Florida Sales Tax

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Bwing96

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Bwing96
In Louisiana if you buy a used plane from an individual I think it's just a casual sale and no taxes are due, but if you buy from a dealer then you must pay Louisiana state sales tax.

Does the same hold true if it's a casual sale between 2 individuals when one is in Florida and one in La.?
 
Bwing96 said:
In Louisiana if you buy a used plane from an individual I think it's just a casual sale and no taxes are due, but if you buy from a dealer then you must pay Louisiana state sales tax.

Does the same hold true if it's a casual sale between 2 individuals when one is in Florida and one in La.?
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If the buyers home state is Louisiana then that would be the place where the sales tax law is applicable IMO.
 
All aircraft sold or delivered in Florida are required to pay the 6%. Further if you're intending to keep the plane in Florida, you owe the 6% use tax (with a credit for any out of state sales tax you pay). If Louisiana doesn't have a sales tax for casual sales and you are going to keep the plane in Louisiana, it would behoove you to do the entire transaction there.

The only out for Florida residents is if you buy the plane out of state and keep it there for at least six months.
 
flyingron said:
All aircraft sold or delivered in Florida are required to pay the 6%. Further if you're intending to keep the plane in Florida, you owe the 6% use tax (with a credit for any out of state sales tax you pay). If Louisiana doesn't have a sales tax for casual sales and you are going to keep the plane in Louisiana, it would behoove you to do the entire transaction there.

The only out for Florida residents is if you buy the plane out of state and keep it there for at least six months.
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How about just deliver the plane to Louisiana?
 
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That's what we do when we buy a plane. Company HQ is Tampa. When a plane is bought we buy gas in a tax neutral state on the day of sale and then the plane stays out of Florida for 6 months. The purchase price is just over $7 Mil so that 6% adds up.
 
Occasional sale exemptions vary widely among states, as do fly-away provisions and other sales-use laws. Be very careful and seek professional advice. Be aware that "we'll just form a Delaware corporation to own the plane" is not a viable strategy.

Do all your planning first, and don't sign anything until you're sure of your position. States have discovered that aircraft transactions are low-hanging fruit insofar as big-ticket tax revenues are concerned. They're all broke, so any easy money is where they will go first.
 
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Absolutely right. My broker almost got mad at me when I did not set up a Delaware corporation to own my airplane to avoid the sales tax. I had a long discussion with the folks at AOPA and with my personal lawyer and found that many states have started going after new aircraft owners to prove they paid sales tax.

My broker reluctantly had me pay tax but used the tax rate of his county of residence. Within a year I received a letter and tax form that required me to prove how much sales tax I had paid vs the rate of my county of residence. The state already knew where my airplane was based so I had to pay the difference between his county and mine ($150) which i did.

As Wayne stated most of the county's and states are broke so they are chasing every avenue they can to generate revenue.
 
Alexb2000 said:
How about just deliver the plane to Louisiana?
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Nope. The sale must take place in Louisiana. If the sale takes place in Florida even if the plane goes out of state, you're liable for the sales tax there.
 
flyingron said:
Nope. The sale must take place in Louisiana. If the sale takes place in Florida even if the plane goes out of state, you're liable for the sales tax there.
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If the owner flies the plane to Louisiana and signs the paperwork there wouldn't that be a transaction taking place in Louisiana? If that is also the buyers state of residence why wouldn't the sales tax laws of Louisiana apply.

All this plus avoiding FL for a minimum of six months.
 
Alexb2000 said:
If the owner flies the plane to Louisiana and signs the paperwork there wouldn't that be a transaction taking place in Louisiana? If that is also the buyers state of residence why wouldn't the sales tax laws of Louisiana apply.
Yes. I have repeatedly said that.

What you said is "just deliver the plane to Louisiana" and that is not sufficient.
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flyingron said:
Alexb2000 said:
If the owner flies the plane to Louisiana and signs the paperwork there wouldn't that be a transaction taking place in Louisiana? If that is also the buyers state of residence why wouldn't the sales tax laws of Louisiana apply.
Yes. I have repeatedly said that.

What you said is "just deliver the plane to Louisiana" and that is not sufficient.
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Got it.. finally.

Here is the document if anyone else is interested.

http://dor.myflorida.com/dor/forms/2010/gt800008.pdf
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Thanks for all the replies. I finally found that document too. Now to see exactly how La. looks at it.
 
How does the State of Florida (or any state) find out that you bought an airplane?

Pardon my ignroance.
 
FAA website. Investigators sitting at airports writing down tail numbers and asking FBO's and hangar landlords.

FWIW, I spent about an hour on the phone this morning talking to the TX aircraft taxation group about a couple of plane deals and other stuff. Learned by coincidence that Amazon is now collecting and remitting sales tax for TX transactions.

texasag93 said:
How does the State of Florida (or any state) find out that you bought an airplane?

Pardon my ignroance.
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texasag93 said:
How does the State of Florida (or any state) find out that you bought an airplane?

Pardon my ignroance.
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Occasionally tax districts will det a data base extract from FAA for aircraft registered in their district, or airport managers report aircraft n numbers on their airport to the county/city manager, or date registered with state if state requires.

Research will show date of transaction or date arrived at that airport. Tax plus penalty can be due for failure to self report.

Some states require sales tax plus annual "property" tax, as aircraft are considered proprty, much like real estate.
 
wabower said:
. Learned by coincidence that Amazon is now collecting and remitting sales tax for TX transactions.
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Yup. Last few purchases that were filled by Amazon's fulfillment center had the TX sales tax tagged on.

For my eBay selling of auto parts, I charge tax on Texas residents (and remit to Austin with the rest of it). The ecommerce sales tax issue is getting stickier and 2013 calendar already has a post-it to remind me to start learning more.
 
Virginia Dept of Aero searches the FAA records. Not too speedy. They came after me almost a year after I had bought the plane (and paid the tax). The airports also report all the based aircraft to the tax man.
 
texasag93 said:
http://www.window.state.tx.us/taxinfo/taxpubs/tx94_168.pdf

Page 2 on the right column shows if I buy it from a casual seller, that no tax is due.

That is Texas.

I see how the non reporting can catch someone via aircraft registration or by property taxes.
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In Texas they took pictures of my aircraft on several occasions in a large hangar at KADS (addison). Then they searched flightaware for my tail number to build a case for residency (even though my airplane is registered to a Texas address). Then the state sent a demand letter for sales tax along with penalties and fees. The whole thing really ****ed me off because I had PAID sales tax to the state of Texas. My accountant contacted them about it and they demanded proof. Rather than create a fuss we provided them with the sales contract, tax calculations, our canceled check, etc.

Finally, reluctantly, they slithered off.

Be careful out there and most importantly have professionals at the ready to defend you when they come looking.
 
I bought my 421 from a broker, so I knew I had to pay sales tax, it took Georgia about a month to bill me. The 182 I bought from a Georgia corporation and put it in my Delaware corp, I knew if I bought it personally, tax would be due. Georgia taxes all sales from companies to individuals, cars, boats, planes. I hoped going to an out of state company would slide by.......wrong again, I got that tax bill in 3 weeks!:dunno:
The tax man is looking hard at airplanes! :rolleyes:
 
About 10 years ago the County Taxman got an extract of all aircraft registered to owners in the county. They politely sent notices, asked when the aircraft arrived and estimated value at purchase or when it moved to the county.

They had finally realized that aircraft were taxable property same as real estate. They did not look for back taxes, only the current year and have been following up with bills each year, and using a standard depreciation schedule lowering the tax each year based on estimated decreased value.

Our club received a notice on one aircraft that had been associated with the club but was long gone before I arrived. A little research with the old timers, it was a wood/fabric glider that was long hauled off to the landfill. The registered owner had passed away and his house no longer existed, but the information was in the FAA database.

A simple letter to the taxman with the information cleared the bill.
 
People are easily confused by terminology, so to be sure every body is on the same page the use of a broker doesn't cause a change in registration or ownership of the aircraft. Only a dealer will take title. The same company may act in either capacity at the same time (some planes owned, some brokered) so it's important to know which type of representation is being provided, especially if any tax exemptions are available.


N747JB said:
I bought my 421 from a broker, so I knew I had to pay sales tax, it took Georgia about a month to bill me. The 182 I bought from a Georgia corporation and put it in my Delaware corp, I knew if I bought it personally, tax would be due. Georgia taxes all sales from companies to individuals, cars, boats, planes. I hoped going to an out of state company would slide by.......wrong again, I got that tax bill in 3 weeks!:dunno:
The tax man is looking hard at airplanes! :rolleyes:
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Delaware corporation.

Sheesh.
 
A Delaware corporation will not help an airplane that is based in Florida, nor if it is determined a transaction took place there. Foreign corporations are just as taxable as individuals.
 
If you buy a plane from an individual in Florida and fly it out on the same day you complete the sale how would they know the sale wasn't completed in another state?
 
Buy gas out of State to prove the plane was out of State for the sale.
 
Not sure about boats, but many airplane owners know (to their chagrin and after it's too late) that the use tax and the sales tax are part of the same statute and that the airport where the plane is based is much more relevant to to state and local taxes than the address on the registration.

RotorAndWing said:
Yea, what does hundreds of airplane owners (and yacht owners) know......:rolleyes:
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wabower said:
Not sure about boats, but many airplane owners know (to their chagrin and after it's too late) that the use tax and the sales tax are part of the same statute and that the airport where the plane is based is much more relevant to to state and local taxes than the address on the registration.
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States such as Florida go through FAA registration database approximately every quarter (probably monthly now) looking for registrations with a Florida address.

The state (Florida) will send the airport managers a letter saying they need to know the registration numbers of all aircraft based at that airport for "statistical data". A few airports I was familiar with down there the managers would just toss the letter.

The state has to know you own the aircraft and it's in fact based there. I know lots of people that have done this for years without a problem.

However with the US sinking further into the financial abyss the states are looking for more revenue.
 
Buying gas out of state doesn't prove the plane was out of state when the transaction closed. The state could easily assert that the deal closed prior to the time the fuel was purchased. If closing location is important, a better method is to fax a time-stamped letter from the FBO to the escrow company authorizing them to close the deal, and in return obtain time-stamped documents showing when the various filings were made on the FAA registry.

The potential sales tax liability for one of the closings I handled in Hillsboro, OR was slightly in excess of $3.2 million, so I carefully complied with all of the details as I didn't want the new owner to come to me to pay it. ;)

Captain said:
Buy gas out of State to prove the plane was out of State for the sale.
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Tax man: you owe Florida tax for N123 bought on January 3rd

You: no, N123 is not in Florida now and was in Tennessee on January 3rd. Further, the plane won't be in Florida until June 3rd to comply with the six month rule.

Tax man: how can you prove it was in Tennessee on the 3rd?

You: I have this here receipt for fuel.


I don't think they are going to look at time stamps to figure it down to the hour and minute. My experience with this is only that I have repoed planes to tax friendly states for this purpose. Once I didn't buy gas. The company went nuts and almost turned me around in the air to go back and buy at least 5 gallons for this purpose. In the end I was saved because I had paid a mechanic to replace a nav light or something. That receipt was used to prove the plane was where we said it was.

I'm not a tax attorney. I just know what we do to stay legal and only my part of it at that.
 
NC has a 1500 max sales tax on aircraft...I have paid it as soon as I received the permanent registration...and kept a copy of the check.
 
RotorAndWing said:
Yea, what does hundreds of airplane owners (and yacht owners) know......:rolleyes:
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Sadly enough, in the vast majority of circumstances, not nearly enough. :D

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Many labor under the unfortunate misapprehension that they can avoid taxes of various kind by having the asset held in the name of a Delaware (or, sometimes, Nevada) corporation. While that can sometimes delay the detection of the asset by the taxing authorities, it in no way defers or excuses the taxes, and ultimately the owner gets to pay all the taxes, plus the penalties and interest. Even better, they get to pay penalties and taxes for the corporation, because they failed to register it as a foreign corporation in their home state.

Btw, it ** can ** work better for yachts, if they never come to the home state (like someone who lives in a high tax state but keeps the Big Honkin' Yacht in Bimini). Rarely applicable to airplanes, which (presumably) we tend to have convenient to where we are so they can be used.

Bottom line: in the vast majority of circumstances, the principal value of incorporating in Delaware is to the incorporation service, in that they collect fees from the transaction.
 
So none of the financial risk or ultimate responsibility was on you, right?

I'm not an attorney either, but when their advice costs me nothing (fax machine use is free) and eliminates any question about where and when the deal closed, I'm going to take it.

Captain said:
Tax man: you owe Florida tax for N123 bought on January 3rd

You: no, N123 is not in Florida now and was in Tennessee on January 3rd. Further, the plane won't be in Florida until June 3rd to comply with the six month rule.

Tax man: how can you prove it was in Tennessee on the 3rd?

You: I have this here receipt for fuel.


I don't think they are going to look at time stamps to figure it down to the hour and minute. My experience with this is only that I have repoed planes to tax friendly states for this purpose. Once I didn't buy gas. The company went nuts and almost turned me around in the air to go back and buy at least 5 gallons for this purpose. In the end I was saved because I had paid a mechanic to replace a nav light or something. That receipt was used to prove the plane was where we said it was.

I'm not a tax attorney. I just know what we do to stay legal and only my part of it at that.
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texasag93 said:
How does the State of Florida (or any state) find out that you bought an airplane?

Pardon my ignroance.
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They found out from the FAA when I bought my airplane. (I had already paid the tax, then I get the letter saying that they had been notified that I bought an airplane and owed them tax :dunno: )
 
Bwing96 said:
If you buy a plane from an individual in Florida and fly it out on the same day you complete the sale how would they know the sale wasn't completed in another state?
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Got me....maybe they notice the fact it's no longer owned by a Florida resident.. Tax authorities (including the rather voracious ones in Florida) generally send bills assuming you OWE the tax.
 
At the annual NBAA TFR (Tax, Financial and Risk) Conference the aviation tax attorneys laughingly refer to it as "the Delaware myth."

All of the lexisnexis goobly-gook follows shortly thereafter.

SCCutler said:
Sadly enough, in the vast majority of circumstances, not nearly enough. :D

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Many labor under the unfortunate misapprehension that they can avoid taxes of various kind by having the asset held in the name of a Delaware (or, sometimes, Nevada) corporation. While that can sometimes delay the detection of the asset by the taxing authorities, it in no way defers or excuses the taxes, and ultimately the owner gets to pay all the taxes, plus the penalties and interest. Even better, they get to pay penalties and taxes for the corporation, because they failed to register it as a foreign corporation in their home state.

Btw, it ** can ** work better for yachts, if they never come to the home state (like someone who lives in a high tax state but keeps the Big Honkin' Yacht in Bimini). Rarely applicable to airplanes, which (presumably) we tend to have convenient to where we are so they can be used.

Bottom line: in the vast majority of circumstances, the principal value of incorporating in Delaware is to the incorporation service, in that they collect fees from the transaction.
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About six months after I bought my plane, got a letter from Florida saying I owed sales tax, interest, and penalties on the plane. Bought it from a firm in Texas for use in Florida. As I knew I had to pay the tax I sent them a check with appropriate documentation a few days after I purchased the plane. Evidently, they never got the check, and I did not realize it was never cashed. I sent them a new check with a letter saying I had sent them a check before, thankfully kept a photocopy of everything, and sent it certified return receipt this time. Actually I got a very nice letter from them a few weeks later getting rid of the interest, and penalties and accepting my check for payment in full. Could have knocked me over. If this was the IRS I think I would probably be in jail by now.
 
Virginia is even better. Twice they've contacted me: well once me directly and once they called the flying club I had it on lease to and asked if I paid the sales tax. I told them I had and that was the end of it.
 
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