Ohio RV Builders--Sales tax?

Just got pinged by the Ohio Department of Taxation for several thousand dollars of "Sales tax" even though I bought the kit out-of-state. Anyone else heard a similar thing from our helpful tax people???

Wayne 120241/N143WM someday

They will get Ya!

yankee-flyer said:

Just got pinged by the Ohio Department of Taxation for several thousand dollars of "Sales tax" even though I bought the kit out-of-state. Anyone else heard a similar thing from our helpful tax people???

Wayne 120241/N143WM someday

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If its like California, if they don't get you on Sales Tax, they get you on Use Tax, which is incidentally the same amount.

The ha ha good news is they can't get you on both.

But, they will most likely send you a property tax statement sometime within a year.

I called the state tax division when I placed my order..

Sales tax paid to Ky on my personal tax return this year. They are happy and I can sleep good knowing I won't get a huge bill at the end of our rv project. Yes, I am also paying property tax on the "tangible goods" in my shop come October. It is definitely not cheap building or owning an airplane but will be worth it in the end.

What is the rate of taxation on the airplane in Ohio?

Do they also have a use tax or is just a sales tax?

I have heard the tax only needs to be paid on the airframe cost not anything else. Say for example you have $100k in an RV X:

$25k airframe kit
$25k engine
$25k instruments
$10k prop
$10k in finishing kit/fwd kit
$5k in misc. cost
----
$100k total

The tax only has to be paid on the $25k airframe kit not the other cost. Is that the case with your Ohio tax bill?

Thanks
Ben

Sales Tax

Thats why I live in New Hampshire - No sales tax. But, we have to be careful not to fly to maine with a new airplane as they will send you a bill for their 6% sales tax.

Art Pennanen

I sent them a check a few weeks ago along with an Ohio "VP USE" form. I included a letter stating what the payment was for and put my N number on everything. I'm sure they'll still hit me up when I go to register the plane, but hopefully I can just show them copies of my letter and payment.

In Kansas, besides Sales/Use Tax, we have to pay annual property tax on airplanes that are less than 30 yrs old. For a $20K Cessna 152, the tax is $1,000/year. I asked them what the property on an RV-12 would be. They said they'd tax it based on "market value" of roughly $120K, meaning the tax amount is $6,000/year. It's ironic that property tax on aircraft is so high in a state that proclaims to be the Aircraft Manufacturing Capital.

Does Kansas have the same tax on a recreational vehicle? If not, that may get you some leverage to change the aircraft tax.

Kansas does have the same tax on boats, jet skis, ATV, etc.

http://www.ksrevenue.net/pdf/forms/PPRendition.pdf

Lionclaw said:

I sent them a check a few weeks ago along with an Ohio "VP USE" form. I included a letter stating what the payment was for and put my N number on everything. I'm sure they'll still hit me up when I go to register the plane, but hopefully I can just show them copies of my letter and payment.

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Can you tell me where you sent that letter? I'm handling this by paying use tax on each part of the kit that I buy during the tax year, but it just goes as a lump sum on the state tax form with nothing to tie it back to the RV-23 kits but a stack of receipts. Purchases from Amazon.com and other sites that don't collect sales tax are included in those amounts too. I'd like to have something a little more solid to show that these items were specifically included in the tax that I've already paid.

Canada,Chile??

Wow, $6k/yr!! I'm glad I don't live in Kansas with a RV. I'm afraid that kind of yearly tax would be the final stick on the camel's back and drive me out of flying. But with the tax revenues falling in most all states, those high Ka. type taxes might not be far in the future for the rest of us. Does anyone know what tax liability would be incurred by owing a nice RV in western Canada or Chile?

Dgamble said:

Can you tell me where you sent that letter? I'm handling this by paying use tax on each part of the kit that I buy during the tax year, but it just goes as a lump sum on the state tax form with nothing to tie it back to the RV-23 kits but a stack of receipts. Purchases from Amazon.com and other sites that don't collect sales tax are included in those amounts too. I'd like to have something a little more solid to show that these items were specifically included in the tax that I've already paid.

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http://tax.ohio.gov/documents/forms/sales_and_use/Generic/ST_VPUse.pdf

I sent it to the address on the form. I put a small blurb to the right of the signature block about what the payment was for along with my N-number, and I included a letter. I called the tax dept a while back and they told me to use this form. They may not care what it's for, or even keep anything that I sent them, but at least I have copies of all of it.

Here's a quote from the form, "The use tax was primarily enacted to protect Ohio businesses from sales lost to out-of-state retailers." I would contest that since there is no such businesses in Ohio there is no lose of sales to Ohio retailers. If Vans opens up an Ohio retail store, I'll gladly pay my tax....or if Ohio 'suggests' I pay it.

When I moved my project from Indiana to Ohio I wrote a letter to the Ohio Department of Taxation. They told me just pay the use tax on my tax form. There is no difference between buying a clothe online and buying RV kit or avionics. Since the total amount I paid over the years I was building is more than the estimated cost of the airplane I can show the tax man that I have paid my share of the use tax. This is what I am doing for my 10.

I do know another person who received letter from the Department of Taxation asking him to pay the use tax. I don't know how he handled this.


Ted

Don't know, but suspect most states will charge sales tax if they know about your build. In Georgia the state monitors new aircraft registrations and contact owners for the tax. (7% of total). Counties do the same thing for personal property tax which charges based on est value. Most RV's run $6-700 year. Death and taxes -you can't get away from either.
Dick Seiders

ARPENN said:

Thats why I live in New Hampshire - No sales tax. But, we have to be careful not to fly to maine with a new airplane as they will send you a bill for their 6% sales tax.

Art Pennanen

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So, does this mean when you drive your new Lexus from NH to Maine for a nice lobstah dinner that you have to pay a 6% sales tax to Maine for the privilege of visiting their fine state? And when is a new airplane no longer new?
Seems pretty short-sighted for a state that depends on tourism for survival.

George

annual airplane taxes?

Sheesh...
I will never live in Kansas. So as you depreciate the aircraft out over the years does the annual tax fee drop as well? It seems downright criminal to tax an RV-12 at 6K per year. You should be able to OPERATE your RV-12 for 6K per year. 12K per year for an RV-12...forget it.
Taxation without representation. I am sure most people in Kansas are not in agreement with the state legislature regarding the taxation of boats, airplanes, RV's, ATV's and motorcycles annually.

There are two guys here in NC that built a $250K homebuilt and didn't pay any sales tax until it was an "airplane". It turns out NC puts a cap on sales tax for an airplane and after it was flying, they wrote that check and IIRC, it was something like $3500.

NC also has annual property tax on planes, boats, cars, motorcycles, trailers, etc. The good news is we can set the tax amount and then it depreciates from that point on, same as a car.

I would like to hear from others in NC about capping the property tax to the builders of planes, boats, cars, etc. to the original builder. If the vehicle is sold, then the buyer would pay based on the purchase price. Realizing that local governments are trying to maximize tax revenue, this might be difficult. However, if any of you have any experience with changing laws, please contact me.

Airplane tax in Kansas

aarvig said:

Sheesh...
I will never live in Kansas. So as you depreciate the aircraft out over the years does the annual tax fee drop as well?

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Yes, the property tax drops as the plane depreciates, but get this...on the yearly Property Declaration form, you have to report the SMOH hour of the engine (backed the engine log if they ask for it). So, when you overhaul the engine or put in a new one, they jack up the plane value and your tax goes way up. It's legal robbery.

All of us RV builders at KHAO (north side of Cincinnati) got the letter and had to pay Ohio 'use tax', which is the same rate as sales tax. We had to include receipts proving the cost of items purchased out of state on which sales taxes were not collected. Any of the airplanes over 5 years old were not included in this 'raid on our bank accounts'. It didn't really matter if the items purchased were available in Ohio or not. You had to pay based on the sales tax rate in the county in which you lived. For me it was 6%. An interesting question is, why should I have to pay sales tax on an item sold in a state or county that has no sales tax - like Oregon? Theoretically, if you bought a pair of shoes in Portland, you would pay no sales tax because there isn't one there. When you got home to Ohio, you would owe the Ohio Department of Taxation 6% of the price of those shoes..... think anyone does that?? On the tax return there is a line that asks for the cost of items purchased online for which no sales taxes were collected. Of course none of us has ever done that - so it's just a wasted line on the tax return......
In Ohio, the guy sending out the letter to all of us did his homework. He had a good idea what these kits are worth. We didn't think trying to bamboozle him was a good idea. I think if we would have exhibited a little more solidarity between us, we could have made it difficult for him, but as it happened we just got as creative as we could in our cost estimate. I have a feeling when he got checks/receipts from most of us, he said something like 'wow, I can't believe they paid without a fight'.

Scott,
What if you purchased your RV parts in a state with sales tax higher than Ohio's? Like maybe at Sun-Fun. I bet they fall all over themselves to refund the difference.

wilddog said:

Scott,
What if you purchased your RV parts in a state with sales tax higher than Ohio's? Like maybe at Sun-Fun. I bet they fall all over themselves to refund the difference.

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Nope.

But if you have already paid equal (or greater) to the local sales/use tax elsewhere (keep receipts!) you can avoid paying it again.

Lionclaw said:

I sent it to the address on the form. I put a small blurb to the right of the signature block about what the payment was for along with my N-number, and I included a letter.

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You should never use the "N" number for aircraft identification. You should always use the make, model, and serial number. The "N" number can be changed at any time. The serial number is forever.