Florida Airplane - Florida Use Tax Considerations

AIRCRAFT USE TAX

If an aircraft is purchased outside of Florida, the aircraft will not be subject to Florida sales tax. Instead, the aircraft may be subject to a use tax. A use tax is triggered in instances tangible personal property is purchased outside of Florida but is brought into Florida. This article will discuss how nonresident owned aircraft become subject to use tax and common ways to avoid use tax.

Generally, when an item of tangible personal property is commingled with the mass property of Florida, or is used, consumed, or stored in Florida, a use tax at a rate of six percent (6%) will be due. See s. 212.06(1)(a), Florida Statutes (“F.S.”). “Tangible personal property” is defined as anything that “may be seen, weighed, measured, or touched or is in any manner perceptible to the senses, including … aircraft ….” See s. 212.02(19), F.S. Thus, the commingling, use, consumption, or storage of an aircraft in Florida could trigger a use tax at a rate of 6%.

Example: A non-Florida resident purchases an aircraft somewhere outside of Florida for $100,000.00. The aircraft enters Florida the day after purchase and remains stored in a hanger for one month. Florida use tax due is $6,000.00 ($100,000.00 * 6%).

Now that it has been established the commingling, use, consumption, or storage of an aircraft in Florida is subject to tax, let’s assume the aircraft is not in Florida for resale purposes. Thus, and though the use of an aircraft in Florida is subject generally to tax, there are certain instances where one does not have to pay tax on an aircraft’s presence in Florida. In Florida, these exceptions are called exemptions. See generally s. 212.08, F.S. Under Florida law, the person claiming the exemption has the burden of proving the exemption. See, e.g., State ex rel. Szabo Food Servs., Inc. of N.C. v. Dickinson, 286 So. 2d 529, 531 (Fla. 1973) (stating exemptions are construed against the taxpayer).

One exemption is for a nonresident owned aircraft to come to Florida for up to twenty (20) days within the first six months after purchase. See s. 212.08(7)(fff), F.S. Thus, an aircraft owned by a nonresident can fly to Florida, stay for 20 days, and leave without incurring a use tax liability within the first six months after purchase. What if the aircraft is in Florida for longer than 20 days because the aircraft is being repaired? While the aircraft remains in the custody of the repair facility during the repairs, the aircraft will not become subject to tax until after 20 days of being in Florida from the time the repairs are complete. See, e.g., Rule 12A-1.007(10)(c), Florida Administrative Code (“F.A.C.”).

Thus, an aircraft could stay in Florida, in the sole care of a repair facility while repairs are being conducted on the aircraft, for months at a time without being subject to Florida tax. This repair exemption only works if the aircraft is in Florida for repairs. What if the aircraft is not in Florida for repairs but is only coming to Florida for pleasure? While the nonresident aircraft owner can stay for at most 20 days, as mentioned above, if the aircraft stays in Florida for longer than 20 days within the first six months after purchase, the aircraft may be subject to Florida use tax.

If an aircraft becomes subject to use tax in Florida, this is not the end! An aircraft owned by a nonresident that has paid tax to another state, United States territory, or to the District of Columbia will receive a credit in Florida for the tax paid to one of these jurisdictions. See s. 212.06(7), F.S.; Rule 12A-1.007(3), F.A.C. Other than United States territories, this credit provision does not include foreign countries. Thus, a nonresident owner will need to demonstrate the tax paid to one of these jurisdictions in order to not have to double pay tax to Florida.

Example 1: A nonresident owner purchases an aircraft for $100,000.00 in another state. That state charges a 4% sales tax on the purchase price, for a total tax due of $4,000.00 ($100,000.00 * 4%). The owner pays the full $4,000.00 of tax to that state. The aircraft then comes to Florida. A Florida use tax is imposed at a rate of 6%. Florida imposes a total tax due of $6,000.00 ($100,000.00 * 6%). Because the nonresident owner has paid $4,000.00 to the other state and can prove as much, the owner may subtract the taxes already paid from the taxes owed to Florida. Accordingly, the owner only owes Florida $2,000.00 of taxes ($6,000.00 - $4,000.00).

Example 2: A nonresident owner purchases an aircraft for $100,000.00 in another state. That state charges a 10% sales tax on the purchase price, for a total tax due of $10,000.00 ($100,000.00 * 10%). The owner pays the full $10,000.00 of tax to that state. The aircraft then comes to Florida. A Florida use tax is imposed at a rate of 6%. Florida imposes a total tax due of $6,000.00 ($100,000.00 * 6%). Because the nonresident owner has paid $10,000.00 to the other state and can prove as much, the owner may subtract the taxes already paid from the taxes owed to Florida. Since the owner has paid to the other state a sales tax that is greater than the amount of use tax imposed by Florida, the owner pays nothing to Florida if the owner can prove the taxes were already paid!

If after reviewing all of the above provisions it is determined the aircraft is still subject to tax, then tax should be remitted as quickly as possible to the Department to minimize the amount of interest. The form that will need to be filed is Form DR-15AIR, Sales and Use Tax Return for Aircraft.

Previously but briefly discussed above involved bringing an aircraft in Florida within six months of purchase. After reading the above, the logical follow-up question entails bringing the aircraft in Florida after six months. If the aircraft has been outside of Florida for more than six months (anywhere in the world) and is then brought to Florida, the aircraft is not subject to tax.

In conclusion, an aircraft purchased outside of Florida may be subject to a use tax when brought into the State. It is important to determine whether an exemption applies. If so, which exemption applies is critical. If an exemption does not apply and tax is due, the aircraft owner should review his or her own records to see whether tax was paid to another qualifying jurisdiction in order to receive a credit in Florida. If the aircraft is coming into Florida more than six months after purchase, tax should not be due.

Florida sales tax attorney; Miami Sales Tax Attorney; Miami Sales Tax Audit; Orlando Sales Tax Attorney; Orlando Sales Tax Audit

About the author: David Brennan is an associate attorney with Moffa, Sutton, & Donnini, P.A. His primary practice area is Florida tax controversy. David received a B.S. in Accounting and Finance, with a minor in Computer Science, from Florida State University. He worked as an accountant for a CPA firm before attending law school at Regent University. He received his Juris Doctor in 2013 and was licensed to practice law in Florida in the same year. In 2015, David earned his Masters of Laws in Taxation from Boston University. While working for the Florida Department of Revenue as a Senior Attorney, David focused on aircraft sales and use tax issues, among various other areas. You may contact David via email at DavidBrennan@FloridaSalesTax.com or 850-250-3830. You can read his BIO HERE.

AUTHORITY

212.02, F.S.

212.06, F.S.

212.08, F.S.

Rule 12A-1.007, F.A.C.

State ex rel. Szabo Food Servs., Inc. of N.C. v. Dickinson, 286 So. 2d 529 (Fla. 1973)

ADDITIONAL ARTICLES TO READ

No Florida Sales Tax On Aircraft Purchased By Non-Resident?, published November 6, 2016, by David Brennan, Esq.

AIRCRAFT AIRPLANE vs FLORIDA SALES TAX, published September 13, 2015, by Jerry Donnini, Esq.

FLORIDA USE TAX AUDIT LETTER?, published June 14, 2015, by James Sutton, CPA, Esq. and Jerry Donnini, Esq.

GOING TO JAIL FOR NOT PAYING FLORIDA SALES TAX?, published November 3, 2013, by James Sutton, CPA, Esq.

FL TAX – VOLUNTARY DISCLOSURE CAN BE THE PERFECT SOLUTION, published October, 5, 2012, by Jerry Donnini, Esq.

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