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REGIONAL SALES & USE TAX FORUM (Northeastern States 2009)

October 2009

Category: Business Aircraft - Tax

Author: Christopher B. Younger

State Sales And Use Tax Forum
Regional update on the Northeastern United States.


This column is the first of the second annual series of quarterly columns describing recent changes to aviation related state sales and use tax issues and, where pertinent, other aviation related tax issues in various regions of the United States. As was the case with the last series of quarterly columns, each quarter, we will focus on a particular region of the United States – namely the Northeastern, Southeastern, Mid-Western and Western States.

This month, we review any recent changes to state sales and use taxes in the states located in the Northeastern region of the United States; namely Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont. Without further ado, here’s a lowdown on state sales and use taxes within the individual states and any changes introduced, or due, within said state:

CONNECTICUT
Connecticut has a sales tax and a use tax imposed at a rate of 6%. Effective January 1, 2010, the sales tax and the use tax rates are scheduled to drop to 5.5%. The reduced rate will not take place if, before January 1, 2010, the state Comptroller's cumulative monthly financial statement indicates that the estimated gross tax revenue to the General Fund at the end of the fiscal year ending June 30, 2010 is at least 1% less than the fiscal year 2010 revenue estimate.

In addition, if the rate reduction takes effect in January and any of the Comptroller's monthly statements issued between January 1, 2010 and July 1, 2010 are at least 1% less than the estimated tax revenue, the rate will be increased back to 6%.

There have been no recent material changes to Connecticut’s sales and use tax laws with respect to aircraft and aviation related matters. Connecticut continues to exempt from its sales and use tax purchases of aircraft that weigh over 6,000 pounds.

As is the case with most states, Connecticut has been struggling with budgetary constraints and is seeking ways to increase state revenues. The state legislature recently considered ending the state’s sales tax exemption for charges relating to general aviation parts and maintenance for aircraft weighing less than 6,000 pounds. The repeal of this exemption was included in proposed legislation introduced for consideration by the legislature.

However, the proposed bill was not passed and, therefore, the proposed change did not become law.

DELAWARE
Delaware has no sales tax, and there have been no recent material changes to Delaware’s sales and use tax laws with respect to aircraft and aviation related matters. Delaware also continues to exempt from its gross receipts tax sales of aircraft with an MTOW over 12,500 pounds.

MAINE
Maine has a state sales and use tax imposed at a rate of 5%. Last year’s column on the Northeastern United States (WAS, Oct 08, p218) contained a discussion of issues relating to Maine’s sales and use taxes and the state’s position regarding the imposition thereof on aircraft flown into or imported into the state. There have been no new developments with respect to that issue, or regarding any other issues relating to the imposition of Maine sales and use taxes on aircraft and related items.

MARYLAND
Maryland has a state sales and use tax imposed at a rate of 6%. There have been no recent material changes to Maryland’s sales and use tax laws with respect to aircraft and aviation related matters since the publication of last year’s quarterly forum on the Northeastern United States.

MASSACHUSETTS
Effective August 1, 2009, Massachusetts has a state sales and use tax imposed at a rate of 6.25% (the rate was 5% prior to August 1, 2009). There have been no recent material changes to the sales and use tax laws of Massachusetts with respect to aircraft and aviation related matters since the publication of last year’s quarterly forum on the Northeastern United States.

NEW HAMPSHIRE
New Hampshire has no state sales/use taxes.

NEW JERSEY
New Jersey has a state sales and use tax imposed at a rate of 7%. There have been no recent material changes to the sales and use tax laws of New Jersey with respect to aircraft and aviation related matters since the publication of last year’s quarterly forum on the Northeastern United States.

NEW YORK
New York has a state sales and use tax imposed at a rate of 4%. In addition, New York localities and special taxing districts/authorities may impose additional sales and use taxes at rates up to 4.5%.

There are two new issues relating to the imposition of New York’s sales and use taxes on aircraft and aviation related items. First, the good news is that New York Governor David Paterson has signed into law a repeal of the sunset date for the state sales tax exemption on the maintenance and repair of general aviation aircraft. The bill makes the tax exemption permanent. It was originally to have expired on December 1, 2009.

Secondly, in its budget for 2009/2010, New York changed the way that it interprets the requirements for the application of its exemption from New York sales and use taxes for “commercial aircraft” operations.

The change narrows the definition of the types of flights that may be used to qualify aircraft operations for that exemption. Although the details of this change are beyond the scope of this forum, the change basically affects those taxpayers who rely on the use of aircraft by affiliated companies to qualify for the commercial aircraft exemption by eliminating the taxpayer’s ability to use those flights in order to determine whether an aircraft is being flown commercially.

PENNSYLVANIA
Pennsylvania has a state sales and use tax imposed at a rate of 6%. There have been no recent material changes to Pennsylvania’s sales and use tax laws with respect to aircraft and aviation related matters since the publication of last year’s quarterly forum on the Northeastern United States.

RHODE ISLAND
Rhode Island has a state sales and use tax imposed at a rate of 7%. There have been no recent material changes to the sales and use tax laws of Rhode Island with respect to aircraft and aviation related matters since the publication of last year’s quarterly forum on the Northeastern United States.

VERMONT
The Vermont sales and use tax rate is 6%. Municipalities are authorized to impose local sales and use taxes. There have been no recent material changes to Vermont’s sales and use tax laws with respect to aircraft and aviation related matters since the publication of last year’s quarterly forum on the Northeastern United States.

In the January 2010 issue of World Aircraft Sales Magazine, we will take a state-by-state look at the Southeastern United States, including: Alabama; Arkansas; Florida; Georgia; Kentucky; Louisiana; Mississippi; North Carolina; South Carolina; Tennessee; and Virginia.

Christopher Younger is the owner of the Law Offices of Christopher B. Younger, LLC. He concentrates his practice in the areas of business and personal aircraft transactions and aviation taxation. Providing extensive experience in planning and implementing a wide variety of aircraft ownership and operating structures, each designed to take into account his client’s specific needs, he has also worked on numerous tax audits with the IRS and with various state taxing authorities involving the taxation of aircraft and aviation related transactions.

The Law Offices of Christopher B. Younger, LLC provides full-service tax and regulatory planning and counseling services to business aircraft owners, operators and managers. The firm’s services include Code Section 1031 tax-free exchanges, federal tax and regulatory planning, state sales and use tax planning, and preparation and negotiation of transactional documents commonly used in the business aviation industry, including aircraft purchase agreements, leases, joint-ownership and joint-use agreements, management and charter agreements, and fractional program documents.

Mr. Younger can be reached at the firm’s Frederick, Maryland office located at 4905 Shelburne Court, Jefferson, Maryland 21755. Telephone (301) 534- 2428, email: cbyounger@cbyoungerlaw.com

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