Extreme Caution Advised! Properly Responding to State Sales and Use Tax Audits of Aircraft Acquisitions and Ownership


As we discussed in our article "IRS Income Tax Audits are

Increasing: What Should You Do When You Receive an Audit

Notice?" published in last month's edition of World Aircraft

Sales Magazine, negotiating your way through a federal

income tax audit can be daunting and difficult.

Similarly, state sales and use tax audits are fraught with

many potentially complex tax compliance pitfalls. If you are

unfortunate enough to receive a notice or other inquiry from

a state taxing authority regarding potential liability for state sales or use tax on your purchase or use of an aircraft, you must tread carefully through the "minefield" of issues surrounding the audit.

This article will highlight several of the most important issues relating to sales and use tax audits and provide some

practical advice for aircraft owners and/or operators with

respect to such audits. By way of general background, the

purchase or use of business aircraft is typically treated as a sale or use of tangible personal property that is subject to state sales or use tax unless a state exemption or similar limitation applies.

See full article for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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