Sales and Use Tax TAA 17A-001 Aircraft
QUESTION: WHETHER A NONRESIDENT TRUST MAY BE SUBJECT TO TAX ON AIRCRAFT
IT OWNS WHEN THE INDIVIDUAL WITH AUTHORITY TO DIRECT OR MANAGE THE TRUST
IS A FLORIDA RESIDENT?
ANSWER: YES. BECAUSE THE TRUST HAS A FLORIDA RESIDENT OWNER THAT CAN DIRECT
OR MANAGE THE ENTITY (I.E., TRUST), TAX IS DUE ON AIRCRAFT FOUND TO BE
IN FLORIDA THAT THE TRUST OWNS.
January 9, 2017
Re: Technical Assistance Advisement 17A-001
Florida Sales and Use Tax – Aircraft Trust Owned By Florida Resident
Sections: 212.05; 212.06; and 212.21, Florida Statutes (F.S.) Rule: 12A-1.007, Florida Administrative Code (F.A.C.)
Petitioners: XXXX (“Trustee”) and XXXX (“Taxpayer”)
Dear XXXX:
This letter is a response to your petition received on XXXX, for the Department
of Revenue’s (“Department”) issuance of a Technical
Assistance Advisement ("TAA") concerning the abovereferenced
petitioners and matter. Your petition has been carefully examined, and
the Department finds it to be in compliance with the requisite criteria
set forth in Chapter 12-11, Florida Administrative Code (“F.A.C.”).
This response to your request constitutes a TAA and is issued to you under
the authority of Section (“s.”) 213.22, Florida Statutes (F.S.).
FACTS PRESENTED
Taxpayer, a Florida resident, intends to own and be the sole shareholder
of a Florida Corporation. The Florida Corporation will wholly own a Delaware
Corporation. The Delaware Corporation is a trustee. Trustee is engaged
in the business of owning aircraft for persons and entities that are not
citizens of the United States of America.
Trustee does not have operational control over the aircraft in its care;
rather, the trustor is vested with operational control. After issuance
of the TAA, Taxpayer wishes to become an officer and director of Trustee.
Taxpayer further states that as Trustee’s business grows, it may
hire Florida residents as employees.
REQUESTED ADVISEMENT
Taxpayer requests that she be allowed to act as an officer, director, and
owner of the Florida Corporation without incurring any presumption that
the aircraft owned by Trustee are subject to sales or use tax.
TAXPAYER ARGUMENT
Taxpayer argues that though she is a resident of Florida, neither Taxpayer
nor Trustee exercise operational control over the aircraft. Based on s.
212.05(1)(a)2., F.S., and Rule 12A1.007(10)(b)1.e., F.A.C., defining a
“nonresident,” neither Taxpayer nor Trustee qualify as a resident,
and thus Taxpayer and Trustee do not have “authority to participate
in the management, direction, or control of the entity’s affairs
who is a resident of … Florida.”
LAW AND DISCUSSION
The legislature has declared its intention in s. 212.21(2), F.S., that
each and every sale, use, storage, or consumption of tangible personal
property in Florida is taxable, subject only to the exemptions and exclusions
contained within Chapter 212, F.S. Therefore, the purchase or use of an
aircraft in Florida is subject to tax, unless an exemption applies. Section
212.05, F.S., provides every person is engaged in a taxable privilege
when engaging in the business of selling, at retail, tangible personal
property1. Tax on a sale of tangible personal property is levied at a
rate of six percent (6%)2. See s. 212.05(1)(a)l.a., F.S.
Generally, a nonresident purchaser may come to Florida to purchase an aircraft
exempt from tax, so long as certain criteria are met. One of the criteria
is that a corporate purchaser, or other artificial entity, cannot have
an officer, director, or other individual, which is vested with authority
to manage, direct, or control the entity, that is a Florida resident.
See s. 212.05(1)(a)2., F.S., and Rule 12A-1.007(10)(b)1.d.-e., F.A.C.
For purchases of aircraft occurring outside of Florida, there is a presumption
that use tax applies if the aircraft is subsequently brought into this
State. See s. 212.06, F.S. Because sales and use taxes are a complementary
system, one cannot evade tax with property in Florida, as either a sales
or use tax will be due. Accordingly, if an aircraft is purchased within
Florida or outside of Florida and brought into Florida, by an entity that
has a Florida resident as an officer, director, or other individual, who
is vested with authority to manage, direct, or control the entity, then
the aircraft will be subject to tax.
In the present case, Trustee will have a Florida resident owner (i.e.,
the Florida Corporation). The Florida Corporation has a Florida resident
as an officer, director, or other individual, who is vested with authority
to manage, direct, or control the entity (i.e., Taxpayer). Taxpayer is
ultimately an officer, director, or other individual, who is vested with
authority to manage, direct, or control Trustee. Because Trustee has a
Florida resident with authority to manage, direct or control Trustee,
Taxpayer is subject to sales or use tax on aircraft she owns, which aircraft
are found to be within Florida.
CONCLUSION
Because Taxpayer is a Florida resident, any aircraft owned by Trustee in
the State will be subject to a sales or use tax.
This response constitutes a Technical Assistance Advisement under s. 213.22,
F.S., which is binding on the Department only under the facts and circumstances
described in the request for this advice, as specified in s. 213.22, F.S.
Our response is predicated on those facts and the specific situation summarized
above. You are advised that subsequent statutory or administrative rule
changes, or judicial interpretations of the statutes or rules, upon which
this advice is based, may subject similar future transactions to a different
treatment than expressed in this response.
You are further advised that this response, your request and related backup
documents are public records under Chapter 119, F.S., and are subject
to disclosure to the public under the conditions of s. 213.22, F.S. Confidential
information must be deleted before public disclosure. In an effort to
protect confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement, the backup
material and this response, deleting names, addresses and any other details
which might lead to identification of the taxpayer. Your response should
be received by the Department within 10 days of the date of this letter.
Sincerely,
Taylor Hikes, Esq.
Senior Attorney
Technical Assistance & Dispute Resolution
Florida Department of Revenue
Record ID: 211498
End Notes:
1 Tangible personal property is defined as including “personal property which may be seen, weighed, measured, or touched or is in any manner perceptible to the senses ....” See s. 212.02(19), F.S. 2 Discretionary county sales surtax, if any, is also owed when tangible personal property is delivered to a county imposing surtax. See s. 212.054, F.S.