Wait as long as possible
alpinelakespilot2000 said:
The thread about taxes in Illinois prompted me to begin thinking/planning for whatever tax consequences there may be for us building in Washington State. Didn't find anything in the forum thus far.
1. What taxes should I anticipate having to pay (and to whom are they paid)by the time I'm done with my project?
2. When will they need to be paid?
3. Any suggestions for minimizing those taxes?
Thanks for any help.
Well I would NEVER tell you to do anything illegal. Second it was a one time "sales tax" and than a very reasonable sticker fee yearly. That pays for search and rescue.
I lived in Washington state and payed tax on airplanes. Homebuilders tried to ignore it based on the fact the law says if you are the manufacture you don't need to pay tax. That argument has failed for those who where caught.
If caught? Well they don't know you have plane until you have a plane registered. Even than they may not call you. Usually they have state police walk airport ramps and take down N #'s. Than they check the record. They may now may just "farm" the FAA data base to WA drivers licenses. I paid, but some made sport of it. I did not want to worry about parking my plane outside during the day time.
Now should you pay as you go for each kit, tail, wing, fuselage, finish? I would not but that is the law in some states. I would wait as long as possible, if legally possible.
So how do they value the airplane? It was loose before at least 10 years ago. If you bought a finished plane, certified or experimental, they just looked at what ever was written on the FAA bill O sale.
What about kits you build? You go in and show them receipts. One RV'er just showed them the receipts for the kit, that was it, no engine or prop. It's really just you and the auditor sitting across the table. They are going to expect the value to be reasonable. Now how knowledge are they? I don't know but I bet they are smarter than they where 10 years ago. I think if you go in and contemptible they may stick it to you. If you are nice and reasonable and not obvioulsy and purposely duplicitous you will be fine. You will no doubt get brownie points going in on your own verses them calling you in.
I hope they don't expect you to now pay on finished hull value, that would be painful. Any thing you can do to lower the tax value and liability with in the law the better. One RV can be worth $40,000 and another $120,000. One RV can cost $40,000 to build, another $80,000. There is wiggle ROOM.
Past threads suggest paying for each kit As-You-Go, so when you pay tax on the last kit you are done? I don't know if that's a good way or not? Washington state may not be set up for that. I'm sure if you go in and say, here's some money they'll take it.
I don't think there is a problem waiting until you get it registered and flying, and that is typical. You probably even have some time after you are flying before they call you.
Some states DO expect you to pay as you go. I think New York is one state that does expect you taxes on the parts, not the plane. Of course if you don't finish your plane you are out the tax. There is grumbling from many states that they want to crack down on ALL tax free mail order.
Washington state most likely does not know you have a plane until you register it. Even then its hard to know how they would catch you. The data is there, but it seemed they only acted if they physically caught you. One guy I knew just paid after flying his RV-4 for a few years, with no fine or back taxes. I would not push it my self, but since its a one time tax than its not as critical. Tax could add up in states that charge tax yearly. I guess what I am saying is know the law and the dept of revenue is in the blue pages, call them (from a pay phone with alias or pseudonym
).
Keep all your receipts and show them the ones you want, I mean you have when you go in.
