One of the persistent myths of the aviation industry is that all you have to do to avoid liability for state tax on your aircraft is to put your aircraft in a Delaware corporation. This is true only if you plan to use the aircraft only in Delaware. Otherwise, you are subject to tax the same as any other aircraft owner.

In a recent interview, William M. Remington, director of the Delaware Division of Revenue stated that:

I, too, have heard it said that Delaware is a tax haven. That reputation is, I think, a generalization, largely unwarranted, drawn from favorable tax treatment of specialized situations. In addition, there is a widespread, but inaccurate, belief that Delaware is a situs of choice for incorporations because of favorable taxation. As your readers are well aware, there is no connection between the state of incorporation and the determination of corporation income tax liability. [emphasis added; Tax Notes, 1999]

This becomes obvious when you consider that most of the Fortune 500 companies are incorporated in Delaware and they are subject to state taxes the same as any other company.

For an example of what happened when a company tried to use the "Delaware defense", see:

• Czars, Inc. , Mich. Tax Tribunal, Dkt. No. 220832 (Oct. 1, 1996)