Question: 

Recently the FAA has imposed a new requirement that ultra light aircraft 
that can carry 2 or more persons must be registered with the FAA (have an N 
number assigned). Based on this requirement, DOT states that DOT Wisconsin 
law then requires that these aircraft stations in Wisconsin would also be 
required to be registered in Wisconsin. Based on this requirement, 
sales/use tax would be due per sec 77.61 (1) (a) (or proof that it has been 
paid). Many of these aircraft have been owned and operated in Wisconsin for 
years by the same person and now they have a new requirement to register 
them. 

The questions are: 

* Would they owe tax when they register the aircraft now since at the 
time of purchase or first use in Wisconsin they may not have owed the tax? 
If they purchased the aircraft already built from a private party they would 
not have owed the tax yet? However, they may have owed tax on kits/parts 
they purchased without tax to build the aircraft. 
* If they do owe tax, would it be based on their purchase price of 
years ago or would it now be based on the fair market value of the aircraft 
per sec 77.57? 
* Naturally if they purchased the aircraft more than 90 days before 
changing their domicile to Wisconsin they would be exempt either way correct 
per sec 77.53 (18)? 


Answer: 

> Assuming no exemptions apply, the buyer would owe use tax on their 
> purchase of the plane or parts for the plane, based on their original 
> purchase price. Depending on whether or not the buyer has filed a sales 
> or use tax return, the statute of limitations may or may not have passed. 
> 
> If the aircraft (or parts to build the aircraft) was purchased from a 
> person who was not a dealer or retailer of aircraft, the occasional sale 
> exemption would apply. At the time of purchase, the aircraft was not 
> required to be registered or titled (and I'm assuming the buyer did not 
> register or title the aircraft), so the transaction is not excluded from 
> sec. 77.54(7)(a), Wis. Stats. The fact that there is now a requirement to 
> register or title the aircraft does not change the occasional sale 
> exemption that applied at the time of purchase. 
> 
> Section 77.57, Wis. Stats. (2003-04), would only apply if the buyer gave 
> the seller an exemption certificate or otherwise certified to the seller 
> that the purchase was exempt. Even if the buyer gave an exemption 
> certificate to the seller, we would have to look to the first taxable use 
> of the plane. The "taxable use" referred to in 77.57 is not the 
> registration or titling of the aircraft (taking place now), rather the 
> taxable use is the taxable storage or use of the plane (presumably, taking 
> place years ago) for a purpose other than the exempt use on the 
> certificate. 
> 
> 
> Anylasis: 
> 
> Assumptions: 
> 
> * Purchase is either made in WI or buyer made purchase out-of-state an 
> brought item into WI 
> * No exemptions apply. 
> * Aircraft was not required to be registered or titled at time of 
> purchase, but it is now. 
> * Buyer did not register or title the aircraft at the time of purchase 
> or when buyer completed construction, but is registering or titling it 
> now. 
> 
> 
> 
> Does occasional sale If tax was not paid @ time 
> 
> exemption apply? of purchase does buyer 
> Possible Transactions 
> {sec. 77.54(7)(a)} now owe tax? Note 2 
> 
> 
> I. Bought completed aircraft/aircraft kit from dealer or retailer. 
> No Yes (note 2) 
> 
> II. Bought completed aircraft/aircraft kit from non-dealer or 
> non-retailer. Yes (note 1) No 
> 
> III. Bought parts from dealer or retailer. 
> No Yes (note 2) 
> 
> IV. Bought parts from non-dealer or non-retailer. 
> Yes No 
> 
> 
> 
> NOTES: 
> 
> 1. Although the aircraft is now required to be registered or titled, it 
> wasn't required to be registered or titled at the time it was purchased. 
> A law that wasn't in effect at the time of purchase cannot apply to a 
> prior transaction. 
> 
> 2. Whether or not the statute of limitations has passed may depend on 
> whether or not the buyer filed a sales or use tax return. 
> 
> 
> 
> Stanley Hook 
> Sales Tax Office Audit Supervisor 
> (608)264-9944