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