California Aircraft Tax Exemptions - Don't assume it is common knowledge
Recently, I received a call from a potential client who was purchasing an aircraft. The call was like most others. The gentleman was referred by a trusted professional in the industry. I explained the available exemptions and we discussed which would work best for him and his company. We discussed how our firm could assist him throughout the process and ensure that he was able to legally avoid California sales and use tax on his purchase. It was the next part of the conversation that surprised me.
This was not this gentleman’s first aircraft purchase. As a matter of fact, he was stepping up from a twin-turbine aircraft to a jet. He explained to me that he was not aware of the available exemptions from California sales and use tax on his earlier purchase and he had paid the tax. Of course, he asked if we would be able to go back and get a refund on that purchase, but because the statute of limitations had passed in order to file a claim for refund, I explained we could not.
Had this been the first aircraft this company was purchasing, I would not have been surprised by this conversation. I frequently receive calls from first time buyers stating that an associate told them they could legally avoid California sales and use tax and to call us. However, this gentleman and his company had to have dealt with a salesperson or broker, possibly an attorney, their CPA, an insurance broker, a skilled professional pilot and many other individuals in the aviation community. Unfortunately, not once did the topic of sales and use tax come up in a manner in which this gentleman was advised to speak with a tax expert.
I write this article to remind those of you that are a part of the aviation community to not assume your friends and associates know all that they should when they are purchasing an aircraft; even if it is not their first purchase. Remind them to speak to an aviation attorney about their ownership structures and make sure they are not violating any FAA regulations. Remind them to speak to an aviation insurance broker to ensure they have the best coverage available to them at the best price. And yes, remind them to speak to an aviation tax expert to ensure they have an opportunity to legally minimize their taxes.
Fortunately, the gentleman from above crossed paths with an industry professional that advised him to contact us. Aviation Tax Group is an aviation tax firm whose main goal is to assist aircraft purchasers and owners to legally minimize their taxes. We advise clients how to legally avoid California sales and use tax through the utilization of any one of the available exemptions. We provide quality and professional service through our knowledge and experience regarding sales and use tax on the purchase of aircraft.
If you are preparing to purchase or have purchased an aircraft and would like to find out how you can legally avoid the sales and use tax, contact Warren Alston or Julia Chan at 916-930-6141.