| (B) Any use of the aircraft for business or pleasure
travel during the time that the aircraft is being completed, repaired,
remodeled, or restored means the aircraft was not brought into Texas
for the sole purpose of completion, repairs, remodeling, or restoration,
and Texas use tax may be due on the aircraft.
(C) The owner or operator of the aircraft must maintain
records sufficient to show all uses of the aircraft within Texas.
The comptroller may examine all records maintained on the aircraft,
including logs, to determine the actual use of the aircraft in Texas.
(5) Use tax credit. The purchaser or lessee of an aircraft
is allowed to claim a credit against Texas use tax due on the use
of the aircraft for any legally imposed sales or use tax due and paid
on the sale or use of the item by the purchaser or lessee of the item
to another state or any political subdivision of another state. For
information on taking a credit for tax paid to another state, refer
to §3.338 of this title (relating to Multistate Tax Credits and
Allowance of Credit for Tax Paid to Suppliers).
(d) Related parties.
(1) The sale, lease, rental, or other transaction between
a person and a member, owner, or affiliate of the person involving
an aircraft that would not be subject to tax, or would qualify for
an exemption from tax if the transaction were between unrelated persons
remains not subject to tax or exempt from tax to the same extent as
if the transaction were between unrelated persons.
(2) Except as provided in paragraph (3) of this subsection,
the use of an aircraft by an affiliate of the purchaser of the aircraft,
or an owner or member of either the purchaser or its affiliate, is
not subject to tax if the purchaser paid Texas sales or use tax on
the purchase of the aircraft, or the purchase of the aircraft was
exempt from Texas sales or use tax.
(3) The exemption in paragraph (2) of this subsection
does not apply if the purchase of the aircraft was exempt as:
(A) a sale for resale; or
(B) an occasional sale, unless the owner, member, affiliate,
or the owner or member of the affiliate, who is leasing or renting
the aircraft could have purchased the aircraft as an occasional sale.
For information on the occasional sale exemption, see subsection (j)
of this section.
(e) Tax exemptions specific to aircraft. In addition
to the other exemptions from tax provided under Tax Code, Chapter
151, the following tax exemptions apply specifically to the sale,
lease, rental, and use in Texas of aircraft, aircraft engines, and
component parts. A person selling, leasing, or renting an aircraft,
aircraft engine, or component part may accept a properly completed
exemption certificate from the purchaser in lieu of collecting Texas
sales and use tax at the time of the transaction. A purchaser claiming
a sales tax exemption under this subsection may provide the seller
with a properly completed exemption certificate at the time of the
transaction. A purchaser who does not claim the exemption at the time
of the transaction may subsequently provide documentation to the comptroller
to prove that the exemption applies, except as provided in paragraph
(4) of this subsection. For more information, refer to §3.287
of this title (relating to Exemption Certificates).
(1) Certificated or licensed carriers.
(A) Sales and use tax is not due on the sale, lease,
or rental of an aircraft to a certificated or licensed carrier.
(B) Sales and use tax is not due on the sale, lease,
or rental of component parts of an aircraft to a certificated or licensed
carrier.
(C) Sales and use tax is not due on the sale or use
of tangible personal property that is necessary for the normal operations
of, and is pumped, poured, or otherwise placed in, an aircraft owned
or operated by a certificated or licensed carrier.
(D) Sales and use tax is due on the sale, lease, or
rental of machinery, tools, and equipment that support the overall
operation of a certificated or licensed carrier, such as baggage loading
or handling equipment, reservation or booking machinery and equipment,
garbage and other waste disposal equipment, and office supplies and
equipment, unless otherwise exempt under Tax Code, Chapter 151.
(E) Sales tax is not due on the sale of tangible personal
property transferred to a certificated or licensed carrier in Texas,
if the carrier, using its own facilities, ships the items to a point
outside of Texas under a bill of lading and the items are purchased
for use by the carrier in the conduct of its business as a certificated
or licensed carrier solely outside Texas.
(2) Flight schools, instructors, and students.
(A) Sales or use tax is not due on the sale, lease,
or rental of an aircraft to a person who:
(i) holds a current flight school or flight instructor
certificate issued by the FAA;
(ii) holds a current sales and use tax permit issued
under Tax Code, Chapter 151; and
(iii) uses the aircraft to provide qualified flight
instruction.
(B) Any use of the aircraft other than that described
in this paragraph is subject to tax as a divergent use under subsection
(f) of this section, unless otherwise exempt under Tax Code, Chapter
151.
(C) Sales or use tax is not due on the sale or use
of component parts of an aircraft owned or operated by a flight school
or flight instructor to provide qualified flight instruction.
(D) Sales or use tax is not due on the sale or use
of tangible personal property that is necessary for the normal operations
of, and is pumped, poured, or otherwise placed in, an aircraft owned
or operated by a flight school or flight instructor to provide qualified
flight instruction.
(E) A student enrolled in a program providing qualified
flight instruction may claim an exemption from sales tax on the short-term
hourly rental of an aircraft for qualified flight instruction, including
solo flights and other flights. When completing an exemption certificate
claiming this sales tax exemption, the student must identify the flight
school by name and address or, if the student is not enrolled in a
flight school program, the student must identify the student's flight
instructor and the instructor's address. The student must also retain
copies of written tests and instructor's endorsements. Without evidence
that the student is in pursuit of a FAA-certified pilot certificate
or flight rating, aircraft rentals are subject to sales tax.
(3) Foreign governments. Sales tax is not due on the
sale, lease, or rental of an aircraft to a foreign government. Sales
tax is due on the sale or lease of component parts or materials incorporated
in Texas into an aircraft owned by a foreign government, unless otherwise
exempt under Tax Code, Chapter 151. Refer to subsection (g) of this
section for information concerning the repair, remodeling, maintenance,
and restoration of aircraft, aircraft engines, and component parts.
(4) Fly-away exemption.
(A) Sales tax is not due on the sale or lease of an
aircraft in Texas to a person for use and registration in another
state or nation before any use in Texas other than:
(i) completing, repairing, remodeling, maintaining,
or restoring the aircraft in Texas, including necessary flights for
troubleshooting, testing, or flights between service locations under
an FAA-issued ferry permit; or
(ii) flight training in the aircraft.
(B) Any use of the aircraft in Texas other than that
described in subparagraph (A) of this paragraph before the aircraft
is flown out of this state for use and registration in another state
or nation will result in the loss of the exemption.
(C) The subsequent use of an aircraft in Texas after
the aircraft has left Texas will not subject the aircraft to tax on
the purchase price if the aircraft is predominantly used outside of
Texas for a period of one year beginning on the later of:
(i) the date the aircraft was purchased or leased by
the person bringing the aircraft into Texas; or
(ii) the date the aircraft was substantially complete
in the condition for its intended use and conducted its first flight
for the carriage of persons or property.
(D) For purposes of this subsection, an aircraft is
predominantly used outside of Texas if more than 50% of its total
departures are from locations outside of Texas.
(E) The owner or operator of the aircraft must maintain
records sufficient to show each of the aircraft's departures. The
comptroller may examine all records maintained on any aircraft brought
into Texas, including logs, to determine the percentage of the aircraft's
total departures that were made from locations in Texas.
(F) The fly-away exemption does not apply to the short-term
hourly rental of an aircraft in Texas, even if the person renting
the aircraft intends to use the aircraft in another state.
(G) Exemption certificate required.
(i) A purchaser claiming the fly-away exemption under
this paragraph must provide the seller with a properly completed Texas
Aircraft Exemption Certificate Out-of-State Registration and Use,
Form 01-907, its electronic equivalent, or any form promulgated by
the comptroller that succeeds such form. The seller may only accept
the certificate if the seller lacks actual knowledge that the claimed
exemption is invalid. Within 30 days of the sale of the aircraft,
a copy of the completed certificate signed by both the seller and
the purchaser must be provided to the Comptroller of Public Accounts,
Business Activity Research Team, P.O. Box 13003, Austin, Texas, 78711-3003.
(ii) By signing the certificate, the purchaser authorizes
the comptroller to provide a copy of the certificate to the state
or nation in which the aircraft is intended to be used and registered.
(iii) Issuing an invalid certificate is a misdemeanor
punishable by a fine not to exceed $500 in addition to the assessment
of tax and, when applicable, penalty and interest on the purchase
price of the aircraft.
(5) Agricultural use.
(A) Sales or use tax is not due on the sale, lease,
or rental of an aircraft for use exclusively in connection with an
agricultural use, as defined in this section, when used for:
(i) predator control;
(ii) wildlife or livestock capture;
(iii) wildlife or livestock surveys;
(iv) census counts of wildlife or livestock;
(v) animal or plant health inspection services; or
(vi) agricultural aircraft operations, such as crop
dusting, pollination, or seeding.
(B) Component parts and necessary supplies for aircraft
used exclusively in agricultural aircraft operations.
(i) Sales or use tax is not due on the sale or use
of component parts of an aircraft used exclusively in agricultural
aircraft operations.
(ii) Sales or use tax is not due on the sale or use
of tangible personal property that is necessary for the normal operations
of, and is pumped, poured, or otherwise placed in, an aircraft used
exclusively in agricultural aircraft operations.
(iii) Exemption certificate required. A person claiming
the exemption under this subparagraph must have a valid Texas Agricultural
and Timber Exemption Registration Number issued by the comptroller,
and must issue a properly completed Texas Agricultural Sales and Use
Tax Exemption Certification, Form 01-924, its electronic equivalent,
or any form promulgated by the comptroller that succeeds such form.
(iv) This exemption does not include the sale or use
of firearms, ammunition, or other equipment or tangible personal property
used to perform predator control, wildlife census counts, or any other
activity not included in the definition of agricultural aircraft operation.
(C) Use of an aircraft is considered to be "for use
exclusively in connection with an agricultural use" if 95% of the
use of the aircraft is for a purpose described by subparagraph (A)
of this paragraph. Travel to a location to perform a service described
by subparagraph (A) of this paragraph will not disqualify the sale,
lease, or rental of an aircraft from the exemption, and will not be
regarded as divergent use.
(D) Selling the use of a gunner's seat on an aircraft
that is exempt under this paragraph to a person participating in aerial
wildlife management, as authorized by Parks and Wildlife Code, §43.1075
(Using Helicopters to Take Certain Animals), will not result in a
loss of the exemption. The sale of the gunner seat is subject to sales
tax as a taxable amusement service under Tax Code, §151.0028
(Amusement Services) and §3.298 of this title (relating to Amusement
Services).
(E) A person who claims an exemption under this paragraph
must maintain and make available to the comptroller upon request flight
records for all uses of the aircraft, as well as any other records
requested by the comptroller, such as Aerial Wildlife Management Permits
issued under Parks and Wildlife Code, Chapter 43, Subchapter G. Failure
to maintain adequate records may result in loss of the exemption.
Cont'd... |
