Aircraft Sales and Use Tax – The States Take a Bite

It’s nothing new that the states, like our federal government, are looking at very serious budgetary shortfalls now and for the foreseeable future.  This has put aircraft-friendly exemptions on the chopping block in popular aircraft states such as Florida, California, New York and elsewhere.  Aside from preferring not to pay more tax (who does), aviators should be asking a very legitimate question:  will it pay?  Are the states cutting off their nose, so to speak, to spite their face?

Consider the following:

Job Losses:

  • Cessna has announced that it is suspending development of a midsize corporate jet, the Citation Columbus, closing the factory in Bend, OR where the plane was being created;
  • Cessna is eliminating almost 5000 posts, or 30 percent of the workforce;
  • General Dynamics to eliminate 1200 jobs at Gulfstream and cut production by one-fifth;
  • Canada’s Bombardier, maker of the Learjet, is cutting almost 4500 jobs.

Not only are the numbers troubling, but also the type of jobs that are being cut.  Unlike, say, a services business or a retail store, once you shutter a manufacturing facility it is very difficult to restart without a major reinvestment of time, effort and capital.  Reducing the demand for aircraft by increasing the tax burden on the buyer and operator finds its way up the chain to executives who, once they move on, may be gone for good.  With them go skilled engineers, tradespeople and professionals who make the operation work.

The states also seem to be missing that aircraft are, believe it or not, somewhat movable.  If you live in New York, which charges up to 8.5% sales or use tax in some areas, it only makes sense to hangar in (mostly) tax-free Connecticut.  If you cut the exemption for repairing and maintaining an aircraft, how can you expect aircraft owners not to go elsewhere for annuals, to say nothing of more costly modifications?

Taxes are what they are, and they’re going up.  What politicians need to understand, however, is that by using a sledgehammer instead of a scalpel anti-aircraft legislation is driving away business that relies on fixed facilitites and highly-skilled employees.  If one state doesn’t want them, perhaps another will

Mr. Ari Good, JD LLM practices in aviation taxation, corporate and partnership tax, international taxation and in representing clients before state and federal taxing authorities.  He has closed over one hundred aircraft transactions involving everything from light sport aircraft to Fortune 100 business jets.  Mr. Good supports aircraft dealers, brokers, flight schools and commercial operators worldwide in operational, regulatory and compliance matters.  Call (239) 216-4106 and visit

What’s New In Florida Sales and Use Tax

Hot Off The Presses – Some Favorable Developments For General Aviation on the Florida Sales and U seTax Front:

A light at the end of the tunnel for aircraft owners scared to come to Florida?  Just last week, we saw signs of progress when it comes to advancing GA-friendly legislation in the Florida legislature.  My thanks to those sponsors of legislation that, in rough terms, looks to create a “grace period” for out-of-state residents visiting Florida.  The basic idea is to allow non-residents to bring aircraft purchased within the prior 6 months into Florida for specified purposes, such as training and repairs, without being subject to use tax.  Non-residents would be allowed  a total of 21 days per year for visiting the state for these purposes.  The days would not need to be contiguous.

Also encouraging is what did NOT happen.  A house committee charged with reviewing the existing sales and use tax exemptions for possible modification or repeal has left some key provisions alone, for now.  One is the provision that allows Florida’s flight to pay use tax on 1% of the value of their flight school aircraft, rather than paying sales tax on these purchases up front.  This and other provisions are critically important to Florida’s economy and the next generation of pilots.  

I applaud the sponsors in the Florida House and Senate who take a long view of general aviation and its importance to Florida.  It is also important to remember that residents and NON-residents alike, tourists and seasonal residents, DO have planning options when it comes to sales and use tax.  Contact me, Ari Good at Good Attorneys At Law, P.A., for professional advice.

Also to read my detailed and up-to-date analysis of the sales tax legislation, and the statutory provisions to which they apply, view the News & Articles page at

16 Annual Aircraft Registry Forum – A Summary

Earlier this week I attended the 16th Annual Aircraft Registry Forum here at the Ritz-Carlton in Naples, FL.  The conference was well attended, especially given our turbulent economic times.  While apparently the past few years have been “All Capetown All The Time”, the panels this year consisted of a good mix of aircraft attorneys, bankers, and representatives from charter and fractional program providers.  A brief summary:

The “Three Layer Cake” of title and closing – Closing aircraft deals post-Capetown requires all parties to pay careful attention to FAA registration issues, the UCC (or its state law equivalents), and the rules and regulations of the International Registry and international law.  The theme here is that the procedures one follows for FAA registration purposes may not necessarily correspond to IR defintions and proceudres for preserving one’s “international interests”.  Some key tips in this area included the suggestion that you re-register on the IR lease agreements that expire and are renewed.  Although this may be cumbersome, especially for short-term leases, re-registering a lease agreement avoids any ambiguity as to the validity of the lessor’s (or lessee’s rights) after the initial lease term.

Change in Lending Practices – As one would expect, lenders have become much more cautious in originating new aircraft loans, and are relying more on structured finance, sale-and-leaseback, and other solutions to get deals done.  Aircraft buyers should expect to have to disclose much more information about their revenues and financial health, as lenders are unable as in the past to rely on the aircraft holding its value as security for the loan.  Distressed owners will be asked to “open their books” when it comes to loan modifications.  The distressed borrower should be cautious in such cases, however, to restrict the use of sensitive financial information to reviewing the borrower’s ability to pay.  Contact an experienced aviation attorney in order to preserve your rights.

Changes to the International Registry – New guidance, regulations and a software update.  Special kudos to Rob Cowan, Managing Director of Aviareto Limited, the organization responsible for administering the International Registry, for coming all the way from Ireland to speak to his customers in person.  ICAO recently issued the third edition of regulations and procedures for the IR.  Some highlights include changes that make changing entity names easier, and an expansion in the scope of “controlled entities”, an important consideration for companies with aircraft-owning subsidiaries.  Aviareto has responded to survey data in making changes to the software, including an improved search function for looking up entities registered on the system.  This is a welcome development for the parties to a deal that need verification that a party to the deal is set up as a TUE and ready to go.

For questions contact Ari Good, JD LLM, at Good Attorneys At Law, P.A. –

Welcome to The Aviation Tax Attorney

Welcome to our new blog, the Aviation Tax Attorney, a service of Good Attorneys At Law, P.A.!  This is the place to be for the most current updates on income tax, sales tax, excise tax, property tax, and many other important issues in aviation today.  I welcome you to register and join as a contributing member, as we all benefit from our collective experiences flying aircraft and representing our clients.

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