Can I use an out-of-state corporation or LLC to avoid sales tax?
The age-old myth is to use an out-of-state entity to avoid paying sales or use tax on the purchase of an aircraft, vessel or vehicle. NO, you can not legally avoid paying sales or use tax by only using an out of state entity to purchase the aircraft, vessel or vehicle. The state where you domicile your aircraft, vessel or vehicle has the legal authority to levy sales or use tax on your purchase. In this era of revenue deficits, many states have dramatically stepped up their enforcement efforts to assess sales or use tax on all aircraft, vessel and vehicle purchases. Their tactics range from obtaining registration information directly from the FAA, Coast Guard or DMV, auditing manufacturer’s or dealer’s sale records, to requiring airports / FBO’s / Marinas / RV Parks to submit listings of tail numbers, CF numbers and license plate information of visiting aircraft, vessels, or vehicles.
