Airline Flight Property Tax

Airline companies involved in air commerce in Minnesota must file an Airline Flight Property Report with the Minnesota Department of Revenue unless the department has determined the airline company is exempt from filing.

Reasons an airline company may be exempt include, but are not limited to, the following:

• It makes less than three flights in or out of Minnesota, or within Minnesota, during a calendar year.
• It does not operate any aircraft with a maximum takeoff weight of 30,000 pounds or more.
• It’s specifically exempt due to a treaty.

You must report your company’s information, aircraft and spare parts cost information, and flight statistics. The report is based on the previous calendar year.

How to File

1. See instructions on how to complete the report.
2. Download and complete
   • Form AF109, Airline Flight Property Report and
   • Certification
3. Submit your completed report through Virtual Room. You will need to register for the Virtual Room before submission. To register, email us at sa.property@state.mn.us.
4. After a successful submission, you will receive a completed submission status.

Filing Deadline and Extension Request

You must file your report by July 1 each year.

An extension of up to 30 days may be granted if a written request showing good cause is submitted. Learn how to submit an extension.

Penalty for Filing Late

If you file late, a 5% penalty of the assessed tax is imposed. On the first day of each month, an additional 5% penalty is imposed if the report has not been filed. This penalty is limited to the lesser of $25,000 or 25% of the assessed tax.

After Filing Your Report

We’ll review your report and contact you if we have any questions or requests for additional documents. We’ll calculate your total Minnesota tax capacity and send you a tax capacity notice. The tax capacity notice is an order of the commissioner and is appealable to Minnesota Tax Court. The notice will include your appeal rights.

Next, the Minnesota Department of Transportation will certify the amount of the Airline Flight Property Tax levy, and we’ll calculate the tax based on the formula set by state law. You’ll receive a tax order by March 1 of the following year, in which payment is due by April 1.

We use information from your report to calculate your tax due using these steps:

1. Determine Total System-Wide Estimated Market Value

This is the total net book value of all your airline property, including spare parts.

2. Calculate Total Minnesota Apportioned Estimated Market Value

To get the total Minnesota apportioned estimated market value, we multiply the Minnesota apportionment percentage to the total system-wide estimated market value.

The Minnesota apportionment percentage is the average of the following two values:

• Your company’s revenue ton miles flown in Minnesota divided by revenue ton miles flown throughout your company’s system
• Your number of departures made in Minnesota divided by the total number of departures throughout your company’s system

3. Calculate Total Minnesota Tax Capacity

Total Minnesota tax capacity is determined by multiplying a tax capacity rate to the total Minnesota apportioned estimated market value.

The tax capacity rate is 40% of the value for quiet aircrafts, which includes turboprops and aircrafts defined as Stage 3 or 4 of aircraft noise levels by the Federal Aviation Administration. For all other flight property, the tax capacity rate is 70% of the value.

This tax capacity will be reduced by an additional 50% if your company meets the following two qualifications:

• A majority of the aircrafts operated by your company are turboprops
• Your company provides passenger service for at least six months during the year to at least three airports anywhere that serve communities in Minnesota with a population less than 100,000 not located in Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, or Washington counties

 4. Calculate Airline Flight Property Tax

The Airline Flight Property Tax due is the tax rate times total Minnesota tax capacity.

The tax rate is calculated by dividing the levy by the total tax capacities of all airline companies.

The Minnesota Department of Transportation certifies the Airline Flight Property Tax levy by December 31. We will calculate the Airline Flight Property Tax, and you will receive a tax order by March 1 of the following year.

Paying the tax 

Pay the Airline Flight Property Tax by April 1 of the following year. Your tax order will include payment method information.

• Pay electronically from your bank account. Go to MN e-Services.
• Pay by credit card or debit card. Go to http://www.paystatetax.com/MN or call 1-855-947-2966.
• Pay by check or money order.
• Pay by ACH credit transfer through your financial institution. Go to MN e-Services.