§ 58.8. Commercial airport and aircraft operators.
(a) Definitions. The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:
Casual sales—A sale of an aircraft by a person not engaged in the business of selling aircraft.
Commercial aircraft operator—A person, excluding scheduled airlines, who is engaged in any of the following activities as a business for compensation:(i) Transporting persons or property as a common carrier.
(ii) Selling or leasing of aircraft.
(iii) Providing flight instruction.
Common carrier—An air carrier who has obtained a Certificate of Convenience from the Civil Aeronautics Board, or its successor, for the purpose of transporting persons or property.
Fair rental value—The rental price which the owner, lessor or other operator of an aircraft normally charges for the rental of the aircraft; or the rental price which would be charged on the open market for the rental of a similar aircraft for a similar period of time under similar circumstances. When the fair rental value is unknown, the Department will recognize 2.0% of the purchase price as a monthly fair rental value of an aircraft provided the purchase price represents the fair market value of such aircraft.
Flight instruction—Instruction provided in connection with obtaining a student license, private rating, commercial rating, instrument rating, instructor rating, transport rating, jet rating, instrument instructor rating or any rating or course approved by the Federal Aviation Administration.
Prevailing market price—The amount which would be charged for an aircraft on the open market at the time and place of transfer; or the amount which would be charged on the open market for a similar aircraft under similar circumstances.
Purchase price—The total value paid or delivered, or promised to be paid or delivered, whether it be money or otherwise in the complete performance of a sale or purchase including delivery charges paid to the seller. The following items may be excluded from purchase price provided they are separately stated:(i) Tangible personal property taken in trade or exchange.
(ii) Reasonable interest and finance charges in connection with an installment sale.
Rental or lease—The transfer of possession or custody of an aircraft, including an aircraft provided or used in connection with flight instruction, but the term does not include the service of a common carrier.
Rental or lease payment—The total value paid or delivered, or promised to be paid or delivered, whether it be money or otherwise, for any period under a rental or lease arrangement:(i) Including payments for maintenance, insurance or repair paid by the lessee to the lessor, or directly to a repairman or insurance carrier.
(ii) Excluding separately stated charges for aircraft fuel sold by the lessor or purchased by the lessee and reimbursed by the lessor. To qualify for exemption, the charges for fuel shall:
(A) Be separately stated on the rental or lease invoice and reflect the quantity and total charge.
(B) Not exceed 110% of the manufacturers consumption rate for the aircraft leased.
(iii) Excluding separately stated charges for instructor fees if such fees are identified.
Resident—(i) A natural person who is domiciled in this Commonwealth, or who maintains a permanent place of abode within this Commonwealth and spends in the aggregate more than 60 days of the year within this Commonwealth.
(ii) A corporation incorporated under the statutes of this Commonwealth, or authorized to do business or doing business within this Commonwealth, or maintaining a place of business within this Commonwealth.
(iii) An association, fiduciary, partnership or other entity domiciled in this Commonwealth, or authorized to do business or doing business within this Commonwealth, or maintaining a place of business within this Commonwealth.
Use—The exercise of any right or power incidental to the ownership, custody or possession of tangible personal property including but not limited to the transportation, storage and consumption.(b)
Sales, purchases, leases or rentals involving delivery in this Commonwealth. (1) Transactions originating in this Commonwealth. Transactions which originate in this Commonwealth and involve physical delivery within this Commonwealth are subject to sales tax, unless the purchaser or lessee is entitled to claim one of the exemptions listed in subsection (d). Examples of taxable transactions include casual or dealer sales or purchases of aircraft, and leases or rentals of aircraft; sales, purchases, leases or purchases of aircraft parts; and sales or purchases of repair or maintenance services.
(2) Transactions originating outside of this Commonwealth. Transactions such as sales, purchases, leases or rentals of aircraft, parts or repair or maintenance services originating outside of this Commonwealth but involving physical delivery within this Commonwealth are also subject to tax. If the seller, lessor or repairman is licensed by the Department to collect Pennsylvania sales tax, the purchaser or lessee is required to pay the applicable tax at the time of purchase or lease. If the seller, lessor or repairman is not licensed by the Department to collect tax, the purchaser or lessee is required to remit the tax directly to the Department. See subsection (h).
(3) Leases and rentals. Leases or rentals taxable at the time of delivery remain subject to Pennsylvania sales tax throughout the entire period of the lease or rental, notwithstanding the fact that the aircraft or aircraft part may be periodically removed from this Commonwealth on one or more occasions during the total rental period. If during a period of out of state use, the lessee is legally required to pay sales or use tax to another taxing jurisdiction having tax credit reciprocity with the Commonwealth, appropriate credit will be given for such tax against Pennsylvania sales tax owing upon the same lease or rental payment. See subsection (e).
(4) Basis for tax. If the transaction is a sale, the tax is imposed upon the purchase price. If the transaction is a lease or rental, the tax is imposed upon the full lease or rental payment.
(c) Purchases, leases or rentals involving delivery outside of Pennsylvania. (1) General. Transactions which originate either inside or outside this Commonwealth and involve physical delivery outside of this Commonwealth are exempt from Pennsylvania sales or use tax. If the aircraft enters this Commonwealth following delivery, it becomes subject to Pennsylvania use tax unless the purchaser or lessee is entitled to claim one of the exemptions listed at subsection (d). Examples of this type of transaction include the casual sale or the purchase of an aircraft from a dealer; leases or rentals of aircraft; purchases or leases of aircraft parts and purchases of repair or maintenance service.
(2) Use by a resident. If a resident brings an aircraft or aircraft part into this Commonwealth within 6 months following the date of an out-of-state purchase, the use tax is based upon the original purchase price. If after 6 months of the date of purchase, the resident brings the aircraft into this Commonwealth, the resident purchaser may elect to pay use tax based upon the prevailing market value on the date the aircraft or aircraft part enters this Commonwealth. If a resident brings an aircraft or aircraft part into this Commonwealth following its lease or rental ouside of this Commonwealth, the use tax is based upon that portion of the rental or lease payment attributable to the use of the aircraft in this Commonwealth. The resident may be entitled to a tax credit representing sales tax required to be paid to another taxing jurisdiction having tax credit reciprocity with the Commonwealth.
(3) Use by a nonresident. If a nonresident brings an aircraft or aircraft part into this Commonwealth following an out-of-state purchase, lease or rental, the nonresident is required to pay use tax and is entitled to the same exemptions as a Pennsylvania resident. The nonresident is not required to pay tax upon an aircraft or aircraft part:
(i) Used in this Commonwealth for any period of time as a tourist or vacationer.
(ii) Used in this Commonwealth other than as a tourist or vacationer, for a period of 7 days or less.
(iii) Brought into this Commonwealth in connection with the establishment of a permanent business or residence if the aircraft or aircraft part was purchased more than 6 months prior to the date it was brought into this Commonwealth. This 6 month exemption does not apply to aircraft or aircraft parts which were purchased within 6 months of the date they were brought into this Commonwealth in connection with the establishment of a permanent business or residence. The aircraft or aircraft parts, purchased within 6 months, are subject to Pennsylvania use tax upon their original purchase price. If a nonresident brings an aircraft or aircraft part into this Commonwealth following its lease or rental outside of this Commonwealth, and is not entitled to an exemption, the Pennsylvania use tax is based upon that portion of the rental or lease attributable to the use of the aircraft in this Commonwealth. The nonresident may be entitled to a tax credit representing sales tax required to be paid to another taxing jurisdiction having tax credit reciprocity with the Commonwealth.
(4) Payment of tax. Residents and nonresidents who use aircraft or aircraft parts in this Commonwealth following their purchase, lease or rental in another state, have the responsibility to remit any Pennsylvania use tax which may be due directly to the Department. See subsection (h).
(d) Exemptions. Transactions relating to aircraft may be subject to an exemption. If the purchase, lease or rental involves physical delivery within this Commonwealth, the purchaser or lessee is required to give to the seller or lessor a completed exemption certificate in lieu of the tax (Form REV-1220). If the exempt purchaser or lessee brings the aircraft or aircraft parts into this Commonwealth, following the purchase or lease, the purchaser or lessee may claim an exemption at the time of filing with the Department (Form REV-832 ‘‘Aircraft Sales and Use Tax Return’’). Purchasers or lessees entitled to claim an exemption under their appropriate regulations are required to complete the form and provide a reason for the claimed exemption.
(e) Credit against tax. A credit may be granted with respect to the tax due and paid to another state by reason of a tax similar to the tax imposed by the TRC. No credit will be granted unless the other state grants similar tax relief to persons who have paid tax to the Commonwealth. A list of states granting similar tax relief may be obtained from the Department upon request.
(f) Commercial aircraft operators. A commercial operator may purchase an aircraft without payment of tax if the commercial aircraft operator is entitled to claim an exemption under the law. Thereafter, if the commercial aircraft operator makes a taxable use of such aircraft, he is permitted to pay tax to the Department based upon the fair rental value of the aircraft during such taxable use. If the commercial aircraft operator uses the aircraft or aircraft part in performing aerial surveys, crop dusting, pipeline inspections or similar flight activities or uses the aircraft or aircraft part for personal use, he is required to pay to the Department use tax upon the fair rental value of the aircraft or aircraft part during such use.
(g) Flight instruction. Airport operators who engage in the business of providing flight instructions are required to collect sales tax upon all equipment and supplies including the rental of an aircraft used in providing this service. No tax need be collected on charges made for flight instructions. If the charges for an aircraft are not separately stated, the Department will require tax to be collected on the amount billed to the student.
(h) Tax and information returns.
(1) General. Purchases and lessees of aircraft, aircraft parts or repair or maintenance services who do not pay the applicable sales tax to the seller, lessor or repairman are required to remit tax directly to the Department. If the purchaser or lessee is licensed with the Department, the applicable tax shall be remitted with the purchaser’s or lessee’s regular tax return. In the conduct of its audit examinations, the Department will examine both the books and records as well as the aircraft flight logs in order to determine the tax due. If the purchaser or lessee is not licensed with the Department, the following forms shall be used:
(i) Purchase of aircraft. Form REV-832 ‘‘Aircraft Sales and Use Tax Return.’’
(ii) Leases of aircraft, lease of aircraft parts or purchase of repair or maintenance services. Form PA-3. To obtain this tax return, purchaser or lessee must register with the Department of filing Form REV-289 ‘‘Application of Sales, Use or Hotel Occupancy License.’’
(2) Aircraft sales information return. Persons engaged in the business of selling aircraft are required to file an Aircraft Sales Information Return with each regular tax return which is filed with the Department. This form permits the seller to list all purchasers of aircraft during the reporting period, the identification of the aircraft sold, and whether the sale was taxable or exempt.
Source The provisions of this § 58.8 amended March 9, 1984, effective March 10, 1984, 14 Pa.B. 848. Immediately preceding text appears at serial pages (40444) to (40445).
Cross References This section cited in 61 Pa. Code § 33.2 (relating to scope); and 61 Pa. Code § 60.16 (relating to Local Sales, Use and Hotel Occupancy Tax).
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