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Purchases and Use Tax

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Sales tax rules vary for purchases by aircraft owners, dealers or lessors, service providers, and others.

The general rules are:

Goods or products are taxable unless a specific exemption applies based on who is buying them or what they will be used for
Several services specified in state law are taxable unless an exemption applies

If you do not pay sales tax on a taxable purchase, use tax is due.

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Use Tax [+]

You owe use tax if you own and use an aircraft in Minnesota but did not pay Minnesota sales tax. If you purchase, hangar, or store the aircraft in an area that has a local tax, you also owe local use tax.

If you buy equipment, supplies, or other taxable items for your business and the seller does not charge Minnesota sales tax, you owe use tax on the cost of the items. If your business is located in an area with a local tax, you may also owe local use tax.

Some common situations where you may owe use tax include:

You buy taxable items or services online without paying sales tax
You withdraw an item from inventory to use (instead of selling it), donate, or give away
You buy taxable items outside of Minnesota
You buy taxable items in another Minnesota city or county with a lower (or no) local sales tax

For more information, see Use Tax for Businesses and Local Sales and Use Taxes.

Reporting Use Tax [+]

To pay any tax that is due or to claim an exemption from the tax, you must complete Section 3 of the Aircraft Registration Application and Sales/Use Tax Return form (Aircraft Registration). To get the form go to the Minnesota Department of Transportation website at http://www.dot.state.mn.us/ and type aircraft registration into the Search box

Instructions for completing Section 3 and information on allowable exemptions are on page two of the Aircraft Registration.

Use Tax Situations in the Aircraft Industry [+]

The sections below explain how use tax applies in specific situations that occur in the aircraft industry.

Fractional Ownership Interest

If you fractionally own an aircraft in Minnesota, you owe use tax on your share of the ownership interest if all the following conditions are met:

You use the aircraft in Minnesota.
The aircraft was not purchased for resale.
No sales tax was paid on the aircraft, or sales tax was paid to another state with a lower tax rate than Minnesota.

For more information, see Revenue Notice 06-05, Fractional Ownership Interests

Parts for Rebuilding an Aircraft

If you buy repair and replacement parts to rebuild an aircraft, the parts are taxable unless the aircraft operates under one of these Federal Aviation Regulations Part 91 or Part 135.

If you buy parts to rebuild an aircraft that you will resell, the parts are not taxable. Give your vendor a completed Form ST3, Certificate of Exemption. Specify the Resale exemption.

Tax Paid to Another State

If you paid legally required sales taxes to another state on an aircraft purchase, it will reduce your Minnesota use tax.

If the other state has a lower sales tax rate, you owe the difference to Minnesota as use tax.
If the other state has a higher sales tax rate, you do not owe Minnesota use tax. (You cannot get a refund for the difference.)

To get credit for sales tax you paid elsewhere, you must attach a copy of the receipt when you register the aircraft in Minnesota. (The receipt must show the amount of tax paid.)

Purchases and Use Tax

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Purchases and Use Tax