IRS/State tax request for Airplane just flying by?

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JasonM

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JM
Good friend of mine got a letter in the mail from a state he has only landed in 2 times in the past 5 years, demanding he pay a sales and use tax for the airplane that is not even based in that state. Anyone seen this happen? Best we could guess was the state was tracking how often he uses an ARTCC based in that state in route to another state. Am I to expect to see this same stuff? Makes you want to fly VFR with the transponder off if these states are just hunting the ARTCC records to get tax money.
 
I'm pretty sure you can't be taxed by a state for overflight or ATC use, considering airspace and ATC is all federally controlled and regulated. I'd probably tell them to stuff it, but that's just me...
 
Was this Rhode Island? I thought I remembered hearing about this sort of thing a while back.
 
I'd send them a piece of pine with Golf Foxtrot Yankee etched into it.
 
EdFred said:
I'd send them a piece of pine with Golf Foxtrot Yankee etched into it.
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I don't think I'd waste a perfectly good piece of wood; perhaps a more appropriate material.
 
Well, is it the IRS or a State? While some states do this, I highly doubt he only landed twice in 5 years if he caught the eye of the State. Was it maybe in a state for a while during some maintenance work?
 
Ignore it. They're on a fishin' trip looking for suckers. Friend of mine got a bill From Maine. He'd landed there only to refuel. He didn't respond and never heard more from them.
 
There is also the possibility a similar tail number, or even a bottlegged tail number, was seen on a plane tied down somewhere in the state. These things usually start with visual spottings, not state tax trolls monitoring FlightAware.

I once got a notice I was being put into collection for an unpaid 100LL bill at an FBO in Florida. I had never had the airplane in Florida, in part because it was an experimental which I had not finished building yet. (It also used auto fuel and had a fuel capacity less than half the gas the bill was for.)

This could just be a mistake. It should be pretty clear with a phone call or two.

But yes - states are trying to tax transient aircraft. Most of these use tax laws require the aircraft to have spent some minimum time in the state, and they all allow credit for any sales or use tax you've already paid in your own state. Some now also specifically exempt time at a maintenance facility.

I don't anticipate doing much interstate flying in a gyroplane, but I may do some trailering. Having seen stories of some massive and unexpected tax bills (6% of the MSRP of an SR22!) I intend to research these things before I travel.
 
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Norman said:
Ignore it. They're on a fishin' trip looking for suckers.
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That's a really bad idea. Use taxes have been upheld in court, and if it takes six years to get you, they'll add penalties and interest at least as far back as their notice to you. Go online and look up the tax law in that state, draft a logical, dispassionate reply letter, and get confirmation of its receipt by the state tax authority. Then you can exhale.

And if your research shows you do in fact owe the money, call a tax attorney!
 
It costs a state millions of dollars to keep an atmosphere affixed to the surface of the earth. And millions to keep the surface of the earth from falling away to the infinite depths of space. In fact there are so many uncountable services a state provides that makes flying possible that I'm surprised anyone would complain about this issue. Just pay the damn taxes and be thankful none of those services are being provided by large corporations.
 
MichiPilot said:
Well, is it the IRS or a State? While some states do this, I highly doubt he only landed twice in 5 years if he caught the eye of the State. Was it maybe in a state for a while during some maintenance work?
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Maybe the previous owner had it registered in that state, and they are just going by N-number? :dunno:
 
PW_Plack said:
That's a really bad idea. Use taxes have been upheld in court, and if it takes six years to get you, they'll add penalties and interest at least as far back as their notice to you. Go online and look up the tax law in that state, draft a logical, dispassionate reply letter, and get confirmation of its receipt by the state tax authority. Then you can exhale.

And if your research shows you do in fact owe the money, call a tax attorney!
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I agree.

I got a letter from the State of Florida about a year after I bought it. The letter was very terse legalese and basically accused me of violating the use tax statutes and demanded that I pay my 6.5% use tax + penalty and interest. I mailed them a copy of my use tax submission form, my receipt and my cancelled check. I never heard from them again.
 
Its Pennsylvania.

He lives is all over the place for extended periods of time but has been recently working in Northern VA and traveling across PA from northern WV where he is staying right now. He said he had only landed in PA a couple times in the past 5 years. Last time was over 6 months ago. His home base is in North Dakota, where his airplane is registered. He is just not in ND that often due to his work and travel schedule. I could see WV or VA maybe making a stink since he is based in WV and fly's to VA almost every other day, but PA??
 
Some state tax codes are written such that if you fly over in a jet while working they expect income tax to be paid while you were over their kingdom. Doubt anyone pays it but maybe they do watch the rich.
 
Jim Logajan said:
It costs a state millions of dollars to keep an atmosphere affixed to the surface of the earth. And millions to keep the surface of the earth from falling away to the infinite depths of space. In fact there are so many uncountable services a state provides that makes flying possible that I'm surprised anyone would complain about this issue. Just pay the damn taxes and be thankful none of those services are being provided by large corporations.
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I pay enough taxes already, but if you would like to contribute on my behalf, please do.. :D
 
PW_Plack said:
That's a really bad idea. Use taxes have been upheld in court, and if it takes six years to get you, they'll add penalties and interest at least as far back as their notice to you. Go online and look up the tax law in that state, draft a logical, dispassionate reply letter, and get confirmation of its receipt by the state tax authority. Then you can exhale.

And if your research shows you do in fact owe the money, call a tax attorney!
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I'd have my attorney write up the initial response regardless. Show 'em you mean business.
 
ClimbnSink said:
Some state tax codes are written such that if you fly over in a jet while working they expect income tax to be paid while you were over their kingdom. Doubt anyone pays it but maybe they do watch the rich.
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What states would that be?
 
JasonM said:
Its Pennsylvania.

He lives is all over the place for extended periods of time but has been recently working in Northern VA and traveling across PA from northern WV where he is staying right now. He said he had only landed in PA a couple times in the past 5 years. Last time was over 6 months ago. His home base is in North Dakota, where his airplane is registered. He is just not in ND that often due to his work and travel schedule. I could see WV or VA maybe making a stink since he is based in WV and fly's to VA almost every other day, but PA??
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Where in PA did he land?
 
Virginia tried to hit me up for the Use tax. I promptly paid it (and bought the $10 state registration) when I ferried my plane back into the state. They then about six months later were mining the registration records or something and tried to hit me up again.

I guess it's easier to send bills out to people shotgun than to figure out if they actually OWE the tax first. They figure you'll gripe if you don't owe it.
 
State revenue departments are generally screwed up. Respond with a certified letter requesting the statute in which they wish to tax you. I suspect they will find none. However, if the plane is based in the state, that is a different issue. Whatever you do, do not ignore the letter. Get it taken care of/cleared up immediately and have proof when you do.
 
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It's always a bad idea to ignore a letter from the IRS or a state revenue department. Always!
 
Penalties and fines add up very quickly,always better to answer any letters from tax agencies. Always ask for a copy of the code they are collecting on.
 
They picked up his N number in PA, saw it was registered in Montana, assumed he lived in PA and was dodging taxes by registering in MT! ;) I bet I'm pretty close to the truth on this one! Montana registration is used to avoid sales tax by some people, perfectly legal, if you live in Montana! ;)
 
Yeah, I've landed in PA plenty of times, multiple times a year, and never gotten a notice from them saying I owed taxes. John is probably on the money with his guess. Along with all the DE registered planes.
 
When I was an airline manager at San Diego in the 1980s, California wanted us to have a liquor license to serve first class booze on the ground before takeoff. We stopped doing that.

They also charged a fuel tax for all fuel burned in the State. I had to compute the miles and fuel burn from SAN to the State Line for flights going East.
 
Mason said:
When I was an airline manager at San Diego in the 1980s, California wanted us to have a liquor license to serve first class booze on the ground before takeoff. We stopped doing that.

They also charged a fuel tax for all fuel burned in the State. I had to compute the miles and fuel burn from SAN to the State Line for flights going East.
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Only in California! :rofl:
 
murphey said:
on top of the sales tax for buying the fuel in California?
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Some airlines don't BUY the fuel in state and therefore do not pay the sales tax.; they tanker it in. Some airlines have fuel sources, or had, back then in the 1980s that were exempt from the usual fuel taxes an FBO might have to charge your typical King Air. Airlines often arrange their own suppliers, which can be from out-of-state, and then arrange a local tank farm operator, typically the FBO, to store the fuel for them. They don't buy the fuel locally, they have a national contract. They buy the fuel somewhere, pay the appropriate taxes at the point of sale, and then "import" it to the point of use. CA did not like that.
 
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PW_Plack said:
That's a really bad idea. Use taxes have been upheld in court, and if it takes six years to get you, they'll add penalties and interest at least as far back as their notice to you. Go online and look up the tax law in that state, draft a logical, dispassionate reply letter, and get confirmation of its receipt by the state tax authority. Then you can exhale.

And if your research shows you do in fact owe the money, call a tax attorney!
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:yeahthat:
 
Actually, Texas assesses a liquor tax on any flight operating in or through the state, not just for drinks served on the ground. Every drink you get on a plane that takes off or lands in Texas gets a nickel sent to the state. The airline also has to buy a liquor license.
 
While you are talking about fuel taxes, it's also a good example of how people/companies react to paying what they think are unfair taxes in certain states or even countries. ;) When taxes are disproportionately higher in one jurisdiction, people will find ways to do business in a place with lower taxes, then the states spend a huge amount of money to figure out a way to collect their share. :mad2:


Mason said:
Some airlines don't BUY the fuel in state and therefore do not pay the sales tax.; they tanker it in. Some airlines have fuel sources, or had, back then in the 1980s that were exempt from the usual fuel taxes an FBO might have to charge your typical King Air. Airlines often arrange their own suppliers, which can be from out-of-state, and then arrange a local tank farm operator, typically the FBO, to store the fuel for them. They don't buy the fuel locally, they have a national contract. They buy the fuel somewhere, pay the appropriate taxes at the point of sale, and then "import" it to the point of use. CA did not like that.
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