Use Tax Requirements Changed July 1 For Purchases of Vehicles, Vessels, and Aircraft

Wednesday, September 12, 2007

Thomas A. Alston, AERO & MARINE Tax Professionals, http://www.aeromarinetaxpros.com

Recently the California Board of Equalization issued the following notice:

On July 1, 2007, California use tax requirements changed for vehicles, vessels and aircraft purchased outside this state and brought into California. Please share this information with your customers who request out-of-state delivery.

When does a buyer owe use tax on an out-of-state purchase of a vehicle, vessel, or aircraft?

As of July 1, 2007, buyers of vehicles, vessels and aircraft generally owe California use tax when they:

• Buy a vehicle, vessel or aircraft outside California, and

• Bring it into this state within 90 days

Are there exceptions?

Yes. The buyer generally will not owe use tax if the vehicle, vessel or aircraft is used outside California more than one-half of the time in the first six months after it is brought into this state.

What changed July 1?

Between October 2, 2004 and June 30, 2007, use tax was generally due if the buyer brought the vehicle, vessel, or aircraft into California within 12 months of purchase. On or after July 1, 2007, it is within 90 days of purchase.

Who collects the tax?

The Department of Motor Vehicles collects the use tax at the time of registration on vehicles and undocumented vessels. Our Consumer Use Tax Section collects the use tax on vessels documented with the United States Coast Guard and aircraft, which are usually registered with the Federal Aviation Administration.

What is the reason for the change?

In 2004, Senate Bill 1100 temporarily amended Revenue and Taxation Code section 6248. That temporary change expired on June 30, 2007.

The reason we are passing this along to you is simple. In the coming weeks and months you will hear a lot of emotional rhetoric about this issue. It is a clear case of two opposing viewpoints; those who believe that tax increases targeted at their definition of the “rich” will solve all the social ills in this state, and those who feel their personal tax burden exceeds their perception of the value they receive from their government.

The opposing forces will be marshaling their troops to support their particular viewpoint. The groups who believe the direct targeting of vehicle, vessel and aircraft owners is the “right thing to do” will be clamoring in the press for the legislature to take action, as they did in 2003 and 2004. The taxpayers who believe they have been “unfairly targeted” will be doing the same by contacting their legislators to defend their rights and to uphold the California Constitutional requirement of a 2/3 vote in both houses of our California Legislature.

The facts are simple. California law set up the “90 day exemption” for all forms of tangible personal property decades ago. The 2004 “suspension” applied only to vehicles, vessels and aircraft. This means that the 90 day exemption remained in effect for all tangible personal property while the vehicle, vessel and aircraft owners were singled out and levied a “tax increase” that the other group was not.

While the rhetoric supporting the law change claimed it was a loophole for the rich and that applying the existing law to minimize sales tax was a scam, the actions of the, “tax the rich” viewpoint used an administrative “loophole” to pass a tax increase which bypassed the clear intent of the California Constitution. Anyone who argues that it is a scam to apply existing law to legally minimize or eliminate taxes clearly has not studied the law in this area.

AERO & MARINE Tax Professionals works in the highly specialized area of California and Sales Tax Law. That is all we do. We provide a professional, highly specialized focus on this one aspect of law.

Our firm has dedicated itself to assisting taxpayers in legally avoiding sales tax by administering a program that helps them to support a claim for exemption. Additionally, we are in our second decade of working with CPAs and attorneys assisting their clients with new acquisitions as well as filing petitions, and claims for refund and audit defense.

In our continuing effort to keep you informed of the truth about taxes, the following excerpt is very important to your survival. No one should feel guilty about exercising their legal rights.

“Over and over again the courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible.”

Our mission statement at AERO&MARINE Tax Professionals is to uphold and defend the following court ruling:

“The legal right of a taxpayer to decrease the amount of what otherwise would be his taxes, or altogether avoid them, by means which the law permits, cannot be doubted.”

SUPREME COURT OF THE UNITED STATES

GREGORY v. HELVERING

293 U.S. 465; (1934)

While some misguided politicians and uninformed public may clamor about “loopholes”, the truth is that our firm defends your rights to legally avoid taxes and will continue to fight for the rights of all citizens to minimize the taxes they pay. The service we provide is more than legal! Judge Learned Hand said it best:

“Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.”

FEDERAL APPELLATE JUDGE LEARNED HAND

The above statement is our operating basis when it comes to defending taxpayers.

Armed with an understanding of the sales and use tax laws, AERO&MARINE Tax Professionals has created strategies that have helped our clients legally avoid hundreds of millions of dollars of sales and use tax.

Contact us now to find out about our services and how we can help you save money on your next aircraft purchase.

Thomas A. Alston
President and CEO
Aero&Marine Tax Professionals
9563 Laguna Springs Drive #100
Elk Grove, CA 95758
916-691-9192
916-691-9185 Fax
916-769-6304 cell
www.aeromarinetaxpros.com

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