Many Aircraft Purchasers Misunderstand How to Avoid Sales Tax
Misunderstanding the System Actually Can Cause You to Pay Double Tax in California
Sacramento, CA: Many California residents who purchase aircraft or vessels misunderstand how the burden of proof works for tax exemption. The common misconception is that if the purchaser takes actions, such as taking delivery of the aircraft out-of-state, they believe that their transaction is exempt from tax and they do not have to do anything further.
The actual situation in California is that the person involved in an aircraft purchase must file a tax return in a timely manner and receive a letter from the California State Board of Equalization stating that they have supported their claim for an exemption. If the purchaser doesn’t do this, the California State Board of Equalization has up to 9 years to notify him that he owes the tax. And they can also assess interest and penalties which can nearly double the amount of tax owed.
Thomas Alston, President of Aero & Marine Tax Professionals stated, “The key to this warning is the fact that the burden of proof in supporting a claim for an exemption rests squarely on your shoulders. The Board does not have to prove anything. The taxpayer has to support the claim for an exemption and must file a tax return. In general, the return is due within twelve months from the date of the transaction. Just because you know that your property was used in an exempt manner does not mean that it is exempt. You must have in your possession a document from the Board which affirms they agree you have supported your claim. Even if you made your purchase 5-6 years ago, your transaction is not exempt if you do not possess a letter from the Board which affirms you have supported your claim for exemption. Do not be lulled to sleep by the fact that you have not been contacted by the Board. They know they have approximately 9 years after your transaction to legally notify you that you have been assessed tax. Imagine getting a notice seven years and eleven months after the tax return due date. You will not only be assessed tax but penalties and interest as well. This will easily double the amount you originally owed. Now imagine that your records were destroyed because someone in your company thought there was no exposure. You would have no recourse, and would end up having to pay the tax.”
Thomas Alston is the President of Aero & Marine Tax Professionals, the pre-eminent experts in California and Arizona sales tax involving airplanes, vehicles or vessels. The company shows purchasers how to avoid sales tax and to make certain the full value of your next aircraft, vehicle or vessel goes into their pocket–not the Government’s. He has successfully filed hundreds of tax returns with the California State Board of Equalization. Mr. Alston is California’s premier specialist in legitimate tax avoidance on aircraft, vessels and vehicles, having published many articles on sales and use tax.