Idaho Admin. Code r. 35.01.02.037 - AIRCRAFT AND FLYING SERVICES
Sections 63-3607A, 63-3612, 63-3613, 63-3622C, 63-3622GG, Idaho Code
01.
Definitions. For the
purposes of this rule, the following terms have the following meanings:
(3-31-22)
a. Aircraft. The term aircraft means
any contrivance now known or hereafter invented, used, or designed, for
navigation of or flight in the air. (3-31-22)
b. Recreational Flight. The hiring on demand
of an aircraft with a pilot to transport passengers for a recreational purpose.
Examples are a pleasure ride, sightseeing, wildlife viewing, hot air balloon
rides, or other similar activities. (3-31-22)
c. Freight. Goods transported by a carrier
between two (2) points. Freight does not include goods which are being
transported for the purpose of aerial spraying or dumping. See Subsection
037.06 of this rule.
(3-31-22)
d. Transportation of
Passengers. The transportation of passengers means the service of transporting
passengers from one (1) point to another. It does not include survey flights,
recreational or sightseeing flights, nor does it include any flight that begins
and ends at the same point. (3-31-22)
e. Nonresident Individual. An individual as
defined by Section
63-3014, Idaho Code.
(3-31-22)
f. Nonresident Businesses
and Other Organizations. A corporation, partnership, limited liability company,
or other organization will be considered a nonresident if it is not formed
under the laws of the state of Idaho, is not required to be registered to do
business with the Idaho Secretary of State, does not have significant contacts
with this state, and does not have consistent operations in this state. A
limited liability company (LLC) or other legal entity formed by an Idaho
resident under the laws of another state primarily for the purpose of
purchasing and owning one (1) or more aircraft is not a nonresident. The use of
an aircraft owned by such an entity will be subject to use tax upon its first
use in Idaho. (3-31-22)
g. Day. For
the purpose of this rule any part of a day is a day. (3-31-22)
h. Transportation of freight or passengers
for hire. "Transportation of freight or passengers for hire" means the business
of transporting persons or property for compensation from one (1) location on
the ground or water to another. (3-31-22)
i. Common Carrier. The operation of an
aircraft in the transportation of freight or passengers for hire by members of
the public. When operating as a common carrier, the operator or owner of an
aircraft usually charges a rate that will generate a profit. For flights in
which federal regulations limit or minimize this profit, the aircraft is likely
not operating as a common carrier. (3-31-22)
j. Public. The public does not include:
(3-31-22)
i. Owners or operators of the
aircraft; (3-31-22)
ii. Employees
of the aircraft owner or operator; (3-31-22)
iii. Guests of the aircraft owner or
operator; (3-31-22)
iv. Any of the
above with the same relationship to a parent of the aircraft owner, a
subsidiary of that parent, or a subsidiary of the aircraft owner;
(3-31-22)
v. An individual or
entity flying under a time sharing agreement which is an arrangement where an
aircraft owner leases his aircraft with flight crew to another individual or
entity and the aircraft owner limits the amount charged in accordance with
federal regulations; or (3-31-22)
vi. An individual or entity flying under an
interchange agreement which is an arrangement where an aircraft owner leases
his aircraft to another aircraft owner in exchange for equal time on the other
owner's aircraft and any fees charged may not exceed the difference between the
costs of owning, operating, and maintaining the two (2) aircraft.
(3-31-22)
02.
Sales of Aircraft. Sales of aircraft are taxable unless an
exemption applies. Section
63 -3622GG, Idaho Code, provides an
exemption for the sale, lease, purchase, or use of an aircraft: (3-31-22)
a. Primarily used to provide passenger or
freight services for hire as a common carrier; (3-31-22)
i. Example 1: An aircraft is flown for the
following activities: the aircraft owner's personal vacations, flight
instruction, and charter operations for hire as a common carrier. The flight
hours for each activity are forty-five (45), sixty-five (65) and seventy-five
(75) hours respectively in a consecutive twelve (12) month period. The combined
flight hours for the taxable uses of the aircraft, owner and flight
instruction, (45 + 65 = 110 hours) are more than the hours operating as a
common carrier (75 hours). Since the greater use of the aircraft is performing
activities that do not qualify for an exemption, the use of the aircraft will
be taxable at fair market value as of that point in time. (3-31-22)
ii. Example 2: A charter aircraft service
uses an aircraft for three purposes: flight instruction, air ambulance service,
and charter flights operated as a common carrier. The flight hours for each
activity are one hundred (100), sixty (60) and fifty (50) respectively in a
consecutive twelve (12) month period. The combined flight hours for the exempt
uses of the aircraft, as an air ambulance and as a common carrier (60 + 50 =
110 hours), are more than the hours used for flight instruction one hundred
(100) hours. Since the greater use of the aircraft is performing activities
that qualify for an exemption, the use of the aircraft will be exempt.
(3-31-22)
b. Primarily
used for emergency transportation of sick or injured persons;
(3-31-22)
c. That is a fixed-wing
aircraft primarily used as an air tactical group supervisor platform under a
contract with a governmental entity for wildfire activity; or
(3-31-22)
d. Purchased for use
outside this state, when the aircraft is upon delivery taken outside this
state, but only if: (3-31-22)
i. The aircraft
is sold to a nonresident as defined in Subsection
037.01.d. or 037.01.e. of this
rule; and (3-31-22)
ii. The
registration will be immediately changed to show the new owner and the aircraft
will not be used in this state more than ninety (90) days in any consecutive
twelve (12) month period. (3-31-22)
03.
Sales of Aircraft Repair Parts to
Nonresidents. Subject to the restrictions of Section
63 -3622GG, Idaho Code, sales of
aircraft repair parts, including those paid for under a warranty or service
agreement, are exempt from tax when installed on an aircraft owned by a
nonresident individual or business as defined in Subsection
037.01 of this rule.
(3-31-22)
04.
Federal Law
Prohibits States From Taxing Sales of Air Transportation. See
49 U.S.C. Section
40116. For this reason, sales of intrastate
transportation as described by Section
63-3612 (i), Idaho Code, are not
taxable in Idaho. (3-31-22)
05.
Rentals and Leases of Aircraft. The rental or lease of an aircraft
without operator is a taxable sale, other than as provided in Subsection
037.02 of this rule. See Rule
024 of these rules.
(3-31-22)
06.
Aerial
Contracting Services. Businesses primarily engaged in the application of
agricultural chemicals as described in Federal Aviation Regulation Part 137, or
in activities involving the carrying of external loads as described in Federal
Aviation Regulation Part 133, such as aerial logging, are performing aerial
contracting services. Such businesses are not primarily engaged in the
transportation of freight. (3-31-22)
a.
Aircraft purchased, rented, or leased for aerial contracting are taxable. It
makes no difference if the service is provided to a government agency or a
private individual or company. Sales or use tax also applies to the purchase of
repair parts, oil, and other tangible personal property. (3-31-22)
b. When aircraft held for resale are used by
the owner, who is an aircraft dealer, for aerial contracting services, a
taxable use occurs. The use tax is due on a reasonable rental value for the
time the aircraft is used to provide the service. (3-31-22)
07.
Air Ambulance Service.
Charges for the emergency transportation of sick or injured persons, including
standby time, are not taxable. (3-31-22)
08.
Flying Instructions. Flying
instructions or lessons which may include solo flights are a service and the
fees are not taxable. (3-31-22)
a. Aircraft
purchased, rented, or leased to be used primarily for flying instruction are
taxable. (3-31-22)
b. When aircraft
held for resale are used by the aircraft dealer for flying instructions or
lessons, a taxable use occurs. The use tax is due on a reasonable rental value
for the time the aircraft is used to provide the service.
(3-31-22)
09.
Recreational Flights. Sales and purchase of aircraft used
primarily for providing recreational flights are taxable. (3-31-22)
10.
Aircraft Held for Resale.
Aircraft purchased and held for resale become taxable when used for purposes
other than demonstration or display in the regular course of business.
(3-31-22)
a. Rentals of aircraft held for
resale are taxable as provided by Subsection
037.05 of this rule.
(3-31-22)
b. When an aircraft held
for resale is used for a taxable purpose, the dealer owes tax on that use. The
use tax applies to a reasonable rental value for the time the aircraft is used.
(3-31-22)
c. Parts and oil
purchased to repair or maintain aircraft held for resale are not taxable. The
aircraft dealer provides the supplier with a properly completed resale
certificate. See Rule
128 of these rules.
(3-31-22)
11.
Fuel. The sale or purchase of fuels subject to motor fuels tax, or
on which a motor fuels tax has been paid, pursuant to Chapter 24, Title 63,
Idaho Code, is exempt from sales and use tax. (3-31-22)
Notes
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