Aircraft and Qualified Jet Engines
What Sales and Use Tax is Due for Aircraft?
The retail sale of an aircraft, including all accessories attached when delivered to the purchaser, is subject to the 4.75% general state rate of sales and use tax with a maximum tax of $2,500 per article. If sales tax has not been paid on the taxable purchase of an aircraft, a use tax at the 4.75% general state rate of sales and use tax with a maximum tax of $2,500 per article applies to an aircraft purchased or received from within or without this state for storage, use, or consumption in this state.
Aircraft are not subject to the local and transit rates of sales and use tax.
What Sales and Use Tax is Due for a Qualified Jet Engine?
A qualified jet engine is an engine certified pursuant to Part 33 of Title 14 of the Code of Federal Regulations. The tax due on the purchase of a qualified jet engine depends on whether the person first obtains a direct pay permit.
Purchase Without Direct Pay Permit
The retail sale of a qualified jet engine, including all accessories attached when delivered to the purchaser, is subject to the 4.75% general state rate of sales and use tax.
If sales tax has not been paid on the taxable purchase of a qualified jet engine, a use tax at the 4.75% general state rate of tax applies when purchased or received from within or without this state for storage, use, or consumption in this state.
Qualified jet engines are not subject to the local and transit rates of sales and use tax.
Purchase With Direct Pay Permit
A purchaser with a Direct Pay Permit for Qualified Jet Engine may purchase the qualified jet engine with paying tax at the time of sale. The person then must pay the maximum tax of $2,500 directly to the Secretary.
A person purchasing a qualified jet engine may apply to the Secretary for a direct pay permit. Use Form E-595JE, Application for Direct Pay Permit for Qualified Jet Engine, to apply for the direct pay permit.
Refer to the Direct Pay Permit for Sales and Use Taxes on Qualified Jet Engine web page for additional information.
How to File and Pay Sales and Use Tax?
Retailers Filing and Paying Sales Tax
Gross receipts derived from the retail sale of an aircraft or qualified jet engine and the sales and use tax thereon are to be reported to the Department on Form E-500, Sales and Use Tax Return, or through the Department’s online filing and payment system.
Purchasers Filing and Paying Use Tax on Aircraft
For a business or person who is not registered with the Department and is required to remit use tax on an aircraft purchased or received from within or without this state for storage, use, or consumption in this state on which sales tax has not been paid, the business or person must file Form E-555, Boat and Aircraft Use Tax Return.
Purchasers Filing and Paying Use Tax on a Qualified Jet Engine
For a business or person who is not registered with the Department and is required to remit use tax on a qualified jet engine purchased or received from within or without this state for storage, use, or consumption in this state on which sales tax has not been paid, the business or person must file Form E-554, Consumer Use Tax Return. However, a person who has obtained a Qualified Jet Engine Direct Pay Permit must file and pay the use tax on Form E-500, Sales and Use Tax Return, or through the Department’s online filing and payment system.
How Do I Find More Resources?
The Department’s Sales and Use Tax Bulletins (“SUTB”) provide additional information regarding the following topics related to aircraft and qualified jet engines:
- SUTB 9 - Aircraft and Qualified Jet Engines
- SUTB 50 - Interstate Air Businesses
- SUTB 74-1 - Refunds to Interstate Carriers
- SUTB 24-7 - Direct Pay Permit - Qualified Jet Engine
- SUTB 24-8 - Direct Pay Permit - Certain Boat, Aircraft, and Qualified Jet Engine Charges and Services
- SUTB 12 - Aviation Gasoline and Jet Fuel