State Tax

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California State Tax News

California Fractional Tax Ruled Unconstitutional
December 13, 2010
An Orange County Superior Court judge has ruled that California’s controversial fractional aircraft property tax law is unconstitutional. On November 30, Judge William Monroe held that the imposition of property tax on the managers of fractionally owned aircraft by California Senate Bill 87 (SB 87) is unconstitutional and unlawful. NBAA welcomes this decision. The judge gave two reasons for his ruling: The right SB 87 gives counties to collect taxes retroactivity for four years dating back to 2003 is overly broad, and the tax is unlawfully imposed on the fractional fleet managers when, as a matter of law, they do not own, control or possess the airplanes on which the tax is actually levied. Learn More.

California State Tax Resources

In general, there are three potential exemptions for aircraft purchases in California:

  1. The not purchased for use in California exemption or what was previously called the “90-day rule”
  2. The interstate or foreign commerce exemption
  3. The common carrier exemption

Regardless of which exemption is being considered, aircraft purchasers should seek professional assistance regarding such exemptions as the governing regulations are detailed and subject to frequent change. Adequate planning prior to closing any purchase transaction is strongly advised.

The articles below provide information on the available exemptions and information on tax policy changes in California. For the latest information on tax issues in California, review the NBAA State Aviation Tax Report.

Articles

California Law Assesses Property Tax on Fractional Aircraft by Stephen R. Hofer, Aerlex Law Group

California Interstate Commerce Use Tax Exemption by Victor C. Anvick, Aviation Tax Information Services