Purchases and Use Tax

Airline companies that transport people or property in regular, intermittent, or irregularly scheduled flights, may purchase air flight equipment exempt from sales tax. Give your vendor a completed Form ST3, Certificate of Exemption. Specify the Other exemption and write-in Airflight equipment.

Air flight equipment includes:

• Airplanes
• Flight simulators
• Parts necessary for the repair and maintenance of air flight equipment

Note: This exemption does not apply to airplanes with a gross weight of less than 30,000 pounds that are used on intermittent or irregularly scheduled flights. Starting Jan. 1, 2018, the air flight equipment exemption does not apply to aircraft with a maximum takeoff weight of less than 30,000 pounds.

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.

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

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.

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.)