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Just hit with USE tax in TN

B

BillOrcutt

Active Member
After moving to TN 2 years ago, and giving my new address to the FAA, the state of TN wants USE tax on my 2007 RV-7A.

Anyone "crossed this bridge" lately? I'm hoping to minimize the damage.

Thanks,
Bill
 
There are several ways that the various states handle sales and use taxes for aircraft, so you'll need to query someone with tax knowledge specific to Tennessee.

In Florida and many other states, if you can show that you paid sales tax on your plane in another state, then they won't try to charge you sales or use tax again in your own state.
 
One thing that many are not aware of in Tennessee is that if you own a plane for purposes of leasing it, you don't have to pay use tax, but you do have to collect and pay sales tax each time the plane is rented, even to yourself. Given that the costs of operating an RV are so low, one could make the argument that rental per hour should be low and therefore sales tax will be lower. Any flight time for the purposes of maintaining the airworthiness of the aircraft is not taxable. Only aircraft rental revenue is taxable.

I set up (with the help of an law firm in Nashvillle which specializes in aviation law) a LLC for this purpose. The LLC owns a Bonanza and each month I file a sales tax return (takes 5 minutes and a little bookkeeping) and remit sales tax to the Tenn Dept of Revenue. All above board and legal. If you want the name of the law firm, PM me...
 
Minnesota Land of 10,000 Taxes

When I went to register my aircraft in Minnesota I had to pay a tax for the total value of my aircraft, Ouch !!!!!
 
TN use tax

Sales tax receipts are proof that taxes were paid. I had a hard time convincing the local person on my low building cost due to using an engine, avionics, etc. that I had from a previous plane. She would not accept my receipts for a value less than the resale value of the plane. I ended up working with the person in charge in Nashville whom I found to be reasonable. Sorry I don't remember his name. If you don't engage the system they will affix a value that you will not like. Good luck.
 
Mark Dickens said:
One thing that many are not aware of in Tennessee is that if you own a plane for purposes of leasing it, you don't have to pay use tax, but you do have to collect and pay sales tax each time the plane is rented, even to yourself. Given that the costs of operating an RV are so low, one could make the argument that rental per hour should be low and therefore sales tax will be lower. Any flight time for the purposes of maintaining the airworthiness of the aircraft is not taxable. Only aircraft rental revenue is taxable.

I set up (with the help of an law firm in Nashvillle which specializes in aviation law) a LLC for this purpose. The LLC owns a Bonanza and each month I file a sales tax return (takes 5 minutes and a little bookkeeping) and remit sales tax to the Tenn Dept of Revenue. All above board and legal. If you want the name of the law firm, PM me...
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How will this work with an experimental?

What about the annual fee TN imposes on LLC's? (Minimum of $300)
 
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Brantel said:
How will this work with an experimental?

What about the annual fee TN imposes on LLC's? (Minimum of $300)
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AFAIK, TN law doesn't care whether it's experimental or not, but the FARs do prohibit commercial use of experimental aircraft, so this might not work for experimental aircraft. And yes, there's a fee of $300 per year on LLCs here..I pay two of them every year!
 
TN Tax

I bought a Starduster Too in 2005. As a plans built plane with relatively low total flying examples, the TN folks sent me a bill saying for me to pay 7% tax on sales price. The letter also said if I did not respond they would estimate the sales price at $12,500 and send me a bill. I waited for the bill.

When I moved my Cub, which I inherited as a non-flying project. I had owned it in Missouri (at my parents address) while I was finishing up my Army career. I eventually moved it to TN and changed address on registration and I got another bill from the state. They relented when I told them I had inherited the plane and could show it in the families ownership since 1969.

When I bought my Swift, it was registered in Oklahoma and I had to pay 3.25% sales tax. When I moved to TN and changed FAA registration, yep, another bill from the nice folks from the State of Tennessee. When I protested and showed I had paid sales tax in Oklahoma, they allowed me to deduct the difference between TN (7%) and OK (3.25%) taxes. So, I ended up paying more in taxes to TN just for moving than I did in Oklahoma where I bought and registered the plane.

It is a one time excise tax.

I just bought an RV-4 (and thus my presence here now) on which I'll get stuck paying taxes. :(

The good news is I now have an RV-4. :)

The bad news is I'll have to pay more taxes and sell my Swift. :(

Jim
N4WJ
 
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BillOrcutt said:
After moving to TN 2 years ago, and giving my new address to the FAA, the state of TN wants USE tax on my 2007 RV-7A.

Anyone "crossed this bridge" lately? I'm hoping to minimize the damage.

Thanks,
Bill
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Did you already pay a sales tax in an other state?
 
RV3bpilot said:
When I went to register my aircraft in Minnesota I had to pay a tax for the total value of my aircraft, Ouch !!!!!
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But a year ago, the Legislature lowered the annual tax to a hundred or so dollars. Previously, it had been something like 1 or 2% of FMV.

The good thing is that MN doesn't want to know the TRUE value of the vehicle; it just wants the airframe, prop, and engine.

I didn't have a philosophical problem paying the tax; I have to pay an excise tax when registering a new car, too.

and Minnesota's Dept. of Aeronautics is REALLY good.

I know taxes as a general subject are usually met with ways to avoid paying them -- I get that --- on the other hand I do like the idea of local/state officials looking at the balance sheets and saying, "say, those general aviation airports/planes are generating income, let's keep plowing money into the airports and keep some of these strips open."

All that said, that last month or so before first flight is a tough time when it comes to check-writing.
 
RV3bpilot said:
When I went to register my aircraft in Minnesota I had to pay a tax for the total value of my aircraft, Ouch !!!!!
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From what I've read in the MN tax code, we only need to pay sales tax on the airframe, engine, and propellor.

Not that I've actually done this yet...

EDIT: Found the form.

MnDOT TP-08106-04 - This is the AIRCRAFT REGISTRATION APPLICATION and SALES/USE TAX RETURN form.

One of the first questions is if the plane is homebuilt. If Yes, approximate cost to build (Price should include cost of kit, prop, and engine).
 
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JimRice said:
I bought a Starduster Too in 2005. As a plans built plane with relatively low total flying examples, the TN folks sent me a bill saying for me to pay 7% tax on sales price. The letter also said if I did not respond they would estimate the sales price at $12,500 and send me a bill. I waited for the bill.

When I moved my Cub, which I inherited as a non-flying project. I had owned it in Missouri (at my parents address) while I was finishing up my Army career. I eventually moved it to TN and changed address on registration and I got another bill from the state. They relented when I told them I had inherited the plane and could show it in the families ownership since 1969.

When I bought my Swift, it was registered in Oklahoma and I had to pay 3.25% sales tax. When I moved to TN and changed FAA registration, yep, another bill from the nice folks from the State of Tennessee. When I protested and showed I had paid sales tax in Oklahoma, they allowed me to deduct the difference between TN (7%) and OK (3.25%) taxes. So, I ended up paying more in taxes to TN just for moving than I did in Oklahoma where I bought and registered the plane.

It is a one time excise tax.

I just bought an RV-4 (and thus my presence here now) on which I'll get stuck paying taxes. :(

The good news is I know have an RV-4. :)

The bad news is I'll have to pay more taxes and sell my Swift. :(

Jim
N4WJ
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The even better news is that you own a really great RV4!
I loved that plane and I'm glad it didn't get to far away.
 
I'm sure fortunate to live in Texas and enjoy the benefit of the "occasional sale" tax exemption. :)
 
Neal@F14 said:
I'm sure fortunate to live in Texas and enjoy the benefit of the "occasional sale" tax exemption. :)
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Same in AZ, and the annual personal property tax is $25 for experimentals rather than some state set value depending on initial cost and age.:)
 
I just bought an RV-4 (and thus my presence here now) on which I'll get stuck paying taxes. :( The good news is I now have an RV-4. :) The bad news is I'll have to pay more taxes and sell my Swift. :( QUOTE said:
Tell you what, you can register it at my Texas address (no taxes) if you leave it here a month out of the year! :D
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