Current California Sales/Use Exemption--Help!

[wabower]

(cross-posted everywhere I can think of)

I may be getting jammed with a quick contract this weekend with closing early next week on a jet for a CA resident.

We haven't had time (or authorization) to research the exemption, or follow the most recent changes in CA law. We only know/believe that:

1. Out-of-state delivery is a requirement. The buyer has a place in MT, so that would appear to be a good non sales-tax state for delivery where he could legitimately form an entity and show legitimate reasons to purchase the plane.

2. The buyer shouldn't ride on the plane to the delivery location, but should have evidence he traveled there by other means to accept the plane and close the deal.

3. The first use for a jet should be a flight from the delivery location (with both crew and pax on board) that doesn't enter CA airspace or land there.

4. Some usage (or non-usage, we're not sure) exemption period follows, that may be based on in-state vs. out-of-state usage, or may be a calendar limitation. We have been advised that the owner is almost certain to be audited by the state BOE, so we need to have our ducks in a row.

I'm a pretty fair hand with mid-west rules and regs but clueless regarding what goes on in the great Granola bowl to the west. Anybody got the real skinny and/or publications that spell it out?

Thanks,

Wayne

 

[jtheune]

Here's a idea. If the CA resident is buying the plane how about having him pay the sales tax. If he really is a CA resident then it's what is due.

 

[Richard]

John T, there are LEGAL strategies to lessen one's tax liability. You seem to be against that. Why?

 

[TMetzinger]

Or consult with the firm (I forget the name) that specializes in working this particular issue.

 

[wabower]

I'll ask him, but I think I know the answer. It's two words.

If he were seeking to evade the tax, I wouldn't be trying to help him. What he's trying to do is to legally avoid the tax by the use of a specific exemption provided by CA state law.

If you don't like the law, go talk to the CA BOE. I assume you don't want a ride in the jet either.

Here's a idea. If the CA resident is buying the plane how about having him pay the sales tax. If he really is a CA resident then it's what is due.

 

[wabower]

No time for working that side of the business, gotta have at least some info for 0730 breakfast tomorrow morning. Otherwise why would I be asking youse guys?

Or consult with the firm (I forget the name) that specializes in working this particular issue.

 

[SCCutler]

I wish I had the info for you, Wayne.

---

If you have a legal means of tax avoidance, it is your moral obligation to avail yourself of it. Giving money to the government needlessly is a sin.

 

[AdamZ]

I gotta ask why the rush? When I have a client who is in such a rush I'll often decline the work because I don't want the exposure to the liability. To many things can go wrong when your client/customer really rushes you.

 

[SCCutler]

Wayne finds jets- he will not contend to have offered tax advice.

I do not expect he will commit JFM (Jet-Finding Malpractice).

 

[wabower]

It's not a bum's-rush deal, I've been working with this guy for a year, looking at airplanes as prices have dropped from 3.5 mil to low 2's in 12 months. He's real glad he didn't buy one last year. The airplane he wants finally became available at his price, now he wants to get a deal done on the weekend. Typical airplane deal.

I gotta ask why the rush? When I have a client who is in such a rush I'll often decline the work because I don't want the exposure to the liability. To many things can go wrong when your client/customer really rushes you.

 

[Areeda]

Wayne,

I agree that you should seek professional tax advice on this as it is a bit complicated but doable. If I remember correctly (

) you have to have more than 50% of the usage outside of the state for the first 6 months. Remember California is broke and doing everything they can to collect more taxes.

Joe

Welfare for the rich: since wealth really comes from society not individuals all of it belongs to society and letting you keep the money you make is the same as taking it from you and giving it so someone else. (where's the pile of smelly crap icon?)
Found it on gmail

with a local sales tax over 10% I think all legal means to avoid it should be used.

 

[wsuffa]

It's not a bum's-rush deal, I've been working with this guy for a year, looking at airplanes as prices have dropped from 3.5 mil to low 2's in 12 months. He's real glad he didn't buy one last year. The airplane he wants finally became available at his price, now he wants to get a deal done on the weekend. Typical airplane deal.

Close on the deal in a no-tax/low-tax state, park the plane there, sort out the California specifics (with appropriate counsel) on Monday/Tuesday.

 

[wabower]

That's the plan. Just trying to fill in as many blanks as possible up-front.

Close on the deal in a no-tax/low-tax state, park the plane there, sort out the California specifics (with appropriate counsel) on Monday/Tuesday.

 

[wabower]

Thanks for the vote of confidence. You're exactly right, in that I will not give tax advice, but consider part of the buyer representation (or maybe just an added benefit of using me vs. some broker who's either clueless or callous regarding this stuff) being sure that the buyer knows where the rocks are.

Wayne finds jets- he will not contend to have offered tax advice.

I do not expect he will commit JFM (Jet-Finding Malpractice).

 

[Ghery]

My information is about 20 years old, so take it for what it's worth.

Back around 1989 or so we had a VP where I worked in Silicon Valley who bought a Santa Cruz 70 set up with a cruising interior. Those who know boats will know that this was UNUSUAL, to say the least. He took delivery of the boat outside the 12 mile limit (rode out on a different boat) and sailed it directly to La Paz, Mexico. Kept it berthed there for at least 6 months (6 months is the key). Then returned it to California to really wring it out and load up for long distance cruising. This was done to avoid California sales tax, which on a $750,000 boat was not exactly chump change. He quit Tandem, sold their house and all their stuff, headed out the Golden Gate and turned left. I read about him now and then in Latitude 38 (watch for postings on Hotel California Too).

So, what your client is proposing (or is being suggested here) was legal then. I don't know what the laws in California are now.