Tax is your contribution to the country and it is inevitable. It is a significant thing and dangerous too, if not planned properly. People who take tax casually can be in the grave a problem later by paying more than the actual amount.
Aviation tax is little different than the normal taxes. It also needs a professional hand to handle like the aircraft title and escrow.
In case you are purchasing an aircraft and want an aircraft title search, you should know to manage aviation taxes to avoid any further problem. Here are some tips for you to manage aviation taxes. This is a general guideline. To understand your requirements and process as per those, you should always consult professionals.
The tax laws are managed by the Internal Revenue Service at the Federal Level. The Aviation is divided into commercial and non-commercial groups by the IRS. The IRS definition is quite different from the FAA for these two groups of operations. For the FAA, the regulatory definitions are valid. This involves the intent to hold an aircraft for hiring purpose. On the contrary, the IRS’s primary concern is the transportation of the person or the property to compensate or hire by air. The IRS is concerned about the intended profit.
It is possible that an operator is FAA Part 91 private but is eligible for commercial taxes as per the IRS. Many operators fall in trouble with the taxes as they don’t know if the Federal Excise Taxes should be applied for or not. The personal and business use is a complicated topic and the tax management of it makes it more complicated to be handled without a professional hand.
Location plays a crucial role in aviation taxation. 50 states of the United States have tax authorities with the Department of Revenue and the local county. All of them are different from each other. Some of those apply sales tax as well. In this case, the aircraft owner has to collect and submit sales tax for the sale of an aircraft, there are some exceptions though. The taxes are based on the percentage of time the aircraft spends in the state or the flat rate for the aircraft in the particular state.
It is quite significant where the aircraft is based at. The aircraft can be in trust but it is subjected to tax if it spends enough time in that particular state. The variation of the taxes may depend on the location. It may include use taxes, sales taxes, property taxes and many others. It is also possible for you to face taxes of two different states for spending much time outside its original location.
Depending on the state and city level, the additional taxes including fuel taxes and use taxes can be added to the aircraft. Generally, these taxes get applied to the aviation fund or the general fund of that state. For the commercial operators, there may be some exemptions.
For planning beforehand, you need an expert person and that you can get from us, at Aero Title. No matter whether it is about your aircraft title search or something else, you can help appropriate help from our professionals. Call us for more details, rather deep insight into the aviation tax management.