| (a) Definitions. The following words and terms, when
used in this section, shall have the following meanings, unless the
context clearly indicates otherwise.
(1) Affiliate--A member of a group of entities in which
a controlling interest is owned by a common owner or owners, either
corporate or noncorporate, or by one or more of the member entities.
(2) Agricultural aircraft operation--The operation
of an aircraft licensed by the FAA under 14 Code of Federal Regulations,
Part 137. Agricultural aircraft operations include crop dusting, pollination,
and seeding.
(3) Agricultural use--This term includes, but is not
limited to, the following activities: cultivating the soil, producing
crops for human food, animal feed, or planting seed or for the production
of fibers; floriculture, viticulture, and horticulture; raising or
keeping livestock; raising or keeping exotic animals for the production
of human food or of fiber, leather, pelts, or other tangible products
having a commercial value; planting cover crops or leaving land idle
for the purpose of participating in a governmental program, provided
the land is not used for residential purposes or a purpose inconsistent
with agricultural use; and planting cover crops or leaving land idle
in conjunction with normal crop or livestock rotation procedure. The
term also includes the use of land to produce or harvest logs and
posts for the use in constructing or repairing fences, pens, barns,
or other agricultural improvements on adjacent qualified open-space
land having the same owner and devoted to a different agricultural
use. The term also includes the use of land for wildlife management.
The term also includes the use of land to raise or keep bees for pollination
or for the production of human food or other tangible products having
a commercial value, provided that the land used is not less than 5
or more than 20 acres.
(4) Aircraft--A fixed-wing, heavier-than-air craft
that is operated by a pilot from within the craft, is driven by propeller
or jet and is supported by the dynamic reaction of the air against
its wings; a helicopter; or an airplane flight simulation training
device approved by the FAA under Appendices A and B, 14 Code of Federal
Regulations, Part 60. The term does not include balloons, gliders,
rockets, missiles, or unmanned aerial vehicles.
(5) Certificated or licensed carrier--A person authorized
by the FAA to operate an aircraft to transport persons or property
in compliance with the certification and operations specifications
requirements of 14 Code of Federal Regulations, Part 121, 125, 133,
or 135. Letters of authorization, certificates of inspection, and
airworthiness certificates are not appropriate evidence of authority
to operate as a certificated or licensed carrier.
(6) Component part--Tangible personal property that
is intended to be permanently affixed to, and become a part of, an
aircraft; is necessary to the normal operations of the aircraft, or
is required by FAA regulations; and is secured or attached to the
aircraft. The term includes tangible personal property necessary to
the normal operations of the aircraft that can be removed temporarily
from the aircraft for servicing, such as engines, seats, radar equipment,
and other electronic devices used for navigational or communications
purposes, and air cargo containers, food carts, fire extinguishers,
survival rafts, and emergency evacuation slides. Items such as pillows,
blankets, trays, ice for drinks, kitchenware, and toilet articles
are not component parts.
(7) Consumable supplies--Tangible personal property
that is used by a service provider to repair, remodel, maintain, or
restore tangible personal property belonging to another; is not transferred
into the care, custody, or control of the purchaser of the service;
and, having been used once for its intended purpose, is completely
used up or destroyed. Examples of consumable supplies include, but
are not limited to, canned air used to remove dust from equipment
and solvents used to clean equipment parts.
(8) Exotic animals--Livestock and fowl that are not
indigenous to Texas and are defined as exotic livestock or exotic
fowl by Agriculture Code, §161.001(a) (Definitions). Examples
include, but are not limited to, nilgai antelope, blackbuck antelope,
axis deer, fallow deer, sika deer, aoudad, ostriches, and emus.
(9) Extended warranty or service policy--A contract
sold to the purchaser of tangible personal property for an amount
in addition to the charge for the tangible personal property, or sold
to an owner of tangible personal property, to extend the terms of
the manufacture's written warranty or provide a warranty in addition
to or in place of the manufacture's written warranty.
(10) FAA--Federal Aviation Administration, an agency
of the United States Department of Transportation.
(11) Incorporated materials--Tangible personal property
that is attached or affixed to, and becomes a part of, an aircraft,
aircraft engine, or component part in such a manner that the property
loses its distinct identity as separate tangible personal property.
(12) Livestock--Horses, mules, donkeys, llamas, alpacas,
and animal life of a kind that ordinarily constitutes food for human
consumption. The term livestock does not include wildlife or pets.
(13) Lump-sum contract--A written agreement in which
the agreed price is one lump-sum amount and in which the charge for
incorporated materials is not separated from the charge for skill
and labor. Separated invoices or billings issued to the customer will
not change a written lump-sum contract into a separated contract unless
the terms of the contract require separated invoices or billings.
(14) Maintain--To perform maintenance.
(15) Maintenance--Work performed on operational and
functioning tangible personal property that is necessary to sustain
or support safe, efficient, and continuous operation of the tangible
personal property, or is necessary to keep the tangible personal property
in good working order by preventing decline, failure, lapse, or deterioration.
(16) Manufacturer's written warranty--A manufacturer's
guarantee made for no additional charge to the purchaser of an item
of tangible personal property that the item is operable and will remain
operable for a specified period of time.
(17) Operational control--This term has the meaning
assigned by FAA regulations and includes the exercise of authority
over initiating, conducting, or terminating a flight.
(18) Predator control--A form of wildlife and exotic
animal management regulated by the Texas Department of Parks and Wildlife
under Parks and Wildlife Code, Chapter 43, Subchapter G (Permits to
Manage Wildlife and Exotic Animals from Aircraft) used to protect
or aid in the administration or protection of land, water, wildlife,
livestock, domesticated animals, human life, or crops. Feral hog eradication
using an aircraft is one form of predator control.
(19) Qualified flight instruction--Training recognized
by the FAA that is designed to lead to a pilot certificate or rating
issued by the FAA, or is otherwise required by rule or regulation
of the FAA, and that is conducted under the direct or general supervision
of a flight instructor certified by the FAA. Qualified flight instruction
includes FAA-required check flights, maintenance flights, and test
flights, but does not include demonstration flights for marketing
purposes or training in aerobatic maneuvers.
(20) Remodel--To modify or remake tangible personal
property belonging to another in a similar but different manner, or
to change the style, shape, or form of tangible personal property
belonging to another, without causing a loss of its identity or without
causing it to operate in a new or different manner. Remodeling does
not include processing.
(21) Repair--To mend or restore to working order or
operating condition tangible personal property that was broken, damaged,
worn, defective, or malfunctioning.
(22) Restore--To return tangible personal property
that is still operational and functional, but that has faded, declined,
or deteriorated, to its former or original state.
(23) Sale for resale--The sale, lease, or rental of
an aircraft to a person who acquires the aircraft for the purpose
of leasing, renting, or reselling the aircraft to another person,
or for the purpose of transferring operational control of the aircraft
to one or more persons pursuant to one or more written lease agreements,
in exchange for a fixed, variable, or periodic consideration, whether
or not the consideration is in the form of a cash payment, in the
United States of America or a possession or territory of the United
States of America or in the United Mexican States in the form or condition
in which the aircraft is acquired.
(24) Separated contract--A written agreement in which
the agreed price is divided into a separately stated charge for incorporated
materials and a separately stated charge for skill and labor. An agreement
is a separated contract if the charge for incorporated materials and
the charge for labor are separately stated on an invoice or billing
that, according to the terms of the contract, is deemed to be a part
of the contract. Adding the separated charge for incorporated materials
and the separated charge for labor together to give a lump-sum total
does not transform a separated contract into a lump-sum contract.
An aircraft completion, repair, remodeling, maintenance, or restoration
contract that separates the charge for incorporated materials from
the charge for labor is a separated contract even if the charge for
labor is zero.
(25) Service provider--A person who repairs, remodels,
maintains, or restores tangible personal property belonging to another.
(26) Wildlife--Animals, other than insects, that normally
live in a state of nature and are not ordinarily domesticated.
(b) Sales tax.
(1) The sale, lease, or rental of an aircraft, aircraft
engine, or component part in Texas is the sale, lease, or rental of
tangible personal property, and is subject to sales tax, unless otherwise
exempt under Tax Code, Chapter 151 (Limited Sales, Excise, and Use
Tax) or Chapter 163 (Sales and Use Taxation of Aircraft). The lease
or rental of an aircraft complete with pilot or crew for a single
charge is a nontaxable transportation service, rather than the lease
or rental of an aircraft, even when the charges for the aircraft and
the pilot or crew are separately stated. For more information about
leases and rentals, refer to §3.294 of this title (relating to
Rental and Lease of Tangible Personal Property).
(2) Sales tax is due on the total sales, lease, or
rental price of the aircraft, aircraft engine, or component part.
The total sales, lease, or rental price includes separately stated
charges for any service or expense connected with the sale, lease,
or rental, including transportation or delivery charges. The total
sales, lease, or rental price does not include separately stated cash
discounts or the value of any tangible personal property taken as
a trade-in by the seller in the regular course of business in lieu
of all or part of the price of the aircraft. For more information
on determining the taxable sales price of an item of tangible personal
property, refer to Tax Code, §151.007 ("Sales Price" or "Receipts")
and §3.294 of this title.
(c) Use tax.
(1) General rule. Use tax is due on the use, storage,
or other consumption in this state of an aircraft purchased, leased,
or rented outside of Texas and brought into Texas to be used in Texas.
For more information about the application of the use tax to aircraft
engines and component parts, refer to §3.346 of this title (relating
to Use Tax).
(2) Presumption of purchase for use in Texas. An aircraft
purchased, leased, or rented outside of Texas and then brought into
Texas by a purchaser is presumed to have been purchased from a seller
for use in Texas and is subject to Texas use tax. An aircraft that
is brought into Texas by a person who did not purchase the aircraft
directly from a seller is not presumed to have been purchased for
use in Texas.
(3) Predominant use outside of Texas.
(A) An aircraft purchased, leased, or rented outside
of Texas and then brought into Texas is not subject to Texas use tax
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 acquired, by purchase,
lease, rental, or otherwise, 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.
(B) For purposes of this subsection, an aircraft is
predominantly used outside of this state if more than 50% of its total
departures are from locations outside of Texas.
(C) 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.
(4) Completing, repairing, remodeling, or restoring
aircraft in Texas. An aircraft purchased, leased, or rented outside
of Texas and then brought into Texas for the sole purpose of completing,
repairing, remodeling, or restoring the aircraft is not subject to
Texas use tax.
(A) Completion, repair, remodeling, or restoration
includes flights solely for troubleshooting, testing, or training,
and flights between service locations under an FAA-issued ferry permit.
Cont'd... |
