Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2013

Sales and Use Tax Annotations

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105.0000 AIRCRAFT—Regulation 1593

Annotation 105.0071

105.0071 Common Carrier Use. A common carrier purchases an aircraft, makes first operational use of the aircraft thereby starting the one-year test period, and the aircraft is added to the air carrier certificate of the charter operator who properly flys the aircraft under FAA Part 135 regulations. The aircraft is chartered and flown empty to pick up the passengers who board the aircraft. They are flown to their destination and then returned to the airport where they were picked up. The plane is then flown without passengers to the airport where it is based. The charter customer is charged for all the hours put on the aircraft including the two legs where the aircraft was flown without passengers. The common carrier asserts that the legs of the flight to pick up the passengers and to return the aircraft to its base airport qualify as common carrier/Part 135 use because the charter customer was charged for the flight time.

For purposes of the common carrier exemption from sales or use tax under section 6366 and 6366.1, Regulation 1593(a)(2) defines a "common carrier" as:

". . . [A]ny person who engages in the business of transporting persons or property for hire or compensation and who offers his or her services indiscriminately to the public or to some portion of the public."

and under subdivision (c)(1)(C), a flight qualifies as common carrier use:

". . . only if the flight is authorized by the governmental authority under which the aircraft is operated and involves the transportation of persons or property. Where the aircraft does not itself transport the person or property to a location on the ground (or water), the flight does not qualify as a common carrier flight for purposes of the exemption."

Flights to position or reposition aircraft by flying the aircraft from one point to another (ferry flights) do not qualify as common carrier use. (Regulation 1593(c)(1)(C)1.) In the above scenario, the legs of the charter flight where the aircraft is flown empty to pick up the passengers and then is ultimately flown without passengers to its base airport are considered to be ferry flights and do not qualify as common carrier use for purposes of the common carrier exemption. 7/21/04. (2005–2).