Iowa Use Tax 6%

[jnmeade]

I paid Iowa Use Tax on an airplane in late 2009. There seemed to be misleading information online, so I called the Iowa Department of Revenue, was routed to the man in charge of aviation tax, and was told the rate was 5%, which I paid. Today, I got a call from Iowa DOT Aviation Division assuring me that the correct rate was 6% and they wanted the balance of the money before they'd register my airplane.

Not a big deal, but it would be nice if the government would get it's act together.

At least local option sales tax is not added on to the Use tax. That would have been another 1%.

 

[tonycondon]

when i registered the glider it was 5%, but that was the state sales tax at the time. has state sales tax increased?

 

[Trapper John]

Sales tax rate hasn't changed but they bumped up the use tax from 5% to 6% in July, 2008.


Trapper John

 

[kkoran]

Sales tax rate hasn't changed but they bumped up the use tax from 5% to 6% in July, 2008.


Trapper John

I wonder if that would even be legal. It's one thing to tax in-state and out-of-state purchases equally, but to have a higher tax on stuff purchased out of state would seem to have interstate commerce implications.

 

[wabower]

If you bought an airplane in-state, why would it be subject to use tax rather than sales tax? Use tax is specifically for transactions to which sales tax doesn't apply.

 

[ScottM]

If you bought an airplane in-state, why would it be subject to use tax rather than sales tax? Use tax is specifically for transactions to which sales tax doesn't apply.

I don't know for Iowa but in Illinois there is no sales tax on used airplanes ONLY use tax regardless of where they are purchased.

 

[tonycondon]

that sounds right scott. i bought my glider in state and had to pay use tax.

 

[wabower]

For clarification, I just looked it up on Conklin's aviation state tax chart. Says it's an excise tax on the use of the personal property. Typical tax law gobbledegook.

 

[John Baker]

Not a big deal, but it would be nice if the government would get it's act together. /quote]

I think the problem is that we are not paying them enough. I am sure if every government employee's salary was doubled they would indeed, get their act together.

California raised sales tax from 7.75% to 8.75%, and in some counties, much higher. The state legislator and governator got together and felt raising sales tax was the only way to get the economy going again.

At six percent the tax on a $50,000.00 used airplane would be $3,000.00
With California's way of thinking, to instead make that tax $4,375.00, more people for sure would want to buy a used airplane.

This makes perfect sense to people who have worked in government service most of their lives, or to wealthy governators.

Retailers across the state tried to talk them out of it, to no avail.

John

 

[jnmeade]

Might be another state, Wayne. The Iowa Department of Revenue and Department of Transportation Aviation Division both refer to it as a use tax.

 

[wabower]

That's the term they use. The definition in the statute (as reported by Conklin) is what I quoted.

Might be another state, Wayne. The Iowa Department of Revenue and Department of Transportation Aviation Division both refer to it as a use tax.

 

[Trapper John]

I wonder if that would even be legal. It's one thing to tax in-state and out-of-state purchases equally, but to have a higher tax on stuff purchased out of state would seem to have interstate commerce implications.

I'm pretty sure the use tax and the sales tax with local option are the same 6% number, so there's no difference where you buy, you end up paying the same amount of tax.


Trapper John

 

[jnmeade]

I'm pretty sure the use tax and the sales tax with local option are the same 6% number, so there's no difference where you buy, you end up paying the same amount of tax.


Trapper John

With some use taxes, for example with aircraft, you don't pay local option sales tax. Checked that with DOR. (In my county, some areas have local option and some don't. I live in an area that does not, so this was an item of interest that I specifically checked out - with the same guy who told me to only pay 5% LOL.)