[Ohio] State tax dept wants purchase price info so they can tax me...

jimmyjack

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As title says, suddenly got a form years after I bought the plane, wanting purchase price info/proof, so they can tax me accordingly.

That's fine, but FAA 8050-2 Bill Of Sale does not count according to them.

That's literally the only paperwork I have, which is moot anyhow because it says $1 OVC.

What do?

PS: It was an out of state transaction, if it matters. WV into OH.
 
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As title says, suddenly got a form years after I bought the plane, wanting purchase price info/proof, so they can tax me accordingly.

That's fine, but FAA 8050-2 Bill Of Sale does not count according to them.

That's literally the only paperwork I have, which is moot anyhow because it says $1 OVC.

What do?
I had a similar situation in Michigan. They gave a list of what would NOT work, which in addition to FAA bill of sale was a plain bill of sale! They pretty much told me on the phone that I had to get an appraisal, or ELSE!!!! I sent them the bill of sale. They accepted it.

Now, I should note, that we were not talking about a Cessna Citation here...but a sub $50k aircraft.
 
In your case I would just send them a statement saying you paid $XXXXX, and list the last owner's info, in case they want to do follow up.
 
Twice I've paid partial cash and partial cashiers check. I send a copy of the cashiers check to the state along with 6% of that amount.
 
Ohio does this all the time. Even owners who bought their plane 30 years ago get these notices periodically. Can’t tell you to ignore it, but I always did.
 
Tennessee sent me such a letter when I bought my Starduster Too in 2004. I told them I had nothing which showed the actual transaction other than a bill of sale with $1 OVC. They said I could declare a value or, failing that, they would assess a value and tax me on it. I rolled the dice on it being a less than common Exp-AB that they wouldn't know the value. They assessed it at $12,500. I happily sent them their seven percent.

When I bought my Swift in Oklahoma, I registered it in Oklahoma at my in-laws because the tax is 3.25% there. I paid OK taxes. Several years later, when they were getting ready to move to Florida, I did a change of address to Tennessee. Naturally, they wanted their cut since I had "moved" it to Tennessee. Rather than seven percent, they took 3.75% since I showed OK taxes. In the end, it didn't cost me any less, but it spread it out and also ensured Tennessee only got part...and since the State of Tennessee does almost nothing in support of General Aviation, I considered that a very minor win.
 
I wonder if I take the wings off and let them assess the plane if it will lower the value any.

I've purchased planes in two transactions. Engine and prop in one and airframe in the other...

I've also purchased in "not airworthy" status but in such condition it was quickly made airworthy again by installing my prop. IIRC, that had an impact in Oklahoma.
 
I have the exact situation currently. I bought the plane in MN and moved it to Ohio where I registered it last year. Just got a notice in the mail a month ago saying to provide documentation for sales tax purposes but Bill of Sale isn't accepted. I'm currently out of town for a prolonged period of time and haven't gotten around to addressing this, but all I have is the Bill of Sale.

I was just going to send a copy of it and hope they accept it since I have the actual purchase price listed. I'm not in any hurry to do it, but I also don't want to ever be accused of tax evasion, etc. Not sure what the real risk is here.
 
When I bought my 182, the state of Georgia sent me a bill for the tax showing the purchase price! I bought it from a Georgia LLC, so I have to assume the reported the sale proce somehow. I just paid it, even though the airplane is registered in a Delaware corporation, I didn't feel like the juice was worth the squeeze.
 
Do they want sales/use tax or property tax?

I paid the full use tax, but then similarly to you got a request for purchase price, appraised value, list of components in the aircraft and their value and some other BS so they could figure out the property tax. I either consciously ignored it or forgot to follow up...don't recall, memory is going...anyhoo, they eventually sent me an assessed value that was half of my actual purchase price.

I am good with the outcome!
 
In my case, and I'm assuming the OP since they're both Ohio, they're asking for sales tax reasons. Ohio has an annual registration fee also, but that's pretty cheap.

I don't get the impression the people who sent the request have a great way of following in up about it. They certainly didn't catch mine when I first registered the plane. Again, I have no problem paying a tax for something like I'm supposed to but if I don't have to pay it yet then it's in my best financial interest to wait and pay it later! I think in my situation I can legitimately wait to address the matter until I return to Ohio in about 5 months...
 
As title says, suddenly got a form years after I bought the plane, wanting purchase price info/proof, so they can tax me accordingly.

That's fine, but FAA 8050-2 Bill Of Sale does not count according to them.

That's literally the only paperwork I have, which is moot anyhow because it says $1 OVC.

What do?

PS: It was an out of state transaction, if it matters. WV into OH.

Was it purchased from a dealer or airplane sales company? Transactions between individuals within Ohio are exempt from state sales tax. This is called a casual sale. If purchased out of state and brought in, then you have to pay, either way.
 
Ohio is basically fishing, almost like the emails you get all the time. I got my letter about 3 months ago. If you purchased from a person it doesn't matter per the letter of Ohio law:

45. Are casual sales of aircraft exempt?

Yes, provided the seller was not in the business of selling, leasing or renting aircraft. R.C. 5739.01(L) defines “casual sale” as the “sale of an item of tangible personal property that was obtained by the person making the sale, through purchase or otherwise, for the person’s own use and was previously subject to any state’s taxing jurisdiction on its sale or use.”

https://www.tax.ohio.gov/sales_and_...6311/Default.aspx?QuestionID=2672&AFMID=13652
 
Colorado sent me a bill after the FAA registration for my Mooney. I had to show what I paid and submit 3% state tax. City and County never got the word. If I didn't respond they would assign a high value and bill me. For my LSA I haven't heard a word in 8 years. They probably don't get LS data from FAA. And it was more than double the price.
 
Was it purchased from a dealer or airplane sales company? Transactions between individuals within Ohio are exempt from state sales tax. This is called a casual sale. If purchased out of state and brought in, then you have to pay, either way.
Purchased from an out-of-state individual.
They certainly didn't catch mine when I first registered the plane.
They didn't catch my first plane, either. Ever. And it's long sold now. But maybe because it was an in-state purchase.
Ohio is basically fishing, almost like the emails you get all the time. I got my letter about 3 months ago. If you purchased from a person it doesn't matter per the letter of Ohio law:

45. Are casual sales of aircraft exempt?
Yes, provided the seller was not in the business of selling, leasing or renting aircraft. R.C. 5739.01(L) defines “casual sale” as the “sale of an item of tangible personal property that was obtained by the person making the sale, through purchase or otherwise, for the person’s own use and was previously subject to any state’s taxing jurisdiction on its sale or use.”

https://www.tax.ohio.gov/sales_and_...6311/Default.aspx?QuestionID=2672&AFMID=13652
So it's a casual sale, so exempt. But Rcmutz says if it's casual and out-of-state I still have to pay.
 
I filled out the info and sent it in based on the info I put in this thread. No taxes, as it was an out of state personal purchase.
 
I'd call a layer and find out what they actually could do

Do not comply
 
...and since the State of Tennessee does almost nothing in support of General Aviation, I considered that a very minor win.

Funny, in my experience, TN has done the most for their airports. The 4.5% aviation fuel tax that goes directly back to airports in TN (including GA) is not even close to "almost nothing". For years that equated to $40 million going back to airports ($20 million specifically for GA airports). It is less these days with the recent "FedEx Bill" (from your lovely hometown employer), but there is still significant money being invested in TN airports. In fact, we'll probably be seeing another new airport constructed in the next few years. When you look at surrounding states (with the exception of FL), TN is doing the most for their airports. Last year there was a $15 million ECD grant that was spread around to 5 or 6 airports, and this year there is a $20 million ECD grant in the governor's budget that will be up for grabs. In the past, the Use Tax collected on aircraft did not go back to airports, but TAA is working with TDOT Aeronautics to explore changing this. Sorry you feel the way you do, but all you have to do is look up the numbers and you'll see just how much TN does for all of their airports vs. surrounding states.
 
How governments collect money can be interesting. Many years ago I received a letter from the state of Maine stating that I was going to be arrested for non payment of child support. They gave the child's name, DOB, mother's name and place of birth. I had a few problems with this.
1. Had a vasectomy 10 years before the child was born.
2. At the time of the child's birth and for years before I was overseas.
3. I had never heard of the mother.
4 They gave the wrong date of birth for me.
At the time my wife was in the state legislature and she took this letter to the governor. About a month later after an investigation she found out that the state of Maine was just doing a 'fishing' expedition and had sent out over a thousand letters! Our governor made a formal complaint to the governor of Maine and I did get a letter of apology from the governor and the head of their child support division. Makes me dubious of some of the ways governments collect monies.
 
Funny, in my experience, TN has done the most for their airports. The 4.5% aviation fuel tax that goes directly back to airports in TN (including GA) is not even close to "almost nothing". For years that equated to $40 million going back to airports ($20 million specifically for GA airports). It is less these days with the recent "FedEx Bill" (from your lovely hometown employer), but there is still significant money being invested in TN airports. In fact, we'll probably be seeing another new airport constructed in the next few years. When you look at surrounding states (with the exception of FL), TN is doing the most for their airports. Last year there was a $15 million ECD grant that was spread around to 5 or 6 airports, and this year there is a $20 million ECD grant in the governor's budget that will be up for grabs. In the past, the Use Tax collected on aircraft did not go back to airports, but TAA is working with TDOT Aeronautics to explore changing this. Sorry you feel the way you do, but all you have to do is look up the numbers and you'll see just how much TN does for all of their airports vs. surrounding states.

So, the 4.5% fuel tax is above and beyond the sales/use tax. I've seen very little TN involvement in western TN airports. Tennessee doesn't foot the bill, they simply distribute Federal money through the TN aviation commission. Saying TN spends the money is like saying everyone who pays taxes is supporting charity via the welfare program. Tennessee loves collecting taxes on everything sold/transferred (including trying to soak me when I inherited a project plan when my dad passed, they failed) with little return. Monies spent on airplane transfer taxes hardly go back to aviation. They go the general fund. Fuel tax, it should be going towards aviation, but I wouldn't be surprised to see some being siphoned off. I'm sure our RINO Governor would love doing that.

The following is from TN Aeronautics Commision page.

State level aviation expenditures in Tennessee are largely afforded by the state’s Transportation Equity Fund(TEF). Aviation’s share of this fund is generated by a sales and use tax on the consumption, distribution, and storage of all aviation fuel sold in
Tennessee.

While Tennessee is not unique in relying on a fuel-based tax to generate revenues
for aviation, the magnitude of those revenues is made unique by the presence of FedEx
which operates a “SuperHub” at Memphis International. Relying heavily on Memphis, FedEx Corporation ranks as the largest freight-carrying airline in the world and is the
world’s fourth largest airline measured by fleet size, operating 647 aircraft in 2015.
FedEx fueling activities at Memphis and its consequent TEF payments are sizable. Approximately 66 percent of the $48 million in revenue collected from the aviation fuel
tax and distributedthrough the TEF’s during Fiscal Year 2014 (roughly $32 million) was
attributable to FedEx fuel purchases at Memphis.

With this noted, future FedEx related TEF revenues will not be as large as in the past.
Last year, faced with the prospect that FedEx might relocate its aircraft fueling
operations and, with it, some portion of its Memphis-based labor force, the Tennessee
legislature voted to cap the amount of aviation fuel taxes to be remitted by any one
contributor.

Importantly, however, even with the enacted cap in place, Tennessee’s TEF still provides the ability to provide airport capital funding at levels that exceed the
nation’s average.
 
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Purchased from an out-of-state individual.
They didn't catch my first plane, either. Ever. And it's long sold now. But maybe because it was an in-state purchase.So it's a casual sale, so exempt. But Rcmutz says if it's casual and out-of-state I still have to pay.

I believe if tax was paid to the original state the plane is coming from, then for a casual sale no tax is due. Not a tax attorney, but did stay at a Holiday Inn Express last week. Does that count?
 
So, the 4.5% fuel tax is above and beyond the sales/use tax. I've seen very little TN involvement in western TN airports. Tennessee doesn't foot the bill, they simply distribute Federal money through the TN aviation commission. Saying TN spends the money is like saying everyone who pays taxes is supporting charity via the welfare program. Tennessee loves collecting taxes on everything sold/transferred (including trying to soak me when I inherited a project plan when my dad passed, they failed) with little return. Monies spent on airplane transfer taxes hardly go back to aviation. They go the general fund. Fuel tax, it should be going towards aviation, but I wouldn't be surprised to see some being siphoned off. I'm sure our RINO Governor would love doing that.

The following is from TN Aeronautics Commision page.

State level aviation expenditures in Tennessee are largely afforded by the state’s Transportation Equity Fund(TEF). Aviation’s share of this fund is generated by a sales and use tax on the consumption, distribution, and storage of all aviation fuel sold in
Tennessee.

While Tennessee is not unique in relying on a fuel-based tax to generate revenues
for aviation, the magnitude of those revenues is made unique by the presence of FedEx
which operates a “SuperHub” at Memphis International. Relying heavily on Memphis, FedEx Corporation ranks as the largest freight-carrying airline in the world and is the
world’s fourth largest airline measured by fleet size, operating 647 aircraft in 2015.
FedEx fueling activities at Memphis and its consequent TEF payments are sizable. Approximately 66 percent of the $48 million in revenue collected from the aviation fuel
tax and distributedthrough the TEF’s during Fiscal Year 2014 (roughly $32 million) was
attributable to FedEx fuel purchases at Memphis.

With this noted, future FedEx related TEF revenues will not be as large as in the past.
Last year, faced with the prospect that FedEx might relocate its aircraft fueling
operations and, with it, some portion of its Memphis-based labor force, the Tennessee
legislature voted to cap the amount of aviation fuel taxes to be remitted by any one
contributor.

Importantly, however, even with the enacted cap in place, Tennessee’s TEF still provides the ability to provide airport capital funding at levels that exceed the
nation’s average.

I already said that in the past, use tax payments have not gone back to aviation. We are currently trying to change that so that payments go directly back to funding improvements for airports where those aircraft reside. We (TAA) feel that is the best use for an aviation generated tax. And yes, the 4.5% fuel tax is above and beyond the use tax payment you're talking about. The monies are not being siphoned off. They are put into a specific fund, must be accounted for each year, and all of that money goes specifically to airports (or aviation organizations, like CAP). You are correct though that the legislature would love to get their hands on that money, but they have no way to, nor would many of the rural legislators allow that to happen. Their local airports are too important to them.

As far as quoting the TDOT Aeronautics and TAC page to me, don't bother. I lived the transition, both from a political rallying standpoint, as well as an airport management standpoint...I'm still (in fact) living through it. TAA is still working to identify new revenue streams to help fill the gap left by Fred Smith and Gov. Haslem. TDOT administers not only the TEF money, but as a block grant state, they also administer the FAA entitlement money for NPIAS airports. I don't know why you haven't seen the money spent in Western TN since several of the airports have taken advantage of the grants that direction. Millington and Jackson are prime examples of airports that are actively getting as much of that money as they can. Union City is another I am very familiar with. Just on the last TAC agenda were two very small airports in West TN getting sizeable grants. That does not include projects which do not have to go before the TAC (generally anything less than $100k).

Additionally, each year, every airport gets an automatic maintenance grant through TDOT to utilize funds for projects around the field such as mowing/landscaping, building/facilities MX, or safety improvements. Moreover, periodically TDOT undertakes statewide improvement programs which are funded at 100%. Examples of this include a recent AWOS equipment upgrade program, and in the not too distant past we had a runway and taxiway crack fill and re-marking program. As I also indicated, money has been earmarked for Aeronautic ECD grants both last year and this. I plan on going for one of those grants this year. Nothing keeping your airport from going after one as well.

Other states around us are quickly realizing that they gave the goose (or cow...whichever metaphor you prefer) away long ago when it comes to being able to maintain their airports. KY gets just $1 million each year for having UPS in Louisville. GA recently reversed a law that now allows them to collect more fuel tax money from Delta to go back into their airports. IN gets next to nothing and they have one of the next larger FedEx bases. Fly to any airport in AL and just about all of them would say they wish they have TN's airport money.

What airport do you base at? Have you asked why they aren't pursuing more of all this project money? Here in Winchester, we're spending it as fast as we can get it. Over the last 8 years, I know we've spent nearly $7 million on various projects which include hangars, taxiway and apron improvements, lighting, AWOS relocation, and various other improvements like utilities. Tullahoma north of me, more than that. Other airports nearby in the area are no different.
 
I don't dispute some work is done, KFYE was resurfaced last year and it only took about three months. As was Bolivar during same time and off and on closed for about the same amount of time. As I understand it, the lionshare of funding comes from federal monies with the TAA simply managing where it goes. It comes back to my point about sales/use tax being collected on aircraft yet it goes to the general fund, not airports. I never disputed the gas tax issue.

I am currently based at 01TN (private) which sits on the state line between Tennessee and Mississippi with the hangars on the Mississippi end. I have another hangar at M72 in New Albany, MS...an hour's drive away, but only $75 for a huge t-hangar. Previously, I was at 54M a privately owned, public use airport in TN for 12+ years. They got Fed money through state to the tune of about $40K which was typically used to maintain adjacent water control to prevent flooding. Ownership squabbles caused everyone to leave, though it remains open with no one based there for over two years now. There is a trial on October to settle those issues. Hopefully I will be able to return someday as it is a great little grass strip.

I split my gas purchases between KFYE (Somerville), M04 (Covington), M08 (Bolivar) and 25M (in Ripley, MS). Other than fixing some really bad runways long after they needed it, M08 especially, the smaller airports don't seem to make the cut for real improvements in recent years. Somerville did get a nice new terminal building and Jet A...way more than it needs or utilizes...about ten years ago in an attempt to draw business traffic. I don't know it did that, but it sure wasn't geared to the aircraft/pilots based there. The county built new t-hangars a few years before and still have a waiting list but won't spring for more. Demands exists but goes unfulfilled, but that is a local politics problem, not state or Fed. Spain and Baker both could use more hangars, but none ever seem to be built. I did see Millington is getting money for hangar refurbishment. Not sure if that will benefit local/based pilots or is simply the city trying to draw more jet traffic in, but likely the latter. They do refer to themselves as a "Regional Jetport.""

Unfortunately, I'm located in SE Shelby County on the far side of the metro Memphis area from M01 (Dewitt Spain), 2M8 (Charles Baker) and NQA (Millington). They are 45-60 drive from my house. 54M and 01TN were both within 15 minutes and both grass. I typically fly my RV down to New Albany (M72) to fly my J-3. Fortunately, there are some new hangars being built at 01TN so I am hoping by end of summer I will have the J-3 moved up there so it will be back on grass.

In short, as related in my original statement, I personally haven't seem much, if any, impact on my flying due to monies spent by the State which loves to collect 7% anytime I register an airplane here. At least there is no state income tax. :D
 
Your understanding is somewhat correct. The Tennessee Aeronautics Commission (TAC) is tasked with making recommendations/decisions on where the TEF money and the FAA entitlement money (two different pots) goes. In terms of GA, each NPIAS airport in TN is allotted $150,000.00 per year (through FAA authorization), bankable up to four years + the current year (I think I'm remembering that correctly) to undertake projects at their airport. Beyond that, airports are eligible to go after any money that is available from the TEF to undertake similar projects, usually with a narrower scope on what can be done. The TAC is not presented with grant requests that total less than $100,000.00 typically, unless there is something odd about the request. Honestly, the biggest issue most smaller airports face is coming up with the local match to undertake these projects. The runway projects you mentioned typically qualify for a 5% match, but even then, a $1,000,000.00 project is an additional $50,000.00 a small municipality has to come up with. That's sometimes a hard sell to small town government.

Unfortunately, Spain and Baker will both be at the mercy of FedEx now. Since they made their power play in Nashville, as you've seen, TEF money is heavily diminished. Pretty sure FedEx told MEM not to worry because they'd make up any difference with projects needed...but that won't help M01 or 2M8 any. TDOT has all but told airports that hangars are off the table until basic needs have been met for MX...although, that's the way it should have been all along. Airports were always supposed to have used their entitlement money to ensure that all safety and operating issues were being taken care of prior to any funds being used to build new hangars, terminals, etc. Unfortunately, it was allowed to happen in the reverse order at many airports around the State. The tragedy is that now with the reduction in funds available, many of those same airports are now finding that there is not enough money to be able to fix the problems they should've addressed to begin with. My airport (prior to my arrival) planned ahead and took care of all of those items first before building a new set of hangars or terminal building. Sadly, not all had the same foresight.

I can understand your frustration, but almost all of the airports you mentioned are very small and low in the pecking order over there near Memphis. As indicated, other airports in Western TN have had more success in obtaining monies. Millington I believe recently underwent a name change, so you might want to check again on the Jetport title. The money they are getting is supposed to be for a flight school. Beyond that, they are trying to refurb a hangar I think to service FedEx's needs (or rather to attract more traffic from them) as well.

The beauty of the TEF is/was that it was a properly functioning system where those who utilized TN airports paid for their improvements...until it was tampered with. If you live in TN, no doubt you recently heard about the Governors plan to fix the highways with an increase in fuel taxes there. Same concept, but in reverse. In aviation, we had a system that was functioning just like it was designed to and was broken...with automobiles, we had a system that was broken and needed to be fixed (and hopefully was).
 
I filled out the info and sent it in based on the info I put in this thread. No taxes, as it was an out of state personal purchase.

Out of curiosity, what state was the seller from. The way the Ohio law reads it has to be a casual sale, AND from a state where the seller already paid a sales or use tax.
 
Since this thread sort of got hijacked, I am bumping it back to find out the results.
 
I believe if tax was paid to the original state the plane is coming from, then for a casual sale no tax is due. Not a tax attorney, but did stay at a Holiday Inn Express last week. Does that count?
In most states - and I don't recall about Ohio - you get credit for the amount of tax paid to another state. In other words, if the tax is 2% in NC and Ohio charges 4%, you'll be on the hook to pay Ohio the difference (2%). Those are made-up numbers that I put up just for principle. In most places it works like cars.

As I recall, there are a couple of states that don't give credit, and there are a few that don't charge tax.

Not a tax professional, and didn't stay in a Holiday Inn last night. It's also been a long time since I bought my last plane.
 
Wondering if the OP found out anything different than what was reported here?
 
Well, I have an update. My plan was to wait until I was back home to send the Bill of Sale and hope that would be enough, but it looks like Ohio moved forward with assessing the value of my plane. Due to my lack of response, they said my Archer II was worth $40,000 and that I owe $3k in sales tax (7.5%).

Okay.

Again, I'm not trying to cut corners or evade paying taxes, so I'll pay my taxes and be glad in this instance that they don't value things the same way I do!
 
Well, I have an update. My plan was to wait until I was back home to send the Bill of Sale and hope that would be enough, but it looks like Ohio moved forward with assessing the value of my plane. Due to my lack of response, they said my Archer II was worth $40,000 and that I owe $3k in sales tax (7.5%).

Okay.

Again, I'm not trying to cut corners or evade paying taxes, so I'll pay my taxes and be glad in this instance that they don't value things the same way I do!

I would fill out the paperwork and send it back before paying. Unless you bought it from a business and taxes were collected. If you purchased from a private seller you do not owe Ohio taxes on your aircraft.
 
Unfortunately, the Bill of Sale does not list the seller as an individual. It lists the seller as an LLC, but only because the seller owned/operated the plane under that LLC even though he was an individual using it for personal use only.
 
I Not sure what the real risk is here.

The main risk is that the state will assess taxes, penalties, and interest for back taxes due. That will be costly. An owner here at our airport decided to ignore NY state for 3 years for a plane bought out of state, whereupon they assessed a tax bill for back taxes, penalties, and interest that exceeded the value of the aircraft. The state taxation interest rate is phenomenally high. He had to sell to pay taxes. It pays to know your state tax laws regarding sales tax or use tax, and not ignore them.
 
And for those of us in NY, the state passed a law in 2015 exempting GA aircraft sales, parts, and any items installed in them required for normal operation (e.g. avionics) from sales or use tax. When I bought both of my planes in the 80s, I had to pay use tax on the sale price, or the difference if sales tax was assessed at the point of sale.
 
Unfortunately, the Bill of Sale does not list the seller as an individual. It lists the seller as an LLC, but only because the seller owned/operated the plane under that LLC even though he was an individual using it for personal use only.

Tax avoidance (not evasion) could have then been possible if you had purchased the LLC, vise the airplane itself (if the only reason for the LLC was the airplane).
 
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