34 Tex. Admin. Code § 3.280 - Aircraft
(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.
(B) Any use of the
aircraft for business or pleasure travel during the time that the aircraft is
being completed, repaired, remodeled, or restored means the aircraft was not
brought into Texas for the sole purpose of completion, repairs, remodeling, or
restoration, and Texas use tax may be due on the aircraft.
(C) The owner or operator of the aircraft
must maintain records sufficient to show all uses of the aircraft within Texas.
The comptroller may examine all records maintained on the aircraft, including
logs, to determine the actual use of the aircraft in Texas.
(5) Use tax credit. The purchaser
or lessee of an aircraft is allowed to claim a credit against Texas use tax due
on the use of the aircraft for any legally imposed sales or use tax due and
paid on the sale or use of the item by the purchaser or lessee of the item to
another state or any political subdivision of another state. For information on
taking a credit for tax paid to another state, refer to §
3.338 of this title (relating to
Multistate Tax Credits and Allowance of Credit for Tax Paid to
Suppliers).
(d) Related
parties.
(1) The sale, lease, rental, or
other transaction between a person and a member, owner, or affiliate of the
person involving an aircraft that would not be subject to tax, or would qualify
for an exemption from tax if the transaction were between unrelated persons
remains not subject to tax or exempt from tax to the same extent as if the
transaction were between unrelated persons.
(2) Except as provided in paragraph (3) of
this subsection, the use of an aircraft by an affiliate of the purchaser of the
aircraft, or an owner or member of either the purchaser or its affiliate, is
not subject to tax if the purchaser paid Texas sales or use tax on the purchase
of the aircraft, or the purchase of the aircraft was exempt from Texas sales or
use tax.
(3) The exemption in
paragraph (2) of this subsection does not apply if the purchase of the aircraft
was exempt as:
(A) a sale for resale;
or
(B) an occasional sale, unless
the owner, member, affiliate, or the owner or member of the affiliate, who is
leasing or renting the aircraft could have purchased the aircraft as an
occasional sale. For information on the occasional sale exemption, see
subsection (j) of this section.
(e) Tax exemptions specific to aircraft. In
addition to the other exemptions from tax provided under Tax Code, Chapter 151,
the following tax exemptions apply specifically to the sale, lease, rental, and
use in Texas of aircraft, aircraft engines, and component parts. A person
selling, leasing, or renting an aircraft, aircraft engine, or component part
may accept a properly completed exemption certificate from the purchaser in
lieu of collecting Texas sales and use tax at the time of the transaction. A
purchaser claiming a sales tax exemption under this subsection may provide the
seller with a properly completed exemption certificate at the time of the
transaction. A purchaser who does not claim the exemption at the time of the
transaction may subsequently provide documentation to the comptroller to prove
that the exemption applies, except as provided in paragraph (4) of this
subsection. For more information, refer to §
3.287 of this title (relating to
Exemption Certificates).
(1) Certificated or
licensed carriers.
(A) Sales and use tax is
not due on the sale, lease, or rental of an aircraft to a certificated or
licensed carrier.
(B) Sales and use
tax is not due on the sale, lease, or rental of component parts of an aircraft
to a certificated or licensed carrier.
(C) Sales and use tax is not due on the sale
or use of tangible personal property that is necessary for the normal
operations of, and is pumped, poured, or otherwise placed in, an aircraft owned
or operated by a certificated or licensed carrier.
(D) Sales and use tax is due on the sale,
lease, or rental of machinery, tools, and equipment that support the overall
operation of a certificated or licensed carrier, such as baggage loading or
handling equipment, reservation or booking machinery and equipment, garbage and
other waste disposal equipment, and office supplies and equipment, unless
otherwise exempt under Tax Code, Chapter 151.
(E) Sales tax is not due on the sale of
tangible personal property transferred to a certificated or licensed carrier in
Texas, if the carrier, using its own facilities, ships the items to a point
outside of Texas under a bill of lading and the items are purchased for use by
the carrier in the conduct of its business as a certificated or licensed
carrier solely outside Texas.
(2) Flight schools, instructors, and
students.
(A) Sales or use tax is not due on
the sale, lease, or rental of an aircraft to a person who:
(i) holds a current flight school or flight
instructor certificate issued by the FAA;
(ii) holds a current sales and use tax permit
issued under Tax Code, Chapter 151; and
(iii) uses the aircraft to provide qualified
flight instruction.
(B)
Any use of the aircraft other than that described in this paragraph is subject
to tax as a divergent use under subsection (f) of this section, unless
otherwise exempt under Tax Code, Chapter 151.
(C) Sales or use tax is not due on the sale
or use of component parts of an aircraft owned or operated by a flight school
or flight instructor to provide qualified flight instruction.
(D) Sales or use tax is not due on the sale
or use of tangible personal property that is necessary for the normal
operations of, and is pumped, poured, or otherwise placed in, an aircraft owned
or operated by a flight school or flight instructor to provide qualified flight
instruction.
(E) A student enrolled
in a program providing qualified flight instruction may claim an exemption from
sales tax on the short-term hourly rental of an aircraft for qualified flight
instruction, including solo flights and other flights. When completing an
exemption certificate claiming this sales tax exemption, the student must
identify the flight school by name and address or, if the student is not
enrolled in a flight school program, the student must identify the student's
flight instructor and the instructor's address. The student must also retain
copies of written tests and instructor's endorsements. Without evidence that
the student is in pursuit of a FAA-certified pilot certificate or flight
rating, aircraft rentals are subject to sales tax.
(3) Foreign governments. Sales tax is not due
on the sale, lease, or rental of an aircraft to a foreign government. Sales tax
is due on the sale or lease of component parts or materials incorporated in
Texas into an aircraft owned by a foreign government, unless otherwise exempt
under Tax Code, Chapter 151. Refer to subsection (g) of this section for
information concerning the repair, remodeling, maintenance, and restoration of
aircraft, aircraft engines, and component parts.
(4) Fly-away exemption.
(A) Sales tax is not due on the sale or lease
of an aircraft in Texas to a person for use and registration in another state
or nation before any use in Texas other than:
(i) completing, repairing, remodeling,
maintaining, or restoring the aircraft in Texas, including necessary flights
for troubleshooting, testing, or flights between service locations under an
FAA-issued ferry permit; or
(ii)
flight training in the aircraft.
(B) Any use of the aircraft in Texas other
than that described in subparagraph (A) of this paragraph before the aircraft
is flown out of this state for use and registration in another state or nation
will result in the loss of the exemption.
(C) The subsequent use of an aircraft in
Texas after the aircraft has left Texas will not subject the aircraft to tax on
the purchase price 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 purchased or
leased 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.
(D) For purposes of this subsection, an
aircraft is predominantly used outside of Texas if more than 50% of its total
departures are from locations outside of Texas.
(E) 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.
(F) The fly-away exemption does not apply to
the short-term hourly rental of an aircraft in Texas, even if the person
renting the aircraft intends to use the aircraft in another state.
(G) Exemption certificate required.
(i) A purchaser claiming the fly-away
exemption under this paragraph must provide the seller with a properly
completed Texas Aircraft Exemption Certificate Out-of-State Registration and
Use, Form 01-907, its electronic equivalent, or any form promulgated by the
comptroller that succeeds such form. The seller may only accept the certificate
if the seller lacks actual knowledge that the claimed exemption is invalid.
Within 30 days of the sale of the aircraft, a copy of the completed certificate
signed by both the seller and the purchaser must be provided to the Comptroller
of Public Accounts, Business Activity Research Team, P. O. Box 13003, Austin,
Texas, 78711-3003.
(ii) By signing
the certificate, the purchaser authorizes the comptroller to provide a copy of
the certificate to the state or nation in which the aircraft is intended to be
used and registered.
(iii) Issuing
an invalid certificate is a misdemeanor punishable by a fine not to exceed $500
in addition to the assessment of tax and, when applicable, penalty and interest
on the purchase price of the aircraft.
(5) Agricultural use.
(A) Sales or use tax is not due on the sale,
lease, or rental of an aircraft for use exclusively in connection with an
agricultural use, as defined in this section, when used for:
(i) predator control;
(ii) wildlife or livestock capture;
(iii) wildlife or livestock
surveys;
(iv) census counts of
wildlife or livestock;
(v) animal
or plant health inspection services; or
(vi) agricultural aircraft operations, such
as crop dusting, pollination, or seeding.
(B) Component parts and necessary supplies
for aircraft used exclusively in agricultural aircraft operations.
(i) Sales or use tax is not due on the sale
or use of component parts of an aircraft used exclusively in agricultural
aircraft operations.
(ii) Sales or
use tax is not due on the sale or use of tangible personal property that is
necessary for the normal operations of, and is pumped, poured, or otherwise
placed in, an aircraft used exclusively in agricultural aircraft
operations.
(iii) Exemption
certificate required. A person claiming the exemption under this subparagraph
must have a valid Texas Agricultural and Timber Exemption Registration Number
issued by the comptroller, and must issue a properly completed Texas
Agricultural Sales and Use Tax Exemption Certification, Form 01-924, its
electronic equivalent, or any form promulgated by the comptroller that succeeds
such form.
(iv) This exemption does
not include the sale or use of firearms, ammunition, or other equipment or
tangible personal property used to perform predator control, wildlife census
counts, or any other activity not included in the definition of agricultural
aircraft operation.
(C)
Use of an aircraft is considered to be "for use exclusively in connection with
an agricultural use" if 95% of the use of the aircraft is for a purpose
described by subparagraph (A) of this paragraph. Travel to a location to
perform a service described by subparagraph (A) of this paragraph will not
disqualify the sale, lease, or rental of an aircraft from the exemption, and
will not be regarded as divergent use.
(D) Selling the use of a gunner's seat on an
aircraft that is exempt under this paragraph to a person participating in
aerial wildlife management, as authorized by Parks and Wildlife Code, §
43.1075
(Using Helicopters to Take Certain Animals), will not result in a loss of the
exemption. The sale of the gunner seat is subject to sales tax as a taxable
amusement service under Tax Code, §
151.0028 (Amusement
Services) and §
3.298 of this title (relating to
Amusement Services).
(E) A person
who claims an exemption under this paragraph must maintain and make available
to the comptroller upon request flight records for all uses of the aircraft, as
well as any other records requested by the comptroller, such as Aerial Wildlife
Management Permits issued under Parks and Wildlife Code, Chapter 43, Subchapter
G. Failure to maintain adequate records may result in loss of the
exemption.
(6) Fractional
ownership operations. Sales and use tax is not due on the sale, lease, or
rental of an aircraft operated as part of a fractional ownership program under
14 Code of Federal Regulations Part 91, Subpart K-Fractional Ownership
Operations. Sales tax is due on the sale or lease of component parts or
materials incorporated into an aircraft that is part of an aircraft fractional
ownership operation, unless otherwise exempt under Tax Code, Chapter
151.
(f) Divergent use.
(1) Exempt aircraft, aircraft engines, and
component parts. Sales and use tax is due when an aircraft, aircraft engine, or
component part sold, leased, or rented tax-free under a properly completed
exemption certificate is subsequently put to a taxable use other than the use
allowed under the certificate. For more information, refer to §
3.287 of this title.
(2) Sales for resale. Sales and use tax is
due when an aircraft engine or component part sold, leased, or rented tax-free
under a properly completed resale certificate is subsequently put to a taxable
use other than the use allowed under the certificate. For more information,
refer to §
3.285 of this title (relating to
Resale Certificate; Sales for Resale). Sales and use tax is not due on the
divergent use of an aircraft that is purchased for resale.
(3) Agricultural use and agricultural
aircraft operations. No divergent use may be made of an aircraft exempted under
subsection (e)(5) of this section, relating to agricultural use, without a
total loss of the exemption. Certain limited uses identified in subsection
(e)(5)(C) of this section do not constitute divergent use of an agricultural
aircraft. No divergent use of component parts or necessary tangible personal
property exempted under subsection (e)(5)(B) of this section, relating to
agricultural aircraft operations, can be made without a total loss of that
exemption.
(g) Repair,
remodeling, maintenance, restoration, and completion.
(1) Labor to complete, repair, remodel,
maintain, or restore aircraft in Texas is not subject to sales tax. The sale or
use of materials incorporated into an aircraft, aircraft engine, or component
part being completed, repaired, remodeled, maintained, or restored in Texas is
subject to sales and use tax as provided in paragraph (2) of this subsection,
unless otherwise exempt.
(2) Tax
responsibilities of service providers.
(A)
Incorporated materials. Whether the service provider owes tax on the purchase
of materials that will become incorporated materials as part of the completion,
repair, remodeling, maintenance, or restoration of an aircraft, aircraft
engine, or component part depends upon whether the service provider is
operating under a lump-sum or separated contract.
(i) Separated contracts. If the services are
performed under a separated contract, the service provider is regarded as the
seller of the incorporated materials. If the service provider has a sales and
use tax permit, the service provider may issue a properly completed resale
certificate to the supplier in lieu of paying sales tax on the purchase of the
incorporated materials. The service provider must then collect sales tax from
the customer on either the agreed contract price for the incorporated
materials, or the amount the service provider paid for the incorporated
materials, whichever amount is greater. The service provider may also use
incorporated materials removed from an inventory of items upon which sales or
use tax was paid at the time of purchase. In such a case, sales tax is to be
collected from the customer on the agreed contract price of the incorporated
materials as though the incorporated materials had been purchased tax-free with
a resale certificate.
(ii) Lump-sum
contracts. If the services are performed under a lump-sum contract, the service
provider is the ultimate consumer of all incorporated materials. The service
provider may not collect sales tax from the customer. The service provider must
pay sales or use tax to the suppliers of the incorporated materials at the time
of purchase, unless the service provider works under both lump-sum and
separated contracts and uses incorporated materials removed from a valid
tax-free inventory that were originally purchased tax-free by use of a resale
certificate. In such a case, the service provider incurs a tax liability based
upon the purchase price of the incorporated materials and must report and remit
the tax to the comptroller. The service provider owes sales or use tax on the
purchase of incorporated materials even when the services are performed for a
customer that is exempt from tax under Tax Code, Chapter 151.
(B) Tools, equipment, and
consumable supplies. Sales and use tax is due on the purchase, lease, or rental
of tools, equipment, and consumable supplies used by the service provider but
not incorporated into the aircraft, aircraft engine, or component part at the
time of the service, regardless of the type of contract used to perform the
service, and the service provider may not collect sales or use tax from the
customer on any charges for such items.
(3) Exemption for certificated or licensed
carriers, flight schools or instructors, and persons operating aircraft for an
agricultural use.
(A) The total charge for
services to complete, repair, remodel, maintain, or restore aircraft, aircraft
engines, or component parts by or for a certificated or licensed carrier, a
flight school or instructor providing qualified flight instruction, or a person
operating aircraft for an agricultural use is exempt from sales and use tax,
whether the charge is lump-sum or separately stated.
(B) Sales and use tax is not due on the sale,
lease, or rental of machinery, tools, supplies, and equipment used directly and
exclusively in the repair, remodeling, maintenance, or restoration of aircraft,
aircraft engines, or component parts by or for a certificated or licensed
carrier, a flight school or a flight instructor providing qualified flight
instruction, or person conducting an agricultural aircraft operation, provided
the purchaser issues the seller a properly completed exemption certificate.
This includes equipment, such as battery chargers and diagnostic equipment,
used to sustain or support safe and continuous operations and to keep the
aircraft in good working order by preventing its decline, failure, lapse, or
deterioration.
(4)
Aircraft used outside Texas. The following guidelines apply to aircraft brought
into Texas by out-of-state owners or operators for completion, repair,
remodeling, or restoration.
(A) Separated
contracts. Sales or use tax is not due on the separately stated charge for
labor to complete, repair, remodel, maintain, or restore an aircraft, aircraft
engine, or component part performed under a separated contract. The cost of
incorporated materials is:
(i) subject to
sales tax when the owner or operator takes delivery of the aircraft in Texas;
or
(ii) not subject to sales tax
when the aircraft is delivered to an out-of-state location by the service
provider.
(B) Lump-sum
contracts. Sales tax is not due by the owner or operator of an aircraft
completed, repaired, remodeled, maintained, or restored under a lump-sum
contract. The service provider owes sales or use tax on the incorporated
materials, whether the service provider delivers the aircraft out of state or
the owner or operator takes delivery of the aircraft in Texas.
(5) The repair, remodeling,
maintenance, or restoration of component parts removed from and returned to an
aircraft pursuant to the repair, remodeling, maintenance, or restoration of
that aircraft is to be treated in accordance with the provisions of this
subsection. The repair, remodeling, maintenance, or restoration of a component
part removed from an aircraft that is not returned to the aircraft is subject
to the provisions of §
3.292 of this title (relating to
Repair, Remodeling, Maintenance, and Restoration of Tangible Personal
Property).
(h) Jet
turbine aircraft engines.
(1) Sales or use
tax is not due on the sale, lease, or rental of the following items used in
electrochemical plating or a similar process by persons overhauling,
retrofitting, or repairing jet turbine aircraft engines and their component
parts:
(A) machinery, equipment, or
replacement parts or accessories with a useful life in excess of six months;
and
(B) supplies, including
aluminum oxide, nitric acid, and sodium cyanide.
(2) A person claiming an exemption under
paragraph (1) of this subsection must maintain documentation sufficient to show
that no exclusion under Tax Code, §
151.318 (Property Used in
Manufacturing) applies. Also refer to §
3.300 of this title (relating to
Manufacturing; Custom Manufacturing; Fabricating; Processing).
(3) Sales tax is not due on the sale of
electricity or natural gas used in the off-wing processing, overhaul, or repair
of a jet turbine engine or its parts for a certificated or licensed carrier.
For more information, refer to §
3.295 of this title (relating to
Natural Gas and Electricity).
(i) Warranties.
(1) Manufacturer's written warranty or recall
campaign.
(A) Sales or use tax is not due on
the use of incorporated materials or services furnished by the manufacturer to
repair an aircraft, aircraft engine, or component part under a manufacturer's
written warranty or recall campaign.
(B) Records must be kept by a service
provider showing that the incorporated materials or services were used in
repairing an item under a manufacturer's written warranty or recall
campaign.
(C) A service provider
purchasing incorporated materials used in a repair under a manufacturer's
written warranty or recall campaign may issue a properly completed exemption
certificate to the seller in lieu of paying tax on the purchase.
(2) Extended warranties and
service policies.
(A) Sales tax is not due on
the sale of an extended warranty or service policy that covers an aircraft,
aircraft engine, or component part.
(B) A service provider performing services
under an extended warranty or service policy must collect sales or use tax on
the sale or use of incorporated materials as required under subsection
(g)(2)(A) of this section, unless the aircraft, aircraft engine, or component
part is owned by a certificated or licensed carrier, a flight school or
instructor providing qualified flight instruction, or an agricultural aircraft
operation.
(j)
Occasional sales. The purchase of an aircraft, aircraft engine, or component
part is exempt from sales and use tax if the purchase meets the definition of
an occasional sale provided by §
3.316 of this title (relating to
Occasional Sales; Transfers Without Change in Ownership; Sales by Senior
Citizens' Organizations; Sales by University and College Student Organizations;
and Sales by Nonprofit Animal Shelters).
(k) Sales for resale.
(1) A person selling, leasing, or renting an
aircraft, aircraft engine, or component part may accept a properly completed
and signed resale certificate from the purchaser at the time of sale in lieu of
collecting tax on the sale if the person does not know, and does not have
reason to know, that the sale is not a sale for resale. For more information on
the good faith acceptance of a resale certificate, refer to §
3.285 of this title.
(2) A person purchasing, leasing, or renting
an aircraft in a transaction that meets the definition of a sale for resale may
provide the seller or lessor with a properly completed resale certificate if
the person:
(A) holds a valid sales and use
tax permit at the time of the transaction; and
(B) does not intend to exclusively lease the
aircraft together with a crew or pilot.
(3) A person purchasing, leasing, or renting
an aircraft in a transaction that meets the definition of a sale for resale who
does not provide the seller or lessor with a properly completed resale
certificate at the time of the transaction may subsequently provide
documentation to the comptroller to prove that the resale exemption
applies.
(4) The purchase of an
aircraft for lease or rental to another does not qualify as a sale for resale
unless more than 50% of the aircraft's departures during the one year period
beginning on the date of purchase are made under the operational control of a
person other than the purchaser, pursuant to one or more written lease
agreements, in exchange for consideration. For purposes of this subsection,
consideration is not required to be in the form of a cash payment, and may be
fixed, variable, or periodic.
(l) Local tax. Local sales and use taxes,
including taxes imposed by a city, county, transit authority, or special
purpose district, apply to aircraft in the same manner as any other tangible
personal property.
(1) Sales consummated in
Texas. Generally, local sales taxes are allocated to the local taxing
jurisdictions in which the seller's place of business is located, and the
seller must collect the local sales tax, without regard to whether the aircraft
is actually delivered to, or intended for use in, a Texas location in a
different local taxing jurisdiction. If the seller does not collect the
applicable local tax, the purchaser must accrue and remit local tax to the
comptroller.
(2) Sales consummated
outside of Texas. When an aircraft is purchased or leased outside of Texas and
brought into Texas, local use tax is due based on the local taxing
jurisdictions in which the aircraft is first stored or used. If the seller does
not collect the applicable local tax, the purchaser must accrue and remit to
the comptroller any local use tax due.
(3) For more information regarding the local
tax collection and reporting responsibilities of sellers and purchasers, refer
to §
3.334 of this title (relating to
Local Sales and Use Tax).
Notes
State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
No prior version found.