Florida Taxes

Florida is at it again with the aviation taxes...sad to say, but true.

Sun-N-Fun was the first thing that popped into my head...lots of new owners from out of state.

From Aero-News Network

Welcome To The Sunshine State... NOT
It appears Florida's tax personnel are targeting new airplane owners in ways that do not exactly make them feel welcome to the state.

Over the course of the last few weeks, ANN has learned of a number of issues that have arisen when owners of new aircraft, generally within the first six months of the sale, have been targeted for "use tax" by agents of the state's Department of Revenue... despite the fact that the targeted aircraft were not owned or operated by state residents.

It starts like this... you buy a new or used aircraft and sign the bill of sale... which starts "the clock." It is Florida's position that for the next six months (possibly thereafter, though the burden of proof reportedly changes at that point), the state has the right to exact the requisite "Use Tax" (Sales Tax) for the fact you partook of the state's services unless you can show an equivalent Use or Sales Tax receipt from another state...

In other words, for those of you who may have bought a $500K Cessna, Cirrus, Columbia, etc... unless you can prove that you paid the equivalent use tax in another state, you owe the state of Florida some $30K if you visited the state in the first six months of your ownership. Mind you, if your sales/use tax bill comes from a state that exacts LESS tax than Florida, the FL Department of Revenue still expects you to pony up the difference... and if you're from a state that exacts a minimum fee (like the few hundred dollars for owners in South Carolina), they will bill you for the WHOLE difference... and its up to you to fight them on it. No kidding.

It makes NO difference to the state if you have any property in Florida, or whether you bought the airplane there, or if you have ANY business interests whatsoever in the state... If Florida catches you here and if they can find a way to stick you with a tax bill, they will.

According to the Florida Tax Code, "There shall be a presumption that any aircraft, boat, mobile home, motor vehicle, or other vehicle purchased in another state, territory of the United States, or the District of Columbia but titled, registered, or licensed in this state is taxable except as otherwise provided in subsection (26) of this rule. This presumption may be rebutted only by documentary evidence that the person owning the aircraft, boat, mobile home, or motor vehicle purchased the aircraft, boat, mobile home, or motor vehicle in another state, territory of the United States, or the District of Columbia six (6) months or more prior to the time it is brought into this state. In order for such property to be presumed exempt as purchased for use outside Florida, the person owning the aircraft, boat, mobile home, motor vehicle, or other vehicle must provide documentary proof that such property was used in other states, territories of the United States, or the District of Columbia for six months or longer under conditions which would lawfully give rise to the taxing jurisdiction of another state, territory, or District of Columbia and any lawfully imposed tax was paid to such state, territory, or District of Columbia before being imported into this state. However, the rental or lease of any aircraft, boat, mobile home, or motor vehicle which is used or stored in this state is taxable without regard to its prior use or tax paid on the purchase outside this state."

Why? Because they can. The very liberal Florida tax code allows them to tax aircraft if they operate at any time during the first six months of a purchase in the state... and according to some interpretations, there may be some legal justification for Florida to tax you if you so much as fly OVER the state.

This problem has been known for a while but recent ramp checks by FL DOR personnel have apparently stepped up, and snagged at least one Cirrus owner and a Meridian owner who came back to Florida to undertake flight training in his new airplane. The Cirrus owner is on the hook for some $30K in additional taxes... the Meridian owner -- well over $100K.

Welcome to Florida, folks, please remove the knife from your back as you cross back over the state lines...

A spokesperson for the FL DOR, Rene Watters, is unapologetic for the issue, telling ANN that they are simply doing their jobs and that if anyone has a problem with that, to "take it up with the legislature." This matter, of course, can be appealed through the courts... but this route necessitates expensive and time consuming litigation, via the use of a trained tax attorney... and you may still lose, after all. Catch 22.

Other DOR staffers opine that aircraft owners have it particularly hard, since they admit that RVs and boats get a somewhat more permissive treatment from them, "...Probably due to better lobbying on the part of their industry reps."

Regardless; it's spooking a number of aircraft owners... we spoke with an avionics shop in Northern Florida that lost some business due to the concern expressed by an aircraft owner over bringing his airplane into the state shortly after he bought it, and Piper is reportedly NOT pleased about the Meridian tax bill noted above... especially at a time when the state is trying to con (uh, convince) Piper to locate the PiperJet facility within the state.

We have a feeling that Piper CEO Jim Bass may have a few things to say, as a result of these recent events, since anyone taking delivery at a Florida Piper plant may find themselves with a tax bill, even if they leave the state right away and never darken the state's borders again.

In the meantime, the recent escalation in DOR ramp inspections is getting aggressive attention from the aviation business community -- and we expect to get some feedback on the matter shortly... we'll update you as to what occurs.

It is not that I didn't believe you, but I try not to comment on things unless I can confirm the information I have read using another source. So I went to the Florida Department of Revenue web site.

http://dor.myflorida.com/dor/taxes/sut_aircraft_owner.html

I won't be flying to Florida.

yea, they sent me a letter saying I owed tax on a project i bought, plus a 10% penalty per months I haven't paid( letter was sent 6 months later), A LOAD of $%^%^ if you ask me, the darn thing wasn't evan flyable!!!!!

I think you may be missing the point I see in the code:

"There shall be a presumption that any aircraft, boat, mobile home, motor vehicle, or other vehicle purchased in another state, territory of the United States, or the District of Columbia but titled, registered, or licensed in this state is taxable"

Not being a tax lover but what I read matches some of what other states, including my beloved Oklahoma intend... buy it where you want but you tax it where you register it, although there are states like Florida and Colorado that want to get you on the selling end too, so you have to be careful and research where you conduct the transaction and document it properly.

From what you have posted I see NOTHING which should cause a visiting (visiting is the key... just like visiting "yachties" who this was most likely written to parallel) pilot any worry unless you are going to register or title that plane in Florida within six months of purchase.


OC

PS. Having no state income tax comes at a price elsewhere and in Florida's case it is in HIGH property, vehicle and "vacation taxes" (hotel, rental car & excessive airline passenger fees)

I didn't read the code, I read (and linked to) the summary information provided by the Florida Department of Revenue. The verbiage:

...but titled, registered, or licensed in this state is taxable

Click to expand...

is vaguely alluded to in the "What is taxable" section, but is never spelled out. Starting in the next section, statements like:

...use tax provides uniform taxation of items such as aircraft, which may be purchased outside Florida, but used*, hangared, or* stored in the state.

Click to expand...

throughout the rest of the text leaves plenty of room for them to include non-Floridians.

I am not against paying my share of taxes, but the information given by the DOR indicates that if I were to take my newly purchased $200,000 plane to Sun 'n Fun, they could demand I pay a $1000 tribute, equal to the difference between the 5.5% Ohio sales tax and the Florida 6% sales tax. That's no way to treat a guest.

Another discrepancy was:

(a) There shall be a presumption that any aircraft... purchased in another state, territory of the United States, or the District of Columbia but titled, registered, or licensed in this state is taxable...

Click to expand...

But...

Aircraft operated in this state must be registered in accordance with the regulations of the Federal Aviation Administration. Florida does not require a separate state registration of aircraft.

Click to expand...

I see now that the code is aimed at aircraft based in Florida. The Florida legislature and DOR just have a bit of re-writing and clarifying to do.


*Bold Added

This doesn't seem new. They've always taxed airplane purchases. I bought one in 1998 in New York, the transaction took place up there, and Florida taxed me.

This approach to taxation isn't new or unique to Florida. When I was a resident of North Carolina and I bought a car out of state I had to pay the difference between the North Carolina tax and the out of state tax. When I bought a plane out of state and registered it in NC I had to do the same (in this case there was no out of state tax, so all the taxes on the plane were paid to NC).

Previous posts have already pointed out the key language: the plane has to be registered in FL in order to be subject to the FL tax. So out of state visitors to Sun & Fun, etc are not at risk.

I read through the code and agree, the key words are "registered, or licensed in this state is taxable". If they were able to tax a visiting vehicle, they could tax EVERY 18 wheeler that enters the state from another state if the truck is less than 6 months old! They could also tax every car, bus, motor cycle, etc that visit. I don't see that happening. Now, if you by or sell a vehicle within Florida or buy out of state and live in Florida, you will be Taxed. California did a similar thing with vehicle registration. With motor home and expensive cars costing over a grand to license, many folks got a PO box in Nevada and bought and licensed the cars there. So, along comes the CHP. They were actually watching vehicles to see where they were being operated, and followied vehicles to see where they were being kept. When the owner could not prove any actual residency in Nevada (or other state) they were busted and had to pay registration, tax, and penalties from when the vehicle was new! Ouch!

Marty

Correct me if I am wrong, but it still appears a non resident could get"dinged" if they purchased a plane in Florida and left the state with it, complied with the (onerous) documentation and notification requirements, but entered Florida again within 6 months (Section 10, Paragraph (b)1).

This weeks AOPA ePilot has a blurb about this. Says they will be working with the folks in Florida (and Maine) to eliminate the possibility of taxing bona-fide non residents.

States are very aggressive about collecting sales tax, even on items bought out state. When I purchase items for my school from vendors out of California, I still need to include the tax on my PO's. At the end of the year the state audits the schools and any items purchased out of state are subject to a "user tax" for lack of a better term. This really came into use as more and more people bought things from out of state via the Internet. The states want their cut, no matter where you bought it. I think the only way to avoid being taxed from two states is to buy an aircraft in the state you live in. States know this is not practical with aircraft like it is with cars, so we get hit from two states. My understanding (I could and hope I am wrong) is that unless I can prove I paid California sales tax or a "user tax" on the materials I am using to build my 2+2, I will be hit with the equivalent of a sales tax when I finish and register my project! Only two things guaranteed in life, Death and Taxes!

Our state is also starting to act like Florida when it comes to airplanes.

I'll never forget the time they taxed a wreck I bought.

We have a very odd situation in this state. We're number 48 in economic development/economy and number 2 in tax burden--yet our beloved state legislature and governor (all the same party) can't seem to figure out the connection between those two statistics....