(a)
Definitions. The
following words and terms, when used in this chapter, have the following
meanings, unless the context clearly indicates otherwise:
Casual sales-A sale of an aircraft by a
person not engaged in the business of selling aircraft.
Commercial aircraft operator-A person,
excluding scheduled airlines, who is engaged in any of the following activities
as a business for compensation:
(i)
Transporting persons or property as a common carrier.
(ii) Selling or leasing of
aircraft.
(iii) Providing flight
instruction.
Common carrier-An air carrier who has
obtained a Certificate of Convenience from the Civil Aeronautics Board, or its
successor, for the purpose of transporting persons or property.
Fair rental value-The rental price which
the owner, lessor or other operator of an aircraft normally charges for the
rental of the aircraft; or the rental price which would be charged on the open
market for the rental of a similar aircraft for a similar period of time under
similar circumstances. When the fair rental value is unknown, the Department
will recognize 2.0 % of the purchase price as a monthly fair rental value of an
aircraft provided the purchase price represents the fair market value of such
aircraft.
Flight instruction-Instruction provided
in connection with obtaining a student license, private rating, commercial
rating, instrument rating, instructor rating, transport rating, jet rating,
instrument instructor rating or any rating or course approved by the Federal
Aviation Administration.
Prevailing market price-The amount which
would be charged for an aircraft on the open market at the time and place of
transfer; or the amount which would be charged on the open market for a similar
aircraft under similar circumstances.
Purchase price-The total value paid or
delivered, or promised to be paid or delivered, whether it be money or
otherwise in the complete performance of a sale or purchase including delivery
charges paid to the seller. The following items may be excluded from purchase
price provided they are separately stated:
(i) Tangible personal property taken in trade
or exchange.
(ii) Reasonable
interest and finance charges in connection with an installment sale.
Rental or lease-The transfer of
possession or custody of an aircraft, including an aircraft provided or used in
connection with flight instruction, but the term does not include the service
of a common carrier.
Rental or lease payment-The total value
paid or delivered, or promised to be paid or delivered, whether it be money or
otherwise, for any period under a rental or lease arrangement:
(i) Including payments for
maintenance, insurance or repair paid by the lessee to the lessor, or directly
to a repairman or insurance carrier.
(ii) Excluding separately stated charges for
aircraft fuel sold by the lessor or purchased by the lessee and reimbursed by
the lessor. To qualify for exemption, the charges for fuel shall:
(A) Be separately stated on the rental or
lease invoice and reflect the quantity and total charge.
(B) Not exceed 110% of the manufacturers
consumption rate for the aircraft leased.
(iii) Excluding separately stated charges for
instructor fees if such fees are identified.
Resident-
(i) A natural person who is domiciled in this
Commonwealth, or who maintains a permanent place of abode within this
Commonwealth and spends in the aggregate more than 60 days of the year within
this Commonwealth.
(ii) A
corporation incorporated under the statutes of this Commonwealth, or authorized
to do business or doing business within this Commonwealth, or maintaining a
place of business within this Commonwealth.
(iii) An association, fiduciary, partnership
or other entity domiciled in this Commonwealth, or authorized to do business or
doing business within this Commonwealth, or maintaining a place of business
within this Commonwealth.
Use-The exercise of any right or power
incidental to the ownership, custody or possession of tangible personal
property including but not limited to the transportation, storage and
consumption.
(b)
Sales, purchases, leases or rentals involving delivery in this Commonwealth.
(1)
Transactions originating in this
Commonwealth. Transactions which originate in this Commonwealth and
involve physical delivery within this Commonwealth are subject to sales tax,
unless the purchaser or lessee is entitled to claim one of the exemptions
listed in subsection (d). Examples of taxable transactions include casual or
dealer sales or purchases of aircraft, and leases or rentals of aircraft;
sales, purchases, leases or purchases of aircraft parts; and sales or purchases
of repair or maintenance services.
(2)
Transactions originating outside
of this Commonwealth. Transactions such as sales, purchases, leases or
rentals of aircraft, parts or repair or maintenance services originating
outside of this Commonwealth but involving physical delivery within this
Commonwealth are also subject to tax. If the seller, lessor or repairman is
licensed by the Department to collect Pennsylvania sales tax, the purchaser or
lessee is required to pay the applicable tax at the time of purchase or lease.
If the seller, lessor or repairman is not licensed by the Department to collect
tax, the purchaser or lessee is required to remit the tax directly to the
Department. See subsection (h).
(3)
Leases and rentals. Leases or rentals taxable at the time of
delivery remain subject to Pennsylvania sales tax throughout the entire period
of the lease or rental, notwithstanding the fact that the aircraft or aircraft
part may be periodically removed from this Commonwealth on one or more
occasions during the total rental period. If during a period of out of state
use, the lessee is legally required to pay sales or use tax to another taxing
jurisdiction having tax credit reciprocity with the Commonwealth, appropriate
credit will be given for such tax against Pennsylvania sales tax owing upon the
same lease or rental payment. See subsection (e).
(4)
Basis for tax. If the
transaction is a sale, the tax is imposed upon the purchase price. If the
transaction is a lease or rental, the tax is imposed upon the full lease or
rental payment.
(c)
Purchases, leases or rentals involving delivery outside of
Pennsylvania.
(1)
General. Transactions which originate either inside or outside
this Commonwealth and involve physical delivery outside of this Commonwealth
are exempt from Pennsylvania sales or use tax. If the aircraft enters this
Commonwealth following delivery, it becomes subject to Pennsylvania use tax
unless the purchaser or lessee is entitled to claim one of the exemptions
listed at subsection (d). Examples of this type of transaction include the
casual sale or the purchase of an aircraft from a dealer; leases or rentals of
aircraft; purchases or leases of aircraft parts and purchases of repair or
maintenance service.
(2)
Use by a resident. If a resident brings an aircraft or
aircraft part into this Commonwealth within 6 months following the date of an
out-of-state purchase, the use tax is based upon the original purchase price.
If after 6 months of the date of purchase, the resident brings the aircraft
into this Commonwealth, the resident purchaser may elect to pay use tax based
upon the prevailing market value on the date the aircraft or aircraft part
enters this Commonwealth. If a resident brings an aircraft or aircraft part
into this Commonwealth following its lease or rental ouside of this
Commonwealth, the use tax is based upon that portion of the rental or lease
payment attributable to the use of the aircraft in this Commonwealth. The
resident may be entitled to a tax credit representing sales tax required to be
paid to another taxing jurisdiction having tax credit reciprocity with the
Commonwealth.
(3)
Use by a
nonresident. If a nonresident brings an aircraft or aircraft part into
this Commonwealth following an out-of-state purchase, lease or rental, the
nonresident is required to pay use tax and is entitled to the same exemptions
as a Pennsylvania resident. The nonresident is not required to pay tax upon an
aircraft or aircraft part:
(i) Used in this
Commonwealth for any period of time as a tourist or vacationer.
(ii) Used in this Commonwealth other than as
a tourist or vacationer, for a period of 7 days or less.
(iii) Brought into this Commonwealth in
connection with the establishment of a permanent business or residence if the
aircraft or aircraft part was purchased more than 6 months prior to the date it
was brought into this Commonwealth. This 6 month exemption does not apply to
aircraft or aircraft parts which were purchased within 6 months of the date
they were brought into this Commonwealth in connection with the establishment
of a permanent business or residence. The aircraft or aircraft parts, purchased
within 6 months, are subject to Pennsylvania use tax upon their original
purchase price. If a nonresident brings an aircraft or aircraft part into this
Commonwealth following its lease or rental outside of this Commonwealth, and is
not entitled to an exemption, the Pennsylvania use tax is based upon that
portion of the rental or lease attributable to the use of the aircraft in this
Commonwealth. The nonresident may be entitled to a tax credit representing
sales tax required to be paid to another taxing jurisdiction having tax credit
reciprocity with the Commonwealth.
(4)
Payment of tax.
Residents and nonresidents who use aircraft or aircraft parts in this
Commonwealth following their purchase, lease or rental in another state, have
the responsibility to remit any Pennsylvania use tax which may be due directly
to the Department. See subsection (h).
(d)
Exemptions. Transactions
relating to aircraft may be subject to an exemption. If the purchase, lease or
rental involves physical delivery within this Commonwealth, the purchaser or
lessee is required to give to the seller or lessor a completed exemption
certificate in lieu of the tax (Form REV-1220). If the exempt purchaser or
lessee brings the aircraft or aircraft parts into this Commonwealth, following
the purchase or lease, the purchaser or lessee may claim an exemption at the
time of filing with the Department (Form REV-832 "Aircraft Sales and Use Tax
Return"). Purchasers or lessees entitled to claim an exemption under their
appropriate regulations are required to complete the form and provide a reason
for the claimed exemption.
(e)
Credit against tax. A credit may be granted with respect to
the tax due and paid to another state by reason of a tax similar to the tax
imposed by the TRC. No credit will be granted unless the other state grants
similar tax relief to persons who have paid tax to the Commonwealth. A list of
states granting similar tax relief may be obtained from the Department upon
request.
(f)
Commercial
aircraft operators. A commercial operator may purchase an aircraft
without payment of tax if the commercial aircraft operator is entitled to claim
an exemption under the law. Thereafter, if the commercial aircraft operator
makes a taxable use of such aircraft, he is permitted to pay tax to the
Department based upon the fair rental value of the aircraft during such taxable
use. If the commercial aircraft operator uses the aircraft or aircraft part in
performing aerial surveys, crop dusting, pipeline inspections or similar flight
activities or uses the aircraft or aircraft part for personal use, he is
required to pay to the Department use tax upon the fair rental value of the
aircraft or aircraft part during such use.
(g)
Flight instruction.
Airport operators who engage in the business of providing flight instructions
are required to collect sales tax upon all equipment and supplies including the
rental of an aircraft used in providing this service. No tax need be collected
on charges made for flight instructions. If the charges for an aircraft are not
separately stated, the Department will require tax to be collected on the
amount billed to the student.
(h)
Tax and information returns.
(1)
General. Purchases and
lessees of aircraft, aircraft parts or repair or maintenance services who do
not pay the applicable sales tax to the seller, lessor or repairman are
required to remit tax directly to the Department. If the purchaser or lessee is
licensed with the Department, the applicable tax shall be remitted with the
purchaser's or lessee's regular tax return. In the conduct of its audit
examinations, the Department will examine both the books and records as well as
the aircraft flight logs in order to determine the tax due. If the purchaser or
lessee is not licensed with the Department, the following forms shall be used:
(i)
Purchase of aircraft.
Form REV-832 "Aircraft Sales and Use Tax Return."
(ii)
Leases of aircraft, lease of
aircraft parts or purchase of repair or maintenance services. Form
PA-3. To obtain this tax return, purchaser or lessee must register with the
Department of filing Form REV-289 "Application of Sales, Use or Hotel Occupancy
License."
(2)
Aircraft sales information return. Persons engaged in the
business of selling aircraft are required to file an Aircraft Sales Information
Return with each regular tax return which is filed with the Department. This
form permits the seller to list all purchasers of aircraft during the reporting
period, the identification of the aircraft sold, and whether the sale was
taxable or exempt.
