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.)