOE will send you a form to fill out with the applicable info to calculate the tax due. There is nothing for you to do in advance. They come to you.
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Yup...this. Super simple.

I purchased in FL from a broker and flew home to CA. No FL tax paid and a few months after I sent in the registration the fine folks at the BOE were kind enough to send me the bill for the use tax...there may have been a form I had to submit at their request first, but they will find you...trust me.
 
Fearless Tower said:
If you want to use your airplane in the state of CA, the BOE is going to find out.
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I can't go to CA, I think the state department doesn't let American visit many communist places ;)

Besides I don't want to have to worry about getting shot or robbed.

Maybe after national carry passes I might go back, too many knuckle heads
 
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I purchased an out of state plane, Oregon, and live in Kalifornstan... so the Tax man wanted 10% sales tax, AND the use tax.... But, I purchased the plane from my Dad, so it was a family sale, thus no "sales tax",... but still have to pay about $375 / year for the use tax. It is explained on the California tax web site... ya, I know... Clear as MUD!.
 
Glenn D said:
I purchased an out of state plane, Oregon, and live in Kalifornstan... so the Tax man wanted 10% sales tax, AND the use tax.... But, I purchased the plane from my Dad, so it was a family sale, thus no "sales tax",... but still have to pay about $375 / year for the use tax. It is explained on the California tax web site... ya, I know... Clear as MUD!.
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You got yer taxes confused (taxes in CA confusing?...SHOCKER)...you were being billed the "Use Tax" (AKA equivalent to Sales Tax) before the family exemption. You pay one or the other, not both...the $375 is the annual property tax on the fixed asset unrelated to sales or use tax.

If you buy in CA from a CA broker that accepts sales tax, then you pay sales tax at time of purchase. I you buy from out of state or a CA seller NOT register with the BOE, you do not pay sales tax at time of purchase but are on the hook for ultimately paying the Use Tax (which is equivalent to sales tax)

Property tax is a just another bend over applied to everyone annually...anally...annually...not sure which.

CA BOE pamphlet for aircraft if anyone is interested:

AIRCRAFT AND CALIFORNIA TAX

https://www.boe.ca.gov/pdf/pub79a.pdf
 
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Bought my plane in CA, and resided in CA at the time. Paid $80k for the plane, and $8k in sales tax, then $800 per year to the state as my penalty for having the nerve to own a plane, as well as another $1,200 to the county for likely the same reason. It's one of the reasons I moved out of CA.

They'll catch up to you for sure, but it will take a few years, and there will be penalties. California never misses a chance to tax you.
 
Rykymus said:
then $800 per year to the state as my penalty for having the nerve to own a plane
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That number sounds familiar...did you own it in a Corporation? Once you pay sales/use tax the property tax administered annually through the County is all you are liable for otherwise as an individual unless you are trying to shelter it as a corporate business asset.

...and yeah the cost of doing business in CA is also stupid, but that is for another discussion.
 
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I remember years ago buying a boat while living in California. Alameda County sent me a bill (the boat was in a marina in that county) and had assessed it at twice what I paid for it. I asked if that was an offer to purchase. They just laughed. Said I could challenge the assessment. Sure, take time off from work to challenge an assessment that would have saved less in taxes than it would have taken to fight it.

Then, to add insult to injury, I get a bill for "possessory interest tax". Seems the marina was a public marina, so I got taxed on the hole in the water where I kept (and paid rent to the city) the boat. California gets you coming and going. Sure don't miss living there at all.
 
Bought my plane in Biloxi, MS in 96 and was working in Alaska (flew it to AK), but my residence was IL. Must have done something right no one came after me for taxes...:)
 
AKBill said:
Bought my plane in Biloxi, MS in 96 and was working in Alaska (flew it to AK), but my residence was IL. Must have done something right no one came after me for taxes...:)
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It's Alaska. Aren't you supposed to go after them?
 
Bought a plane in May from TN. Registered it in GA but no tax bill. Been holding the cash but ..... with a squawk lost a foot long, the wait is killing me!
 
TheFB said:
Bought a plane in May from TN. Registered it in GA but no tax bill. Been holding the cash but ..... with a squawk lost a foot long, the wait is killing me!
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Don’t know about Georgia, but not all states come to you like CA. In Virginia, for example, it’s your responsibility to contact them and report the sale and pay the tax. They aren’t staffed to track registrations.
 
Bought my plane in AZ in Dec 2016 and keep it in CA. Early 2017 I received a bill from the County where it is hangared for a few hundred dollars. Kept waiting for the bill from the state BOE for the use tax to show up. It finally did almost a year later in Nov 2017 and was due by the end of that month.

Interestingly the county valued my plane at about 1/3 of the sale price. I didn't argue and just paid the bill... The bill for the use tax from the state was based on sale price and I had to attach proof of what the sale price was to the tax bill.
 
Fearless Tower said:
Don’t know about Georgia, but not all states come to you like CA. In Virginia, for example, it’s your responsibility to contact them and report the sale and pay the tax. They aren’t staffed to track registrations.
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I think they purposely wait for the interest penalties to accumulate, I think it’s like 10% in many states. Every time I get a notification about taxes, it’s 2-3 years later.
 
Fearless Tower said:
In Virginia, for example, it’s your responsibility to contact them and report the sale and pay the tax. They aren’t staffed to track registrations.
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While you're supposed to volunteer to pay it (in both Virginia and California), I can very much tell you that Virginia periodically does scan the FAA registrations. I got a letter about a year after I bought my plane (and had paid the tax) inquiring if I had paid the tax.

And the counties very much track whose in the hangars and the tie downs for property tax bills.
 
TheFB said:
Bought a plane in May from TN. Registered it in GA but no tax bill. Been holding the cash but ..... with a squawk lost a foot long, the wait is killing me!
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That's a dangerous game of chicken you're playing. Once they figure it out, the penalties and interest could make the actual tax seen trivial.
 
flyingron said:
While you're supposed to volunteer to pay it (in both Virginia and California), I can very much tell you that Virginia periodically does scan the FAA registrations. I got a letter about a year after I bought my plane (and had paid the tax) inquiring if I had paid the tax.

And the counties very much track whose in the hangars and the tie downs for property tax bills.
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Your experience may be dated. I know from personal experience they haven’t been. And now the state is hurting because of it.

Virginia recently sent out a letter to airports complaining about the loss of tax revenue and asking airports to report any based airplanes they saw not displaying stickers.

I had forgotten to pay the tax on my Waco three years ago when I bought it. Never heard a peep from VA, even though I was paying property tax to the city. Fortunately, I was able to take advantage of the tax amnesty program this year to get it straight.


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donjohnston said:
That's a dangerous game of chicken you're playing. Once they figure it out, the penalties and interest could make the actual tax seen trivial.
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Again, depends entirely on the state. Some states like CA come to you and others expect you to report to them.


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Jeez, lot of supposition being made. I spoke to at least ten owners and called my accountant. They all said the process for GA is to register and you will get a bill. I guess my joke about wanting to spend the money on squawks made me look like a tax cheat wannabe. I’m in no danger.
 
Fearless Tower said:
Virginia recently sent out a letter to airports complaining about the loss of tax revenue and asking airports to report any based airplanes they saw not displaying stickers.
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Ah, you're confused. The stickers are not TAX. They are a registration fee that goes to support the Department of Aviation which indeed is very underfunded.
The sales tax (which is what I was referring to) is collected by the Commonwealth Department of Taxation, a group that has far more resources. The counties independently collect the personal property tax and I paid it to Culpeper county until I moved out last September. They are very aggressive in identifying planes based in the county. In fact, when the airport decided to nix subleases they used the tax records as the most reliable indication of who was the possessor of the various spaces.

Frederick County (OKV) was even more aggressive than Culpeper.

Can't vouch for your situation, but the initial "You may owe us sales / use tax" seem to still come. I don't know what happens if you don't respond. I just told them I already paid it and they went away.
 
No need to snoop in hangars...Airport/FBO managers are required by the FAA to keep updated a BasedAircraft.com page for their airport. Anytime someone new signs a lease they will be added. If you are hangared or tied down at an airport, it's a requirement of the FAA for the airport folks to keep that page updated. As with many other things, results may vary depending on how active your airport management team is. Based on how accurate the DoR here in TN has been, I would just about bet they have access to the information on that site.
 
flyingron said:
Ah, you're confused. The stickers are not TAX. They are a registration fee that goes to support the Department of Aviation which indeed is very underfunded.
The sales tax (which is what I was referring to) is collected by the Commonwealth Department of Taxation, a group that has far more resources. The counties independently collect the personal property tax and I paid it to Culpeper county until I moved out last September. They are very aggressive in identifying planes based in the county. In fact, when the airport decided to nix subleases they used the tax records as the most reliable indication of who was the possessor of the various spaces.

Frederick County (OKV) was even more aggressive than Culpeper.

Can't vouch for your situation, but the initial "You may owe us sales / use tax" seem to still come. I don't know what happens if you don't respond. I just told them I already paid it and they went away.
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I’m not confused at all. You have to pay the use tax before you can register and get the sticker.

The state is asking for notification of based aircraft without stickers as a means to then compare #numbers with people who have paid the tax.

As I posted earlier, no one from the state asked me for over three years to pay the tax. I saw an info email from the airport mentioning the amnesty and went ahead and paid the tax.
 
You could form an LLC, unfortunately in komnifornia any corp will cost you $800 a year
 
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