| This article contains information that is designed to | | | | and when after the transfer the real and ultimate |
| help a prospective aircraft or vessel buyer to | | | | ownership remains substantially similar. |
| understand the maze known as California Sales and | | | | Payment of Tax by Purchaser: |
| Use Tax Laws and Regulations. This first section will | | | | Purchases of MTE from any person other than a |
| contain some definitions. It is intended to clear up | | | | person required to hold a sellers permit by reason of |
| questions, such as, "Who owes the tax?" and "What | | | | the number, scope, and character of the persons |
| is use tax?" | | | | sales of such MTE, as the case may be and not |
| The summary will explain why these definitions are | | | | otherwise specifically exempt shall report and pay tax |
| important to you and give examples why. It is felt | | | | to the board. |
| that with the basic understanding of these terms you | | | | A purchaser who holds a sellers permit, or to whom |
| can determine prior to the transaction who will | | | | a consumers use tax number has been assigned, |
| ultimately be responsible for the tax. The information | | | | must include the tax in the purchasers return for the |
| contained herein will apply whether you are buying a | | | | period in which the MTE was purchased. |
| $20,000.00 ski boat or a $2,000,000.00 aircraft. These | | | | A purchaser who does not hold a sellers permit, or to |
| are issues that we deal with and advise people on all | | | | whom a consumers use tax number has not been |
| the time, at Aero & Marine Tax Professionals ( | | | | assigned, shall make a return and pay use tax, |
| Definitions | | | | measured by the sales price of the vessel or aircraft, |
| Sale: | | | | on or before the last day of the calendar month |
| Any transfer of title or possession, exchange, or | | | | next succeeding the month in which a return form is |
| barter, conditional or otherwise, in any manner or by | | | | mailed to the purchaser, or the last day of the |
| any means whatsoever, of tangible personal property | | | | twelfth month following the month during which the |
| for a consideration. | | | | vessel or aircraft was purchased, whichever period |
| Retail Sale: | | | | expires earlier. |
| A "retail sale" or "sale at retail" means a sale for any | | | | Vessel or Aircraft Purchased Through Brokers: |
| purpose other than resale in the regular course of | | | | Notwithstanding any other provision, when a person |
| business in the form of tangible personal property. | | | | purchases a vessel or aircraft from another person |
| Gross receipts: | | | | through a broker, the purchaser is relieved from the |
| Gross receipts mean the total amount of the sale or | | | | liability for use tax on the transaction only to the |
| lease or rental price... | | | | extent that he or she: |
| Sales Tax: | | | | 1. Has paid an amount as sales or use tax to the |
| Sales Tax is imposed on retailers for the privilege of | | | | broker, and |
| selling tangible personal property at retail. The tax is | | | | 2. Has obtained and retained a receipt from the |
| measured by the gross receipts from retail sales. The | | | | broker showing the payment of such tax. |
| obligation to pay sales tax is on the seller. | | | | The purchaser is relieved from liability only to the |
| Use Tax: | | | | extent of the amount paid, and for which a receipt |
| Use tax is imposed upon the storage, use or other | | | | as provided, but remains liable for any amount of tax |
| consumption in this state of tangible personal | | | | later determined to be due. An amount designated as |
| property purchased from a retailer. The use tax | | | | sales or use tax collected by the broker from the |
| rather than the sales tax applies to purchases | | | | purchaser constitutes a debt owed by the broker to |
| shipped from an out-of-state point to a California | | | | the state and the broker shall be liable for that |
| consumer. The obligation to pay use tax is on the | | | | amount as if he or she were engaged in business in |
| purchaser. | | | | this state required to collect that amount as use tax |
| Mobile Transportation Equipment (MTE): | | | | from the purchaser. |
| Mobile transportation equipment includes equipment | | | | The following is a list of reasons why California |
| such as railroad cars and locomotives, buses, trucks | | | | residents need to know the difference between |
| (except "one-way truck rental trucks"), truck | | | | sales tax and use tax: |
| tractors, truck trailers, dollies, bogies, chassis, reusable | | | | 1. If you purchase MTE from a California dealer while |
| cargo shipping containers, aircraft and ships, and | | | | the MTE is located inside California he or she owes |
| tangible personal property which is or becomes a | | | | the sales tax, however, the dealer can reimburse |
| component part of such equipment. It does not | | | | itself it from you. |
| include passenger vehicles. | | | | 2. If you purchase MTE for use inside California from |
| Vessel: | | | | an out-of-state dealer, you are liable for use tax and |
| Vessel means any boat, ship, barge, craft, or floating | | | | must file the tax return and pay the tax. Unless the |
| thing designed for navigation in the water except: | | | | out of state dealer has nexus with the State of |
| (There is a list of exceptions to the above sentence.) | | | | California. |
| Aircraft: | | | | 3. If you purchase MTE for use inside California from |
| Aircraft means any contrivance designed for | | | | a individual, whether he or she is located inside |
| powered navigation in the air, except a rocket or a | | | | California or not, you are liable for use tax and must |
| missile. "Aircraft" includes an airframe or a fuselage | | | | file the tax return and pay the tax. Many people will |
| even without an engine. | | | | tell you to wait until the Board sends you a bill. THIS |
| Retailer of Vehicle, Vessel or Aircraft: | | | | IS WRONG. The state does not have to notify you |
| Every person making any retail sale of a Vehicle, | | | | in a timely manner. It is your obligation to file the tax |
| Vessel or Aircraft as defined above is a retailer. | | | | return that is due in a timely manner. |
| Seller: | | | | 4. If you want to be able to qualify for most of the |
| When the retailer is not otherwise required to hold a | | | | available exemptions you must always take |
| sellers permit, he or she is exempted from the | | | | possession while the property is located outside |
| computation of the sales tax on the gross receipts | | | | California and you must meet the requirements of a |
| from the sale. | | | | legal definition of "first functional use" before the |
| Application of Tax | | | | aircraft enters California the first time. First functional |
| Sales tax does not apply to: | | | | use depends on the type of aircraft as well as your |
| Sales of vessels and aircraft by a person not required | | | | intended us. |
| to hold a sellers permit by reason of the number, | | | | Therefore, always request as part of an offer to |
| scope, and character of the persons sales of such | | | | purchase that the seller deliver your aircraft or vessel |
| vessels or aircraft. | | | | to you outside the State of California. The rules |
| Vessels and aircraft when included in any transfer of | | | | about where to take delivery are as varied as each |
| all or substantially all of the property held or used in | | | | states laws apply to your specific type of purchase. |
| the course of business activities of the transferor | | | | ALWAYS SEEK PROFESSIONAL GUIDANCE. |