Imposition of Sales and Use Tax
In general, sales tax is imposed on Missouri sellers for the privilege of engaging in the business of selling tangible personal property and taxable services in Missouri. By statute, the seller is subject to sales tax and is required to collect the tax from its purchasers and remit that tax to the Department of Revenue. As it relates to airplanes, when a seller is engaged in the business of selling airplanes, the seller is required to collect the sales tax and remit the tax to the Department of Revenue. However, when a seller is not engaged in business and the seller's gross receipts are less than $3,000 annually, or is liquidating a portion of the seller’s household, farm or non-business enterprise, the seller is relieved from the responsibility of collecting sales tax on that transaction. This does not relieve the purchaser from paying any tax on the purchase.
Use tax is imposed on the storage, use or consumption of tangible personal property in this state. Unlike sales tax, which requires a sale at retail in Missouri, use tax is imposed directly upon the person who stores, uses, or consumes tangible personal property in Missouri. Use tax does not apply if the purchase is from a Missouri retailer and subject to Missouri sales tax.
Missouri cannot require out-of-state companies that do not have nexus or a "direct connection" with the state to collect and remit use tax. If an out-of-state seller does not collect use tax from the purchaser, the purchaser is responsible for remitting the use tax to Missouri. A purchaser is required to file a use tax return and pay the tax if the cumulative purchases subject to use tax exceed $2,000 in a calendar year. For the sale of airplanes between individuals, or between an out-of-state seller and a Missouri purchaser, if the seller does not collect sales tax on its sale of airplanes, the purchaser is required to pay use tax directly to the Department of Revenue.
A Missouri statute, Section 144.043, RSMo, provides an exemption on the purchase of light aircrafts, light aircraft kits, or components sold to qualified purchasers. However, for the exemption to apply, the purchase must be from a Missouri manufacturer by a nonresident of the state of Missouri who will transport the aircraft out of state within ten days of purchase. If the purchaser subsequently hangars the aircraft in Missouri sales or use tax must be paid.
Please note, tax is due only on the purchase price of the kit and parts, not on the final value of the plane, once it is built.
See the Frequently Asked Questions below for more information related to the sales and use tax on the purchase of an airplane.
Frequently Asked Questions - Aircraft
Yes, consumer’s use tax is due unless tax was paid to the seller.
To calculate the tax, multiply the purchase price of the airplane by the tax rate in effect at the location in which the airplane is hangared based on the date it was first placed in that location. The state use tax rate is 4.225%. Cities and counties may impose an additional local use tax. The amount of use tax due on a transaction depends on the combined (local and state) use tax rate in effect at the Missouri location where the tangible personal property is stored, used or consumed. For aircraft, this is the location at which the aircraft is hangared. The tax due is calculated on the purchase price of the aircraft at the rate of use tax applicable to your location. Access to determine the correct rate to apply to the purchase.
You can use one of three forms, Use Tax Return For Reporting Periods December 2010 Or Prior (Form 53U-1), Consumer's Use Tax Return For Reporting Periods Beginning January 2011 (Form 53-C), or the Individual Consumer's Use Tax Return (Form 4340). The due date is April 15 in the year following the calendar year in which the airplane was purchased.
Yes. However, a trade-in allowance for trading aircraft for other tangible personal property is allowed in some cases. If your trade-in is less than the purchase price, you are liable for tax on the amount of the difference in price. If you buy a new aircraft and then sell your old one to someone else, that transaction does not qualify as a trade-in. Also, a like kind exchange for income tax purposes usually does not qualify as a trade for sales and use tax purposes.
Yes, consumer’s use tax is due even though the aircraft is not operable. Tax is due on the purchase price of the plane and the value of any parts you purchased to fix the airplane if tax had not been paid on the parts.
No, you do not owe consumer’s use tax. However, if you receive a letter from the Department regarding this aircraft, provide a written explanation to avoid further collection activity.
Whether or not consumer’s use tax is due to the state of Missouri depends on the facts and circumstances. To determine if you owe the tax, we suggest you request a letter ruling from the Department.
Yes, consumer’s use tax is due. However, if a tax was paid to the other state, a credit is allowed for the tax paid to that state.
Missouri consumer’s use tax is imposed the date the aircraft moved to Missouri. The due date to file and pay the tax is April 15 in the year following the calendar year in which the airplane entered Missouri. If a tax was paid to the other state, a credit is allowed for the tax paid to that state.
Yes, if you did not pay sales or use tax to the seller, you owe Missouri consumer’s use tax. Missouri consumer’s use tax is not the same as personal property tax. Consumer’s use tax is paid to the state based on the purchase price of the aircraft. Personal property tax is based on the value of the aircraft and paid to the county where the airplane is hangared if owned by a corporation, or in the county where the owner resides if owned by an individual.
Yes, consumer’s use tax is due, unless sales or use tax was previously paid on the purchase.
Yes, Missouri statute does not exempt antiques or collectibles from consumer’s use tax.
Yes, you are liable for consumer’s use tax if sales tax was not paid on the purchase at the auction.
The purchase is exempt only if you are a nonresident of Missouri, you purchased the light aircraft from a Missouri manufacturer, and you removed the aircraft from Missouri within ten days of purchase. If not exempt, tax is due only on the amount paid for the kit and parts, not on the value of the aircraft when assembled.
Yes, if you cannot demonstrate that you paid tax on the purchase of the parts. Therefore, if you are building an aircraft, it is important for you to maintain records to substantiate that sales or use tax was paid on your purchase of the kit and parts.
No, consumer’s use tax is not due.
The most important thing to do is to respond to the letter. There are several possible responses to the letter depending on your specific circumstance:
A. Indicate the tax was paid or provide information on why it is not owed.
If tax was paid or there are circumstances that you believe result in no tax due, mark the appropriate box on the letter and include a letter of explanation; or
B. Complete the return and remit payment.
If you did not pay tax on the airplane complete a use tax return and remit the amount due. Obtain a Use Tax Return For Reporting Periods December 2010 Or Prior (Form 53U-1), Consumer's Use Tax Return For Reporting Periods Beginning January 2011 (Form 53-C), or the Individual Consumer's Use Tax Return (Form 4340). The due date was April 15 in the year following the calendar year in which the airplane was purchased. Calculate the interest and penalty and include it with your payment; or
C. Complete the return and ask for a payment plan.
Provide information in the response regarding a suggested monthly payment. Most payment plans are established for 12 months or less but the Department may make exceptions on a case-by-case basis. The Department will process your return and contact you to finalize payment arrangements; or
D. Complete the return and ask that penalty be waived.
Complete the return, remit the tax and interest, but ask the Department to waive the penalty. Include a brief explanation of why you believe the penalty should be waived. In many cases, the Department will grant a waiver of penalty; or
E. Complete the return and submit an offer-in-compromise.
If there is a basis for paying less than the amount due, complete the use tax return and submit an offer-in-compromise, Form MO-656, to request to pay less than the full tax, interest and penalty owed. The form requires that you specify whether you are requesting a compromise based on doubt as to collectability, doubt as to liability, or effective tax administration. The necessary forms and additional information are available here ; or
F. Pay the amount due, including interest and penalty, under protest.
If protesting, the protest must include payment including tax, interest and penalty. Complete Form 163, Protest Payment Affidavit and write on the payment, “Protested.” Upon receipt of the protest payment, the Department will evaluate the protest and either grant the protest or deny it through a final decision. A taxpayer may appeal any decision to the Administrative Hearing Commission. Appeals must be submitted in writing to the Administrative Hearing Commission, 301 West High Street, Harry S Truman State Office Building, Post Office Box 1557, Jefferson City, Missouri 65102 within 60 days after the date the decision is mailed or the date it is received, whichever date is earlier. If the appeal is sent by registered or certified mail, the appeal will be deemed filed on the date it is mailed. If the appeal is sent by any method other than registered mail, it will be deemed filed on the date it is received by the Administrative Hearing Commission.
If you still have questions, please check out other Business Tax FAQs.
For more information pertaining to Special Events, contact the Department of Revenue at (573) 751-5860 or e-mail [email protected].