| (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.
(6) Fractional ownership operations. Sales and use
tax is not due on the sale, lease, or rental of an aircraft operated
as part of a fractional ownership program under 14 Code of Federal
Regulations Part 91, Subpart K-Fractional Ownership Operations. Sales
tax is due on the sale or lease of component parts or materials incorporated
into an aircraft that is part of an aircraft fractional ownership
operation, unless otherwise exempt under Tax Code, Chapter 151.
(f) Divergent use.
(1) Exempt aircraft, aircraft engines, and component
parts. Sales and use tax is due when an aircraft, aircraft engine,
or component part sold, leased, or rented tax-free under a properly
completed exemption certificate is subsequently put to a taxable use
other than the use allowed under the certificate. For more information,
refer to §3.287 of this title.
(2) Sales for resale. Sales and use tax is due when
an aircraft engine or component part sold, leased, or rented tax-free
under a properly completed resale certificate is subsequently put
to a taxable use other than the use allowed under the certificate.
For more information, refer to §3.285 of this title (relating
to Resale Certificate; Sales for Resale). Sales and use tax is not
due on the divergent use of an aircraft that is purchased for resale.
(3) Agricultural use and agricultural aircraft operations.
No divergent use may be made of an aircraft exempted under subsection
(e)(5) of this section, relating to agricultural use, without a total
loss of the exemption. Certain limited uses identified in subsection
(e)(5)(C) of this section do not constitute divergent use of an agricultural
aircraft. No divergent use of component parts or necessary tangible
personal property exempted under subsection (e)(5)(B) of this section,
relating to agricultural aircraft operations, can be made without
a total loss of that exemption.
(g) Repair, remodeling, maintenance, restoration, and
completion.
(1) Labor to complete, repair, remodel, maintain, or
restore aircraft in Texas is not subject to sales tax. The sale or
use of materials incorporated into an aircraft, aircraft engine, or
component part being completed, repaired, remodeled, maintained, or
restored in Texas is subject to sales and use tax as provided in paragraph
(2) of this subsection, unless otherwise exempt.
(2) Tax responsibilities of service providers.
(A) Incorporated materials. Whether the service provider
owes tax on the purchase of materials that will become incorporated
materials as part of the completion, repair, remodeling, maintenance,
or restoration of an aircraft, aircraft engine, or component part
depends upon whether the service provider is operating under a lump-sum
or separated contract.
(i) Separated contracts. If the services are performed
under a separated contract, the service provider is regarded as the
seller of the incorporated materials. If the service provider has
a sales and use tax permit, the service provider may issue a properly
completed resale certificate to the supplier in lieu of paying sales
tax on the purchase of the incorporated materials. The service provider
must then collect sales tax from the customer on either the agreed
contract price for the incorporated materials, or the amount the service
provider paid for the incorporated materials, whichever amount is
greater. The service provider may also use incorporated materials
removed from an inventory of items upon which sales or use tax was
paid at the time of purchase. In such a case, sales tax is to be collected
from the customer on the agreed contract price of the incorporated
materials as though the incorporated materials had been purchased
tax-free with a resale certificate.
(ii) Lump-sum contracts. If the services are performed
under a lump-sum contract, the service provider is the ultimate consumer
of all incorporated materials. The service provider may not collect
sales tax from the customer. The service provider must pay sales or
use tax to the suppliers of the incorporated materials at the time
of purchase, unless the service provider works under both lump-sum
and separated contracts and uses incorporated materials removed from
a valid tax-free inventory that were originally purchased tax-free
by use of a resale certificate. In such a case, the service provider
incurs a tax liability based upon the purchase price of the incorporated
materials and must report and remit the tax to the comptroller. The
service provider owes sales or use tax on the purchase of incorporated
materials even when the services are performed for a customer that
is exempt from tax under Tax Code, Chapter 151.
Cont'd... |
