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Summary: Establishes the aviation fuel excise tax. The tax is $0.10 per gallon for aviation fuel
purchased in Indiana. The retailer will add the tax to the selling price of each gallon of fuel sold.
The sale of aviation fuel is exempt if the fuel is placed into the supply tank of an aircraft owned
by the United States or its instrumentalities, the state of Indiana, the Indiana Air National Guard,
or a common carrier of passengers or freight. A purchaser of exempt fuel must present an
exemption certificate to the retailer. A retailer shall remit the tax to the department by the 16th
day of the month following the calendar month in which the sales occurred. The retailer is
required to remit the fuel tax by electronic funds transfer. The retailer is allowed to retain 1.6%
of the tax collected for the timely remittance of the tax. A person who knowingly fails to collect
or timely remit the tax is subject to a penalty of 100% of the uncollected tax plus the amount of
tax due. The aviation fuel excise tax that is collected will be deposited in the state general fund.
Effective date: July 1, 2013
Code: IC 6-6-13
Enrolled Act: HEA 1545, Sec. 67

Summary: Defines “aviation fuel” as gasoline, jet fuel, or a synthetic fuel used to power an
aircraft. Exempts the purchase of aviation fuel from the sales tax. (Sec. 31)
Effective date: July 1, 2013
Code: IC 6-2.5-5-49

Summary: Eliminates the requirement that an aircraft be registered in another country and
weigh more than 5,000 pounds to be eligible for the sales tax exemption concerning the repair,
maintenance, refurbishment, remodeling, or remanufacturing of an aircraft or avionics system.
Effective date: July 1, 2013
Code: IC 6-2.5-5-46
Enrolled Act: HEA 1545, Sec. 30

_________________
Steve Eberhart, W9JUQ (Jig Uncle Queen)
3EV - Evansville, IN

RV-7A Slider, O-360 A1A, Catto 3 blade, Garmin G3X, Bionics APRS. FLYING since June 24, 2009

On a related change to the Indiana code, it appears that there may be a way to avoid SOME sales taxes owed on things that we buy for our aircraft. Here is a letter that I sent to my state rep and senator:

Dear Jim and Wendy,

Regarding recent changes to the Indiana tax code, which is published at http://www.in.gov/legislative/bills/201 ... 545.1.html (see below also).

There are hundreds, or possibly thousands, of Indiana residents who are currently building their own aircraft under FAA part 23 which allows these aircraft to be built for various reasons including: education, market research, and others. The cost to build these aircraft is significant and their construction and subsequent use adds greatly to the Indiana economy.

Here is my question:

The code found in section 30 that takes effect on 6-30-13 looks dangerously close to allowing a sales tax loophole for building of FAA registered experimental aircraft. It certainly appears that anything we buy for "maintenance" of our aircraft could be sales tax exempt if we jump through the proper hoops. The question then is where does aircraft construction end and maintenance or remodeling begin? And what constitutes a "repair station". Does my FAA issued repairman certificate meet the vague qualifications for "repair station" under the "other applicable law or regulation" section"?

By my reading of the code, it appears that there is a huge gray area between construction and maintenance. Obviously, a "bare-bones" aircraft could be constructed and registered with the FAA, and subsequently "remodeled" to add upgrades engines, props, and avionics. It would be possible for a builder to save thousands in sales taxes by doing so. This is similar to what is done commonly in Europe when a person buys a stripped down new car and then adds optional equipment later, all in order to avoid the VAT.

Please offer your opinion. Do those of us building our own experimental aircraft need to be concerned that the DOR aviation compliance division is going to allow or disallow sales tax exemptions in the future on construction materials? Keep in mind that the changes to the code seem to allow "remodeling" to aircraft. Many builders would choose that path to save money, but it certainly isn't an efficient path!

I'd be happy to talk to either of you about this topic. It would seem that the last thing that Indiana would want to do is to encourage one area of aviation (repair shops), but totally ignore the hundreds, or thousands, of individuals who are quietly adding great wealth to the Indiana economy by building and maintaining experimental aircraft. Please note that these aircraft are the genesis of many small businesses like mine, and are commonly used for business travel, education, market research, and other uses.


SECTION 30. IC 6-2.5-5-46, AS ADDED BY P.L.153-2012, SECTION 5, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2013]: (deleted text omitted here)
(a) Transactions involving tangible personal property (including materials, parts, equipment, and engines) are exempt from the state gross retail tax, if the property is:
(1) used;
(2) consumed; or (3) installed;
in furtherance of, or in, the repair, maintenance, refurbishment, remodeling, or remanufacturing of an aircraft or an avionics systems system of an aircraft.
(c) (b) The exemption provided by this section applies to a transaction only if the retail merchant, at the time of the transaction, possesses a valid repair station certificate issued by the Federal Aviation Administration under 14 CFR 145 et seq. or other applicable law or regulation.

Thanks,

Vince Frazier
Flyboy Accessories
3963 Caborn Road North
Mount Vernon, IN 47620
812-464-1839
1-888-8FLYBOY
1-888-835-9269
www.flyboyaccessories.com