Avionics News January 2023 - 53

M
any states have sales tax exemptions on aircraft
maintenance, whether on related labor,
parts, or both. What are the benefits of your
state having these exemptions? How can an organization lobby
to get exemptions? Are there any trade-offs? For example, are
states without sales tax exemptions on labor and parts more
likely to have fly-away exemptions or lower or no personal
property tax or registration fees?
Many states do not charge sales taxes on aircraft parts and
labor. In states that do charge sales taxes, those sales taxes on
major avionics work can add thousands of dollars to the cost
of upgrades.
Iowa is the latest state to join that group of sales tax-exempt
states, with state lawmakers hoping businesses that left the
state for more tax-friendly states will return. Lawmakers also
hope graduates of community colleges with aircraft
maintenance programs will be more likely to
remain in the state after graduation.
Representative Lee Hein said, " We
have seen a lot of business go out of
the state, and this will help our local
aircraft maintenance shops. But more
importantly, we have three community
colleges that have aircraft maintenance
programs, and this will help keep those
graduates here in the state of Iowa. "
The June 2022 legislation expanded
an existing aircraft repair and maintenance
sales and use tax exemption to include aircraft that
are not used in scheduled or nonscheduled interstate
Federal Aviation Administration-certified air carrier operations;
in other words, it expanded the exemption to include noncommercial
general aviation aircraft.
er, is an aviation tax expert with special focus on state tax issues.
" Most exemptions have come about because a large FBO
or repair organization has lobbied for it, " said Stubbs, adding
sales tax exemptions are often sold to state legislators
because of the ability to attract new business and more jobs
to the state. Because of these positive impacts on the state's
overall economy, there usually aren't trade-offs by increasing
aircraft registry fees, personal property taxes, or other
types of taxes that would offset the sales tax exemption on
maintenance and parts.
" If you have
maintenance done in a
state without a sales
tax on maintenance
and parts, you may
still be subject to tax
where the aircraft is
hangared. "
The Iowa legislation is particularly important to Iowa-based
repair shops, as most of its neighboring Midwest states already
had such exemptions, resulting in some aircraft owners flying
out of state to have maintenance - especially large jobs or expensive
avionics upgrades - conducted.
Local aviation professionals believe the Iowa exemption contributed
to a combined federal and local grant of $1 million to
Kirkwood Community College's aviation maintenance program.
Eastern Iowa Airport Director Marty Lenss said the sales tax
exemption creates a " level playing field, " paving the way for
more students to seek training in aviation maintenance and then
remain in the state after graduation.
Nel Stubbs, director at JSSI Consulting's Conklin & deDeckContact
your regional or state aviation advocacy group
and your state's department of transportation's aviation division
to begin lobbying for a sales tax exemption. Your state's
aviation division likely has access to data on the economic
impact of aviation on your state, which can be used to support
your advocacy efforts.
Your regional or state aviation advocacy group
can put you in touch with the right policymakers
and help coordinate efforts among
other repair organizations in your state.
Stubbs advises aircraft owners to be
aware of the tax laws in the state the
aircraft is based. If you have maintenance
done in a state without a sales tax
on maintenance and parts, you may still be
subject to tax where the aircraft is hangared.
" Each state applies sales taxes differently,
so you need to be familiar with the tax laws
not only where maintenance is done but also where
the aircraft is based, " Stubbs said. " Making the issue
even more complicated, some state tax laws can be triggered
just by the aircraft being in that state for a certain number of
days. In Minnesota, an aircraft can trigger aircraft registration
fees and maybe even the state sales/use tax if it is in the state
for more than 60 days. California is aggressive with its personal
property tax, and an aircraft being in the state for 30 days
can trigger an apportionment of the personal property tax. "
With so many states exempting maintenance parts and
labor from sales tax, an exemption in your state might not be
a competitive advantage. But not having one is certainly a
disadvantage, particularly if the surrounding states do exempt
maintenance parts and labor from sales tax.
Know your state's sales tax laws and those of neighboring
states to thoroughly understand your company's status. If you
don't like the current tax situation, work with other repair
organizations in your state to lobby for change. q
avionics news * january 2023 53
Avionics News January 2023

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