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

This column is the first of the third 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 will focus on a particular region of the United States – namely the Northeastern- Southeastern- Mid-Western and Western States.

In this column- 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. In addition- we will discuss whether or not each state has a “fly-away” exemption from its sales and use tax.

A fly-away exemption typically permits a buyer of an aircraft who takes delivery of the aircraft in a particular state to remove the aircraft from that state following the purchase of the aircraft without paying that state’s sales or use tax- provided that the conditions of the exemption are met.

Without further ado- here’s a lowdown on state sales and use taxes within the individual states- any changes introduced- or due- and fly-away exemption issues:

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 rate was scheduled to drop to 5.5%. However- the reduced rate did not take effect because the conditions set forth in the legislation that provided for the rate reduction were not met. Sales of- and the storage- use or other consumption of aircraft having a maximum ‘certificated takeoff weight’ of 6-000 pounds or more continue to be exempt from Connecticut sales and use tax. ‘Certificated takeoff weight’ is the maximum weight contained in the aircraft’s type certificate or airworthiness certificate.

Connecticut has a very narrow fly-away exemption from its sales and use taxes. The exemption is available only to sales of aircraft made by a Connecticut manufacturer of such aircraft to aircraft purchasers who are nonresidents- who will not use such aircraft in Connecticut- and who remove the aircraft from Connecticut immediately following the delivery of such aircraft.

DELAWARE
Delaware has no sales or use 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. As Delaware has no sales or use tax- it also provides for no flyaway exemption from those taxes.

MAINE
Maine has a state sales and use tax imposed at a rate of 5%. Sales (or leases) of aircraft that weigh over 6-000 pounds ‘maximum certificated takeoff weight’ as determined by the FAA- and that are propelled by one or more turbine engines are exempt from sales and use tax.

In addition- any aircraft purchased by a non-resident outside Maine that is used in Maine for 20 days or less- excluding days in the state for major repairs or alterations or for preventative maintenance- is exempt from use tax. There have been no recent material changes to Maine’s sales and use tax laws with respect to aircraft and aviation related matters.

Maine has a limited fly-away exemption from its sales and use taxes. The exemption is available only for sales of aircraft to aircraft purchasers who are non-residents and who remove the aircraft from Maine immediately following the delivery of such aircraft.

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. Maryland does not have a fly-away exemption from its sales and use taxes.

MASSACHUSETTS
Massachusetts has state sales and use taxes imposed at a rate of 6.25%. Massachusetts continues to exempt sales and use of aircraft from its sales and use taxes. There have been no recent material changes to the sales and use tax laws of Massachusetts with respect to aircraft and aviation related matters. In addition- as Massachusetts exempts sales of aircraft from its sales and use taxes- there is no need for a fly-away exemption from those taxes and none exists.

NEW HAMPSHIRE
New Hampshire has no state sales and 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.

New Jersey has a limited fly-away exemption from its sales and use taxes. The exemption is available only for sales of aircraft to purchasers who (i) are non-residents of New Jersey; (ii) have no permanent place of abode in New Jersey; (iii) are not engaged in carrying on in New Jersey any employment- trade- business or profession in which the aircraft will be used in the state; and (iv) will not base- or otherwise place the aircraft in New Jersey for use on other than a transient basis- or for repairs at any time within twelve months from the date of purchase.

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 4.875%. New York does not have a fly-away exemption from its sales and use taxes.

PENNSYLVANIA
Pennsylvania has a state sales and use tax imposed at a rate of 6%. However- sales of helicopters and similar rotorcraft are exempt from Pennsylvania’s sales and use taxes. There have been no recent material changes to Pennsylvania’s sales and use tax laws with respect to aircraft and aviation-related matters. Pennsylvania does not have a flyaway exemption from its sales and use taxes.

RHODE ISLAND
Rhode Island has a state sales and use tax imposed at a rate of 7%. The sale- storage- use- or other consumption in Rhode Island of any new or used aircraft is exempt from Rhode Island sales and use taxes. 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.

As Rhode Island exempts sales of aircraft from its sales and use taxes- there is no need for a fly-away exemption from those taxes and none exists.

VERMONT
The Vermont sales and use tax rate is 6%. Municipalities are authorized to impose an additional 1% local option sales tax. There have been no recent material changes to Vermont’s sales and use tax laws with respect to aircraft and aviation related matters. Nor does Vermont have a fly-away exemption from its sales and use taxes.

In the January 2011 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.

Please keep in mind that this article serves as a general and broad overview of state sales and use tax laws and does not constitute legal advice or a legal opinion. Therefore- it is always advisable to consult with qualified aviation counsel when considering any questions regarding the application of sales and use tax in a particular situation- or to a particular transaction.

Christopher Younger is an attorney at the Law Offices of Christopher B. Younger- LLC. He is a tax and FAA specialist concentrating in the areas of corporate aircraft transactions and aviation taxation. He has extensive experience in planning and implementing unique aircraft ownership and operating structures on a global level. He has worked on numerous tax audits with the IRS and with various state taxing authorities. 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 offices at 47 East All Saints Street- Frederick- Maryland 21701; telephone (301) 696 5735; email: cbyounger@cbyoungerlaw.com


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