Nontaxable Sales

Certain types of organizations may buy aircraft and aircraft parts exempt from sales tax. The organization must give the seller a completed Form ST3, Certificate of Exemption. Examples include:

• Federal government
• Schools
• Hospitals or nursing homes
• Qualifying charitable, religious, and educational organizations, see Nonprofit Organizations

Aircraft and aircraft parts bought for resale or leasing are not taxable. Give your vendor a completed Form ST3, Certificate of Exemption. Specify the Resale exemption.

Note: You cannot fly an aircraft that is held for resale in Minnesota except for demonstration purposes.

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
•  Aircraft with a maximum takeoff weight of less than 30,000 pounds

Equipment, parts, and installation labor to repair, maintain or upgrade aircraft are not taxable if the aircraft operate under one of these Federal Aviation Regulations:

• Part 91, which governs small non-commercial aircraft
• Part 135, which governs on-demand commercial aircraft such as charter, commuter, or air taxi services

Give your supplier a completed Form ST3, Certificate of Exemption. Specify the air-flight equipment exemption.

Note: The air-flight exemption does not apply to ultralights and sport-planes.

Note: This exemption does not apply to tools or equipment used to perform the repair.

Aircraft designed and used primarily for agricultural spraying are not taxable. They must be registered with the Office of Aeronautics.

Aerial crop spraying is not a taxable service.

The following purchases are not subject to sales or use tax.

• Aviation fuel (subject to petroleum tax)
• Flight transportation charges (cargo or passengers)
• Renting hangar space
• Repair labor, if separately stated on the bill or invoice
• Washing an aircraft

Non-Minnesota buyers who take possession of an aircraft in Minnesota are exempt from Minnesota sales or use tax if they transport the aircraft outside Minnesota and meet all of the following requirements:

• The aircraft returns to Minnesota only for interstate commerce or occasional use
• The aircraft is registered in another state or country
• The aircraft meets the definitions in Minnesota Statutes 360.511 and is approved by the Federal Aviation Administration.

This exemption also applies if the buyer uses the aircraft in Minnesota only for a training period of up to 10 days before removing it from the state. 

Flight instruction fees are not taxable. But tax is due on aircraft rentals or leases, and on other related products (books, manuals) unless an exemption applies.

You must collect sales tax on these items if they are separately stated from the flight instruction fee. If the items are included in the flight instruction fee, the instructor is responsible for reporting and paying any use tax due on these items.

Transfers of aircraft ownership are not taxable in the following situations:

• Transfers on death of the owner through revocable trusts, wills, or inheritance. (You must provide court documents when you register the aircraft.)
• Transfers under Internal Revenue Code, section 351 or 721. (For details, of the Internal Revenue Code, see Isolated and Occasional Sales.)