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Old 08-25-2017, 11:40 AM
LEZ1675 LEZ1675 is offline
Bill Welter
 
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Default Uh-Oh, Here We Go - State Sales Tax

Just got a letter from Colorado Dept Of Revenue - "We just received word that you purchased an airplane and we need proof that you paid taxes on it".

So I called them up, explained that it's a homebuilt, and that I've been buying parts for 7 years, mostly mailorder. They want to see the receipts! I said no receipts, but I have a spreadsheet that shows every item that I purchased, so they want that.

I have a really bad feeling about this, more government BS

.
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Last edited by LEZ1675 : 08-25-2017 at 01:27 PM.
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  #2  
Old 08-25-2017, 05:36 PM
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TMann TMann is offline
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Default Re: Uh-Oh, Here We Go - State Sales Tax

Let's see .......
6 boxes of wing foam at $1.45 each ......
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  #3  
Old 08-30-2017, 12:18 PM
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Andrew Anunson Andrew Anunson is offline
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Default Re: Uh-Oh, Here We Go - State Sales Tax

In Virginia:

If you purchase parts from an individual that doesn't sell parts often, its called occasional sale and you don't need to pay tax.

I bought my engine from a friend... it came off of his RV-9. I don't have to pay tax on the engine since its the only thing I bought from him and its the only engine he has sold.

I bought my canard from an individual that builds canards. I do need to pay tax on it because at the time he sold multiple canards.

ALSO,
we don't typically have to pay tax on shipping

ALSO,
Sales tax in Virginia is 4.5%. Aircraft sales and use tax is 2%. The state of VA charges 2% on items purchased to build a plane.

Your state may have similar rules.
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Old 08-30-2017, 07:41 PM
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Default Re: Uh-Oh, Here We Go - State Sales Tax

Just tell them you can't release the information because it's "under audit".

Joe Polenek
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Old 08-30-2017, 09:10 PM
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Default Re: Uh-Oh, Here We Go - State Sales Tax

Quote:
Originally Posted by jpolenek View Post
Just tell them you can't release the information because it's "under audit".

Joe Polenek
...... or that the funds will be available as soon as the "Affordable Airplane Act" is passed by Congress.
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  #6  
Old 08-31-2017, 11:51 AM
LEZ1675 LEZ1675 is offline
Bill Welter
 
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Default Re: Uh-Oh, Here We Go - State Sales Tax

Or the "Aircraft Builder's Protection Act" !

Thanks, guys, for the info...
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  #7  
Old 10-15-2017, 11:59 PM
ZG4Me ZG4Me is offline
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Default Re: Uh-Oh, Here We Go - State Sales Tax

Quote:
Originally Posted by LEZ1675 View Post
Just got a letter from Colorado Dept Of Revenue - "We just received word that you purchased an airplane and we need proof that you paid taxes on it".
...
.
I'm not a tax attorney, but did sleep in a Holiday Inn dumpster last night.

May be prudent to contact a tax attorney, a referral to one from your normal/regular attorney should be free/low cost.

But there's this snippet from the CO tax website:
AIRCRAFT PARTS
The sales and use tax exemption for aircraft parts applies to parts that are permanently affixed to the aircraft. This
includes, but is not limited to, fuselage parts, parts for the aircraft’s engine(s), seats permanently affixed to the
aircraft, and paint for the aircraft.

Last I checked, all our components are attached to the plane, therefore you only owe tax on the 'glue'

Rick
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Old 10-16-2017, 01:31 AM
LEZ1675 LEZ1675 is offline
Bill Welter
 
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Default Re: Uh-Oh, Here We Go - State Sales Tax

Thanks, Rick, but I believe that rule only applies to commercial aircraft.

But, I've heard of other people using that same info with success. I tallied up the spreadsheet I used when building, and I only spent $4000 for parts, labor, etc. in Colorado. And that was all spent to businesses that charged tax, so I think I'm good to go. But when dealing with the government, you never know. They have a lot of rules and regulations they have to go by.

Did they send you a similar letter when you finished your Cozy?

- Bill
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Last edited by LEZ1675 : 10-16-2017 at 10:50 AM.
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  #9  
Old 10-16-2017, 03:25 AM
ZG4Me ZG4Me is offline
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Default Re: Uh-Oh, Here We Go - State Sales Tax

Quote:
Originally Posted by LEZ1675 View Post
Thanks, Rick, but I believe that rule only applies to commercial aircraft.

But, I've heard of other people using that same info with success. I tallied up the spreadsheet I used when building, and I only spent $4000 for parts, labor, etc. in Colorado. And that was all spent to businesses that charged tax, so I think I'm good to go. But when dealing with the government, you never know.

Did they send you a similar letter when you finished your Cozy?

- Bill
Aircraft used for commercial purposes are exempt from state levied sales/use tax. So is any part permanently installed *in any* aircraft. Emphasis is mine. City/county tax is another story.

I'm still building. FAA deemed it airworthy, but it still needs years (at my speed) of work to fly correctly. Biggest issue is stall/spin, I can't get it to spin. I need to fix that.

Rick
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  #10  
Old 10-16-2017, 11:10 AM
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TMann TMann is offline
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Default Re: Uh-Oh, Here We Go - State Sales Tax

Quote:
Originally Posted by ZG4Me View Post
Biggest issue is stall/spin, I can't get it to spin. I need to fix that.

Rick
I am chuckling out load here Rick.
Very close to having coffee come out my nose (ouch!)
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  #11  
Old 11-09-2017, 05:13 PM
LEZ1675 LEZ1675 is offline
Bill Welter
 
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Default Re: Uh-Oh, Here We Go - State Sales Tax

OK, I got a letter from the Discovery Section of Colorado Dept of Revenue, they said that the value is $47,580 because that's what I payed for parts and labor, and that would have been taxable.

They say they're not going to worry about shipping charges.

So I call and explain the situation - asked if they think I was telling the truth about shipping charges, they said Yes. So I said so where do you think all these parts came from that I payed shipping for ? Out of state of course. So everything that has shipping charges should not be taxable, right?

Uh, yeah.

Then I said I could just tell you that I went to Home Depot and bought some foam for $30 and some Elmers glue, deck screws and luaun plywood for $50 and built this airplane, and pay you the $6 in taxes and we would be good, right?

Uh....

He's beginning to see the logic here.



to be continued...
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Old 11-10-2017, 12:05 AM
ZG4Me ZG4Me is offline
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Default Re: Uh-Oh, Here We Go - State Sales Tax

Umm, I think you're digging a deeper hole.

Sales and Use tax is due to our fine state no matter where you purchased parts. Unless there's an exemption!

If purchased in state, the vendor/supplier collects on behalf of the THEIR state/municipality. If purchased out of state, it's up to you to pay OUR Sales/Use tax via your income tax form(s).

Factual Anecdote: In the past, purchases from Amazon were't taxed. For us in CO anyway. A few years ago, Amazon started collecting state (and a few municipal?) taxes on purchases as the overwhelming majority of Amazon buyers (in all states) never filled out the Sales and Use lines on our tax forms.

$47.5k value doesn't' seem that bad , especially so if you can lower the sales/use tax on that value by providing receipts and such that show you already paid the tax on one/more/all items.

Rick
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Last edited by ZG4Me : 11-10-2017 at 12:19 AM. Reason: Because I can -- Steve P. (edits underlined)
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  #13  
Old 11-10-2017, 12:51 AM
LEZ1675 LEZ1675 is offline
Bill Welter
 
Join Date: Feb 2010
Location: Colorado Springs, CO
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Default Re: Uh-Oh, Here We Go - State Sales Tax

I dunno, Rick. If I purchase something from out of state for my own use, that may not apply.

-------
From State Of Colorado:

Individuals and businesses have always been required to pay sales or use tax on taxable purchases from out-of-state vendors if the item is sold, leased, or delivered in Colorado for use, storage, distribution, or consumption in the state.
--------

I'm not purchasing the item to sell, lease or distribute it. No profit will be made from the purchases of the out-of-state items. Not a "taxable" purchase.

I'm just practicing up for when I call them again tomorrow . And I use to watch Perry Mason all the time! Or was it Mary Payson ?
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Old 11-10-2017, 01:12 AM
ZG4Me ZG4Me is offline
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Default Re: Uh-Oh, Here We Go - State Sales Tax

Quote:
Originally Posted by LEZ1675 View Post
I dunno, Rick. If I purchase something from out of state for my own use, that may not apply.

-------
From State Of Colorado:

Individuals and businesses have always been required to pay sales or use tax on taxable purchases from out-of-state vendors if the item is sold, leased, or delivered in Colorado for use, storage, distribution, or consumption in the state.
--------

I'm not purchasing the item to sell, lease or distribute it. No profit will be made from the purchases of the out-of-state items. Not a "taxable" purchase.

I'm just practicing up for when I call them again tomorrow . And I use to watch Perry Mason all the time! Or was it Mary Payson ?
Gotcha. Re-read the part about "delivered in Colorado for *use* ...". Read again, let it sink in.

Sales or use tax (they're basically the same) is due from all end purchasers in our state, no matter where the item was purchased. Major exceptions would be items purchased for resale to an end user (think Lowes or Walgreens), or items added to a component that will be resold to an end user once finished (think a Ford plant, or General Contractor).

I wish ya luck though, but think the hole is getting bigger.

Rick
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  #15  
Old 11-13-2017, 01:29 PM
LEZ1675 LEZ1675 is offline
Bill Welter
 
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Default Re: Uh-Oh, Here We Go - State Sales Tax

Talking to the CDOR guy again. Most of the reports of new amateur-built aircraft from the FAA come to CDOR with a manufacturer's name like "Jones LongEZ, serial Number 2", and CDOR doesn't worry about that.

But mine came to them with manufacturer "ZZ Homebuilt" (FAA error) and that was all, so they wrote and asked for all of the info. I sent them my spreadsheet showing all of the parts I purchased. So then they wanted to charge me taxes and provide receipts for everything purchased out of state.

So the registrations that came across with a correct manufacturers name etc, were just over-looked. But I explained, I'm not the first guy to build an aircraft in Colorado, all those other people over the years also bought parts or kits etc., why didn't you collect taxes from them ? Why me all of a sudden?

to be continued...
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