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

This column is the first installment in the fourth 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- we focus on a particular region of the United States each quarter – namely the Northeastern- Southeastern- Midwestern and Western States. In this column- we review Northeastern States- namely Connecticut- Delaware- Maine- Maryland- Massachusetts- New Hampshire- New Jersey- New York- Pennsylvania- Rhode Island and Vermont.

Additionally- we will discuss whether or not each state has an exemption from its sales and use tax for casual- isolated or occasional sales of aircraft. An exemption for casual- isolated or occasional sales of aircraft typically permits a buyer of a used aircraft to take delivery and/or use such aircraft in a state with such an exemption without paying that state’s sales or use tax- provided that the specific conditions of the exemption are met.

Those conditions vary from state to state and typically require that either- or both of the seller and buyer not be habitually engaged in the sale of aircraft or- in some instances- of any tangible personal property; that the seller and buyer be affiliated business entities; or- in the case of individual buyers and sellers that they have a certain family relationship with one another.

Following is a summary of aviation related 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%. 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 exemption from its sales and use taxes for the sale of an aircraft pursuant to certain corporate reorganizations and for sales of an aircraft by an individual to the spouse- mother- father- brother- sister or child of such individual.

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 exemption from those taxes for casual- isolated or occasional sales.

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.

Sales- use or leases of aircraft and sales of repair and replacement parts exclusively for use in aircraft- or in the significant overhauling or rebuilding of aircraft- aircraft parts or components are exempt from Maine sales and use tax from July 1- 2011 to June 30- 2015. This new law pre-empts the prior exemption from Maine use tax for 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.

This change in the law was enacted to clarify that aircraft brought into Maine by a non-resident will not be subject to Maine use tax regardless of the number of days they remain in Maine- and to add the exemption from Maine sales tax for aircraft repair and replacement parts as described above.

Maine has a very narrow isolated sales exemption from its sales and use taxes for the sale of an aircraft to a corporation- partnership- limited liability company or limited liability partnership if the seller is the owner of a majority of the common stock of the corporation or of the ownership interests in the partnership- limited liability company or limited liability partnership.

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 has a very narrow isolated sales exemption from its sales and use taxes for the transfer of an aircraft pursuant to certain corporate reorganizations.

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- however. There have been no recent material changes to the sales and use tax laws of Massachusetts with respect to aircraft and aviation related matters.

As Massachusetts exempts sales of aircraft from its sales and use taxes- there is no need for an exemption from those taxes for casual/isolated/occasional sales of aircraft.

NEW HAMPSHIRE
New Hampshire has no state sales and use taxes- and therefore has no exemption from those taxes for casual- isolated or occasional sales.

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 an exemption from its sales and use tax for an isolated or occasional sale of an aircraft by a person who is not regularly engaged in the business of making retail sales of aircraft where the aircraft was obtained by the person making the sale- through purchase or otherwise- for that person’s own use in New Jersey.

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 exempt casual/isolated/occasional sales of aircraft from its sales and use taxes. Furthermore- effective as of August 11- 2010 New York removed an exemption from its sales and use tax for isolated transfers of aircraft pursuant to corporate reorganizations so that those transfers are now subject to such 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 exempt casual/ isolated/occasional sales of aircraft 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.

In addition- as Rhode Island exempts sales of aircraft from its sales and use taxes- there is no need for an exemption from those taxes casual/isolated/occasional sales of aircraft - although it does have such an exemption.

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.

Vermont does exempt casual sales of tangible personal property from its sales and use taxes - however- the definition of ‘casual sales’ specifically excludes sales of aircraft.

NEXT TIME…
In the January 2012 issue of World Aircraft Sales Magazine- we will take a state-by-state look at the Southeastern United States- which we previously reviewed in the January 2011 issue.

Christopher B. Younger is a member of the Business Aircraft Group at GKG Law- P.C. He is a tax and FAA specialist concentrating in the areas of corporate aircraft transactions and aviation taxation.

Mr. Younger can be reached at the firm’s Washington- DC office- 1054 31st Street- NW- Suite 200- Washington- DC 20007- telephone: (202) 342-5295- facsimile: (202) 342-5203- e-mail: cyounger@gkglaw.com.

Do you have any questions or opinions on the above topic? Get them answered/published in World Aircraft Sales Magazine. Email feedback to: editorial@avbuyer.com 


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