3. STATE SALES AND USE TAX

3.04 Sales Tax Concerns of Purchaser

The purchaser of an aircraft will generally want to avoid having to pay the sales tax. Since an aircraft is a mobile asset, it is possible to avoid the sales tax by careful selection of the state in which the sale takes place. This kind of tax avoidance is perfectly legal. The problems arise where the participants do not comply with the legal requirements, or worse, where they try to cover-up a failure to comply with those requirements.

How to Avoid the State Sales Tax

In order to avoid state sales tax on an aircraft sale, the following steps should be taken:

1. Identify a state where tax can be avoided:

• No sales tax.
• An appropriate exemption (e.g. the "fly-away" exemption).

2. Make sure that the sale takes place in that state:

• The paperwork must be unambiguous, particularly the delivery receipt.
• The aircraft must be in the state at the time the sale occurs.

3. Insure that the appropriate exemption certificates are completed.

• The exemption claimed must be appropriate for the state.
• The exemption certificate must be accepted in "good faith"