LR 7771

Aircraft Parts & Equipment Used to Directly Repair Aircraft No Subject to Sales Tax

January 05, 2017

Dear Applicant:

     This is a letter ruling issued by the Director of Revenue under Section 536.021.10, RSMo, and Missouri Code of State Regulations 12 CSR 10-1.020, in response to your letter dated November 8, 2016.

     The facts as presented in your letter ruling request are summarized as follows:

Applicant is a Missouri corporation that maintains and repairs aircraft for its customers. As a part of its business, Applicant purchases replacement parts and equipment for use directly for the modification, replacement, and repair to the aircraft of its customers.

ISSUE:

     Is Applicant required to collect and remit sales tax on its sales of aircraft parts and equipment used directly in the repair or modification of its customer's aircraft?

RESPONSE:

     No. Applicant is not required to collect and remit sales tax on its sale of aircraft parts and equipment used directly in the repair or modification of its customer's aircraft.

     Section 144.020.1, RSMo, provides: "A tax is hereby levied and imposed upon all sellers for the privilege of engaging in the business of selling tangible personal property or rendering taxable service in this state."

     Section 144.030.2(41), RSMo, exempts from Missouri sales tax "[a]ll materials, replacement parts, and equipment purchased for use directly upon, and for the modification, replacement, repair, and maintenance of aircraft, aircraft power plants, and aircraft accessories."

     Applicant is in the business of maintaining and repairing aircraft. As part of its business, Applicant sells aircraft parts and equipment used in the repair or modification of its customer's aircraft. As long as those parts and equipment are used "directly upon, and for the modification, replacement, repair, and maintenance of aircraft, aircraft power plants, and aircraft accessories", then those sales would not be subject to tax.

     Applicant also asked about the tax exemption contained in Section 144.030.2(3), RSMo. This exemption applies to parts purchased for use directly on aircraft engaged as a common carrier. While both exemptions are for aircraft, they are two separate exemptions and it is not necessary to qualify for the exemption contained in Section 144.030.2(3), RSMo, in order to qualify for the exemption in Section 144.030.2(41), RSMo. As stated above, Applicant's sales of parts and equipment that are used "directly upon, and for the modification, replacement, repair, and maintenance of aircraft, aircraft power plants, and aircraft accessories" are exempt from tax under Section 144.030.2(41), RSMo.

     This letter ruling is binding upon the Department of Revenue with respect to the Applicant for three (3) years from the date of this letter and is subject only to statutory changes by the General Assembly and to changes in the interpretation of law by the courts or administrative tribunals. If a change occurs, the taxpayer who relies upon an outdated interpretation may be subject to additional taxes, interest and penalties, which may be imposed prospectively from the date of the change. For this reason, the interpretation set forth above should be reviewed on a regular basis. Please note that any change in or deviation from the facts as presented will render this ruling inapplicable.

     Should additional information be needed, please contact Associate Counsel Christopher Fehr, General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475 (phone 573-751-0961), or me.

Sincerely,

John Mollenkamp