Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2014
 

Sales and Use Tax Annotations


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A

105.0000 AIRCRAFT—Regulation 1593

Annotation 105.0061

105.0061 Common Carrier. The following discusses the application of tax to three scenarios involving the use of a helicopter for emergency medical transport with a hospital:

Scenario 1—A firm which owns a helicopter contracts directly with the patients for transportation services (ambulance service to hospitals) and bills and collects from them or their insurance carrier.

Assuming the transportation services are authorized under the FAA regulations governing the owner's FAA common carrier certificate, the common carrier exemption would apply if the other requirements of Regulation 1593 are satisfied.

Scenario 2—The hospital purchases a helicopter from a dealer and contracts with a firm to provide pilots, mechanics, parts, and other personnel and supplies necessary for the operation of the helicopter. The hospital will contract with the patients and will be responsible for billing and collecting fees from the patients or their insurance carriers. The firm will be paid a monthly fee and an additional fee for each operating hour.

In this case, it is the hospital that owns and uses the helicopters and contracts with customers for transportation services. Assuming the transportation services of the hospital are authorized under the FAA regulations governing the FAA common carrier certification under which the helicopter is operated, the common carrier exemption would apply if the other requirements of Regulation 1593 are satisfied.

Scenario 3—A firm purchases or leases a helicopter and then "leases" it to a hospital. The firm also contracts with the hospital to provide pilots, mechanics, parts, and other personnel and supplies necessary for the operation of the helicopter. This may involve two contracts (one for the lease and one for the flight services) or a single contract. The hospital contracts with patients and is responsible for billing and collecting the applicable fees. The firm will be paid a monthly fee and an additional fee for each operating hour.

If the transaction between the firm and the hospital is a true lease, then the hospital is the person regarded as using the helicopter and the analysis applicable to the other scenarios are equally applicable here. That is, assuming the transportation services are authorized under the FAA regulations governing the FAA common carrier certificate under which the helicopter is operated, the common carrier exemption would apply if the other requirements of Regulation 1593 are satisfied.

However, if the firm is instead regarded as providing charter services to the hospital rather than leasing the helicopter, then the use of the helicopter would not qualify for the common carrier exemption. Whether a charter is involved depends on the degree of control retained by the firm. For example, if the firm will not lease the helicopter without also providing a pilot, then the firm is providing charter services and is not regarded as leasing the helicopter. The firm will not be offering services to the public or to some portion of the public, but, rather, offering its services to a single person, the hospital. 11/18/94.