Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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105.0000 AIRCRAFT—Regulation 1593

Annotation 105.0204

105.0204 Refrigerators Installed in New Aircraft. The following three scenarios describe transactions under which refrigerators are incorporated into new aircraft:

(1) The refrigerator is sold and delivered to an aircraft manufacturer. The manufacturer incorporates the refrigerator into a galley. The galley is checked to determine that all specifications of the design have been met. After the check, the galley is installed into the aircraft and after the aircraft is completed, it is delivered to a common carrier.

(2) The refrigerator is sold to a common carrier who instructs the seller to deliver the refrigerator to a third party galley manufacturer instead of delivering the refrigerator to the common carrier or an aircraft manufacturer. The galley manufacturer designs the galley and installs the refrigerator into the galley, and determines that all the specifications of the design have been met. Upon completion, the galley is shipped to the aircraft manufacturer. The aircraft manufacturer installs the galley into the airframe and the finished aircraft is delivered to the common carrier.

(3) The refrigerator is sold and shipped directly to a common carrier who instructs a third party to install the refrigerator into a galley that will be incorporated into the finished aircraft.

Under section 6366, as long as the installation of the refrigerators is a step in the manufacture or completion of a new aircraft, the sales of the refrigerators are exempt from tax. Thus, under all three scenarios, the sale of the refrigerators is eligible for the exemption as long as the purchase of the aircraft otherwise qualifies as a common carrier under section 6366, as explained by Regulation 1593. 2/10/97.