Suspicious calls to your FBO

Dave Siciliano

Final Approach
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Feb 27, 2005
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Dave Siciliano
We got a call from our FBO a few days ago that they received a strange call asking a lot of questions about our plane. The caller stumbled around a bit and asked about our plane being there. The lady on the phone asked if he had a registration number. He said he did and provided it. He then asked if he could get a schedule of all our flights for the last year and a list of passengers on those flights. She said she couldn't provide that; it was private information. He said he may deliver a summons and she referred him to the GM. She also suggested he contact the owners of the plane. Then, she called me and related what happened. I thanked her, and after thinking about it and calling a friend, believe it was the tax folks. We purchased this plane the end of January. How much to y'all want to bet it's the local tax folks trying to make a case for corporate/business use? This is a personal aircraft and we'd be cooperative in documenting that. These tax folks are pretty annoying in several situations in which I'm involved. They think everyone is hiding something. We have nothing to hide. Of course, they will probably want some proof it's personal use and we will state it is and ask that they prove otherwise. How can I prove it's personal use--there is no specific documentation saying I'm flying with friends and family. But, that's what I do. Of course, we charge no fees and we don't depreciate the plane. They will cite corporate ownership and it is that way of course to limit liability among owners and so we can transfer interest if necessary. Heads up. Best, Dave
 
Wow. This must be because of the personal property tax laws in Tejas?
 
Hang up on them. If it's a legitimate matter they can identify themselves and explain their reasons.

Sent from my SAMSUNG-SGH-I777 using Tapatalk 2
 
What a pain, Dave, sorry to hear you're having to deal with that.
 
I don't get it. If they are tax folks, wouldn't they be questioning business use, not personal use? You can write off business use (to some degree), but you can't write off personal use, to my knowledge. Also, my experience with government audits, is that you know it is happening, when it is happening and they expect your cooperation. I have not known the tax people to be covert. I suppose it is possible, but doesn't seem likely. Could it be something civil?
 
did you take strangers up and make them pay? they do watch.
 
All forms of government (Federal, State,Municipal) are looking for revenue and they are out turning over every rock they can find right now.
 
We got a call from our FBO a few days ago that they received a strange call asking a lot of questions about our plane. The caller stumbled around a bit and asked about our plane being there. The lady on the phone asked if he had a registration number. He said he did and provided it. He then asked if he could get a schedule of all our flights for the last year and a list of passengers on those flights. She said she couldn't provide that; it was private information. He said he may deliver a summons and she referred him to the GM. She also suggested he contact the owners of the plane. Then, she called me and related what happened. I thanked her, and after thinking about it and calling a friend, believe it was the tax folks. We purchased this plane the end of January. How much to y'all want to bet it's the local tax folks trying to make a case for corporate/business use? This is a personal aircraft and we'd be cooperative in documenting that. These tax folks are pretty annoying in several situations in which I'm involved. They think everyone is hiding something. We have nothing to hide. Of course, they will probably want some proof it's personal use and we will state it is and ask that they prove otherwise. How can I prove it's personal use--there is no specific documentation saying I'm flying with friends and family. But, that's what I do. Of course, we charge no fees and we don't depreciate the plane. They will cite corporate ownership and it is that way of course to limit liability among owners and so we can transfer interest if necessary. Heads up. Best, Dave

Well I am nothing but a victim of Texas tax law so my advice probably isn't worth much. I registered an aircraft in the past under an LLC. I got nailed for property tax at the end of the year even though it was nothing more than personal use. I don't know how you are registered, but that may be part of it. I've also been nailed repeatedly on sales tax. I don't know if you are avoiding that through a casual sales exception or what, regardless I'm sure they'll try to get it if they haven't already. Apparently they have been walking/driving the hangars at KADS writing down N#'s, so the line guys tell me.
 
Alex, you are spot-on. The fact that an aircraft is held in corporate name does not, in itself, convert it into “business use” which is subject to business personal property tax, but it creates a strong suspicion on the part of the taxing authorities, especially where the aircraft is of a kind and character that they expect to be a business aircraft (like a King Air). Documentation is key, and I am confident Dave will document it well.
 
Next time they call, just tell them you cannot handle this over the phone -- they'll have to meet you in your attorney's office with an appropriate warrant, judicial order, or other legal authorization to obtain your records, not to mention appropriate identification.
 
We've gone to this dance before, so, we know something about the law (rules). We obtained an occasional sale certificate from the seller who is not a dealer or in the business of selling or brokering aircraft. They questioned us when we purchased the baron in an LLC and we explained the liability aspect and it being on the recommendation of our attorney: not to use the plane for the production of income. In the end, they asked for a letter with specific working from our CPA which we provided. In Texas, a plane for personal use isn't subject to property tax. I posted this on Beechtalk too, and an attorney on there cited the specifics of the Texas Property Code that apply. I agree with Wing and Rotor; the tax folks are getting much more aggressive. There should be some simple safe harbor, but it's not that simple. Still, I object to the sneaking around and not properly identifying one's self in a blatant attempt to intimidate a lady at the front desk of the FBO. Best, Dave
 
We got a call from our FBO a few days ago that they received a strange call asking a lot of questions about our plane. The caller stumbled around a bit and asked about our plane being there. The lady on the phone asked if he had a registration number. He said he did and provided it. He then asked if he could get a schedule of all our flights for the last year and a list of passengers on those flights. She said she couldn't provide that; it was private information. He said he may deliver a summons and she referred him to the GM. She also suggested he contact the owners of the plane. Then, she called me and related what happened. I thanked her, and after thinking about it and calling a friend, believe it was the tax folks. We purchased this plane the end of January. How much to y'all want to bet it's the local tax folks trying to make a case for corporate/business use? This is a personal aircraft and we'd be cooperative in documenting that. These tax folks are pretty annoying in several situations in which I'm involved. They think everyone is hiding something. We have nothing to hide. Of course, they will probably want some proof it's personal use and we will state it is and ask that they prove otherwise. How can I prove it's personal use--there is no specific documentation saying I'm flying with friends and family. But, that's what I do. Of course, we charge no fees and we don't depreciate the plane. They will cite corporate ownership and it is that way of course to limit liability among owners and so we can transfer interest if necessary. Heads up. Best, Dave

Did you ask the FBO why they released your registration number when they didn't know the identity or jurisdiction of the caller?
 
I would write down all the details of the phone call including times, and any follow up calls for the harassment suit I would file when the calling party did finally identify themselves.
 
Texas comptroller (sales tax) and Dallas County (property tax) bugged us constantly about casual sale exemption and personal use with the King Air. We were well-documented and I deal with this stuff on an ongoing basis as part of the consulting business, so they went away empty-handed. The test for property tax exemption is "no tax benefits derived" which isn't particularly difficult if the use is in fact personal.
 
Did you ask the FBO why they released your registration number when they didn't know the identity or jurisdiction of the caller?

My understanding is they didn't. They asked the caller for a registration number and he provided it. Typical FBO; girl had someone standing there and a call on hold when she answered. Seemed like they handled it reasonably. Best, Dave
 
I would write down all the details of the phone call including times, and any follow up calls for the harassment suit I would file when the calling party did finally identify themselves.

FBO said they would let me know if they contacted their GM. Dave
 
Why not ask them to produce the 135 certificate that you are supposedly operating under?
 
Sent to me by someone in the practice.

Texas Tax Code Sec. 11.14. Tangible Personal Property not Producing Income

(a) A person is entitled to an exemption from taxation of all tangible personal property, other than manufactured homes, that the person owns and that is not held or used for production of income.

Texas Tax Code Sec. Sec. 22.01. Rendition Generally.
(a) Except as provided by Chapter 24, a person shall render for taxation all tangible personal property used for the production of income…

Texas Comptroller; Texas Property Tax Assistance Property Classification Guide:
Non-income-producing personal property such as boats, travel trailers and personal aircraft are exempt under Property Tax Code Section 11.14, unless the governing body of a taxing unit takes an official action to tax non-income-producing personal property.
Best,

Dave
 
I think your right Dave - they're trying to nail a business personal property tax value. I received a rendition from the Harris County Assessor a couple of years ago for the first time (after 8+ years of ownership and no address changes) on the Cherokee registered in my name. I wrote "Personally Owned and Utilized Aircraft - No Business Use" on the rendition, mailed it back, and never heard anything else.
 
Sent to me by someone in the practice.

Texas Tax Code Sec. 11.14. Tangible Personal Property not Producing Income

(a) A person is entitled to an exemption from taxation of all tangible personal property, other than manufactured homes, that the person owns and that is not held or used for production of income.

Texas Tax Code Sec. Sec. 22.01. Rendition Generally.
(a) Except as provided by Chapter 24, a person shall render for taxation all tangible personal property used for the production of income…

Texas Comptroller; Texas Property Tax Assistance Property Classification Guide:
Non-income-producing personal property such as boats, travel trailers and personal aircraft are exempt under Property Tax Code Section 11.14, unless the governing body of a taxing unit takes an official action to tax non-income-producing personal property.
Best,

Dave
if that's not a governmental over extension of authority, I don't know what is
 
At least they weren't calling to see if you were hauling drug runners, re: Spike's two year ordeal.
 
The revenuers are getting quite aggressive. A couple of years ago I did one job in Illinois. Netted probably $35k...$40k on the outside. So my total tax liability to that fine state was less than $4k.

Returns were filed and taxes paid.

Got audited. They sent someone 200 miles into Missouri to audit my piddly return. He was here less than an hour.

Worse, less than two months later they sent a sales tax guy over to audit from that angle. He too was wasting his time.

They spend $100 trying to collect $1 sometimes.
 
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We've gone to this dance before, so, we know something about the law (rules). We obtained an occasional sale certificate from the seller who is not a dealer or in the business of selling or brokering aircraft. They questioned us when we purchased the baron in an LLC and we explained the liability aspect and it being on the recommendation of our attorney: not to use the plane for the production of income. In the end, they asked for a letter with specific working from our CPA which we provided. In Texas, a plane for personal use isn't subject to property tax. I posted this on Beechtalk too, and an attorney on there cited the specifics of the Texas Property Code that apply. I agree with Wing and Rotor; the tax folks are getting much more aggressive. There should be some simple safe harbor, but it's not that simple. Still, I object to the sneaking around and not properly identifying one's self in a blatant attempt to intimidate a lady at the front desk of the FBO. Best, Dave

Threats and intimidation aside, it really burns my cork that we've allowed the law of the land to become something that makes it a crime to tell an untruth to a federal officer but anyone from the government and/or law enforcement can legally lie all they want anywhere outside of a court.
 
My understanding is they didn't. They asked the caller for a registration number and he provided it. Typical FBO; girl had someone standing there and a call on hold when she answered. Seemed like they handled it reasonably. Best, Dave

Gee, for once I'm *glad* there is no FBO at my airport... :rolleyes:
 
Threats and intimidation aside, it really burns my cork that we've allowed the law of the land to become something that makes it a crime to tell an untruth to a federal officer but anyone from the government and/or law enforcement can legally lie all they want anywhere outside of a court.

Start pushing for "must identify" laws. I'm right there with ya.
 
Threats and intimidation aside, it really burns my cork that we've allowed the law of the land to become something that makes it a crime to tell an untruth to a federal officer but anyone from the government and/or law enforcement can legally lie all they want anywhere outside of a court.

Kind of like it's illegal for US to lie to congress, but not the other way around?:dunno: or maybe we taxpayers spend millions to prosecute Roger Clemons for lying to congress,:nono: yet our attorney general............never mind :mad2:
 
These tactics aren't new at ADS, for at least three reasons:

1. Airplanes are typically big-buck transactions that are in many cases un-taxed due to owner ignorance of the law. The "Delaware Corporation" myth and other airport fairy tales have been bandied about since the flood (Noah's) and unfortunately are still believed. These misconceptions are rapidly being exposed due to the activities of BART (Business Aircraft Research Team) formed by the Comptroller's office in 2007 to actively enforce the sales/use tax laws that have long been on the books but have not been observed by aircraft owners who are now learning a painful lesson.

Most owners who do not submit sales tax returns when purchasing their aircraft are now receiving letters from the state requesting payment of the tax or some evidence (typically a statement of occasional sale) to show they are exempt. Even when such statement is filed, the state will follow up if they have reason to believe that tax is due.

For example, an individual recently became aware of an airplane being sold at an extremely attractive price. He submitted an offer that was accepted, and planned to close the deal. In the meantime, a friend expressed interest in the airplane and had greater need, so the buyer (who was eligible for the occasional sale transaction) simply executed an identical contract with his friend who then bought the plane from him.

Both contracts were executed and recorded on the same day, so the comptroller (incorrectly) assumed that the "flip" had been done at a profit to the sandwich seller, and sought to impose sales tax based on intent to avoid tax by improper used of the occasional sale exemption. The transaction was upheld, but not without some intervention by outside advisors.

2. The approach end of ATC's preferred Rwy 15 is adjacent to a public parking lot. Anybody who is interested can--and does--sit there and record the tail numbers of airplanes on short final or in the queue for takeoff. When a tax collector has amassed the numbers for a significant number of airplanes, he/she then proceeds directly to the FBO desks to inquire about whether the planes are based with the FBO. The law affords them sufficient authority to verify the information by physical inspection of the hangar and records by flashing a badge, or, if necessary, after obtaining the legal paperwork.

3. Sales tax auditors understand the financial significance and relative ease of picking the low-hanging fruit afforded by GA planes. As one said to me "I figure that one nice airplane can generate more money for my production report than 5 convenience stores, and with a hell of a lot less work and without going home every night smelling like curry."

Caveat emptor


We've gone to this dance before, so, we know something about the law (rules). We obtained an occasional sale certificate from the seller who is not a dealer or in the business of selling or brokering aircraft. They questioned us when we purchased the baron in an LLC and we explained the liability aspect and it being on the recommendation of our attorney: not to use the plane for the production of income. In the end, they asked for a letter with specific working from our CPA which we provided. In Texas, a plane for personal use isn't subject to property tax. I posted this on Beechtalk too, and an attorney on there cited the specifics of the Texas Property Code that apply. I agree with Wing and Rotor; the tax folks are getting much more aggressive. There should be some simple safe harbor, but it's not that simple. Still, I object to the sneaking around and not properly identifying one's self in a blatant attempt to intimidate a lady at the front desk of the FBO. Best, Dave
 
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Threats and intimidation aside, it really burns my cork that we've allowed the law of the land to become something that makes it a crime to tell an untruth to a federal officer but anyone from the government and/or law enforcement can legally lie all they want anywhere outside of a court.

Unfortunately, it's been this way for some time and is only getting worse. The enforcement folk have used it extensively for years after a couple of very successful "sting" operations. It is SOP in vice (drug, prostitution, etc) investigations as well as a multitude of other things including tax matters. Just wait until drones are fully accepted here in the US borders for law enforcement purposes... (and the first incident of a law enforcement drone colliding with a GA flight will likely elicit calls for banning GA....)
 
Actually, one FBO here on the field went to their legal counsel and has since prohibited the tax folks from perusing in their hangars without a warrant. Badge and letter from attorney--snort! Best, Dave
 
Actually, one FBO here on the field went to their legal counsel and has since prohibited the tax folks from perusing in their hangars without a warrant. Badge and letter from attorney--snort! Best, Dave

I was gonna ask why they let them walk or cruise up and down the row of hangars.
 
I was gonna ask why they let them walk or cruise up and down the row of hangars.

Owned by the city. I imagine the FBO's can stop them from coming onto leased space, but not the airport itself. We now have a City of Addison police car there almost everyday prepared to write tickets to anyone without an airport access permit.
 
Owned by the city. I imagine the FBO's can stop them from coming onto leased space, but not the airport itself. We now have a City of Addison police car there almost everyday prepared to write tickets to anyone without an airport access permit.

Airport access permit? Do they write tickets to people who land there?
 
Airport access permit? Do they write tickets to people who land there?

If you land hot, then yes you get a ticket.:)

I can't say I don't want to ticket all the people I see touching down in a 172 at 100 knots.
 
So how do they tell who landed there and who walked onto the field?
 
If the call was from the tax people fine. What if the caller was some one that needed info about the plane and it destinations but wanted to make it sound like it was from government types. I would be very suspicious.

BTW this is standard practice for bad guys.
 
What if the caller was some one that needed info about the plane and it destinations but wanted to make it sound like it was from government types. I would be very suspicious.
The FBO isn't going to know the destination unless they look it up on FlightAware, etc, just like everyone else. If the number is blocked, people can still hear airplanes pick up their clearances. If someone has enough patience to sit at the end of the runway watching airplanes take off and land they can certainly have their radio tuned to clearance, or in Addison's case they usually give IFR clearances on ground.
 
So how do they tell who landed there and who walked onto the field?

If someone walked onto KADS they scaled a fence or came through an FBO/Business. It has been an issue in the past. Once a photographer from a local paper decided to get some pictures so they walked out to the runway with a telephoto lens, crouched behind a runway sign, and started taking pictures. Tower thought the camera lens looked like a rocket launcher, so you can imagine was a squabble that was. Now they will stop any vehicle/person without a visible permit (rear view mirror tag and badge). If you are based here you have to go through a class, get permits, etc. If you just land here then you proceed directly into the FBO from the ramp, no walking around.
 
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