Tax Exemption Procedures

As mentioned at the General Meeting, the Bay Area Aero Club has developed Procedures for Training Flights that are exempt from Texas Sales Tax.  To receive credit, you must do the following:

  1. Read the approved Procedures
  2. Submit your sales tax exemption form to the Treasurer
    1. Put member number where the form calls for Title
    2. Make sure you fill in your instructor’s address; do NOT put something like “see Schedule Master” or an e-mail address.  The State requires the instructor’s address.
    3. Only put one rating/endorsement
  3. Fill out the new log book for any flight that qualifies

If all three steps are not taken, you will not receive the sales tax exemption, and the Club will not go back to prior billing periods to refund you for not following a procedure correctly.

 


 

 

BACKGROUND: The State of Texas currently provides for a sales tax exclusion for “flights designed to lead to a pilot certificate or rating issued under the provisions of federal aviation regulations (FAR) Part 61 or Part 141. Flight training includes all experience and training specifically identified for certification or rating at all levels from student pilot through air transport rating and includes FAA-required check flights, maintenance flights, and test flights per FAR part 61 or part 141.”  (Text is from STAR System – 200210542L on the Texas Comptroller’s website).

DISCLAIMER: Comments made in this document are not intended to replace or supplement the CFR’s.  Comments only represent how BAAC has chosen to implement its Texas Sales Tax exemption policy.

BAAC IMPLEMENTATION:

1)  An authorized BAAC Flight Instructor must provide a note to the Treasurer with the student’s name and qualification being pursued.  If that instructor later leaves or is no longer in good standing with the BAAC, the student should identify a replacement instructor, but no further notes to the Treasurer are required.

2) Once complete, the student must note any flight in the approved BAAC Flight Log (white notebook) that qualifies for the sales tax exemption.  Noting a flight requires filling out all blanks on the flight log that are applicable to the Sales Tax exemption.

a)  CERTIFICATE/RATING: For BAAC Sales Tax exemption purposes, you can only be pursuing one certificate/rating at a time.  The CFR’s do not have this stipulation, but the BOD has voted for this stipulation for audit purposes.

i)  Recreational Pilot Certificate

(1)  No restrictions; all flights qualify until you receive your recreational pilot certificate

ii)  Private Pilot Certificate

(1)  No restrictions; all flights qualify until you receive your private pilot certificate

iii)  Instrument Rating

(1)  Must have a Private certificate before beginning training.

(2)  Once minimum requirements for an instrument rating have been met, future flights will be assessed sales tax (ex. Instrument rating requires 50 hours of Cross Country flights.  Once the applicant has met those 50 hours, future cross country flights should NOT be logged as tax exempt as the flight is no longer “designed to lead to a pilot certificate or rating…under the provisions of federal aviation regulations…”).

(3)  See CFR § 61.65(d) for the Instrument rating aeronautical experience requirements.

(4)  Any flight required by the CFR’s within the near-term of the applicant’s checkride will qualify for tax-exempt status.  (ex. Applicant already has all required instrument hours, but is scheduled to take the checkride in the next 60 days.  Applicant needs 3 hours of instrument training from an instructor to be eligible to take the checkride).

iv)  Commercial Pilot Certificate

(1)  Must have a Private certificate before beginning training

(2)  Once minimum requirements for a commercial certificate have been met, future flights will be assessed sales tax. (ex. Commercial certificate requires 250 hours of flight time.  Once the applicant has met those 250 hours, future flight time should NOT be logged as tax exempt as the flight is no longer “designed to lead to a pilot certificate or rating…under the provisions of federal aviation regulations…”).

(3)  See CFR § 61.129(a) for Commercial pilot aeronautical experience requirements.

(4)  Any flight required by the CFR’s within the near-term of the applicant’s checkride will qualify for tax-exempt status.  (ex. Applicant already has all required commercial hours, but is scheduled to take the checkride in the next 60 days.  Applicant needs 3 hours of commercial  training from an instructor to be eligible to take the checkride).

v)  Certified Flight Instructor (CFI) Certificate

(1)  Must have a Commercial certificate before beginning training

(2)  There are no aeronautical experience requirements for the CFI certificate.  All flights in the pursuit of a CFI certificate qualify for the tax exempt status.  However, the student must be actively pursuing a CFI certificate.  Undue delay in obtaining the CFI certificate may result in sales taxes being owed by the student if it is deemed by the BAAC BoD that the student isn’t actively pursuing the CFI certificate.  Non-training flights should NOT be logged as tax exempt as the flight is no longer “designed to lead to a pilot certificate or rating…under the provisions of federal aviation regulations…”).

(3)  There are no aeronautical experience requirements for the CFI certificate.

(4)  Any flight required by the CFR’s within the near-term of the applicant’s checkride will qualify for tax-exempt status.  (ex. Applicant has a checkride scheduled in the next 60 days.  Applicant needs 3 hours of CFI training from an instructor to be eligible to take the checkride).

vi)  Airline Transport Pilot (ATP) Certificate

(1)  Must have BOTH Commercial certificate and Instrument rating before beginning training

(2)  Once minimum requirements for an ATP certificate have been met, future flights will be assessed sales tax (ex. The ATP certificate requires 1500 hours of flight time.  The student must be actively pursuing a ATP certificate.  Undue delay in obtaining the ATP certificate may result in sales taxes being owed by the student if it is deemed by the BAAC BoD that the student isn’t actively pursuing the ATP certificate.  Non-training flights should NOT be logged as tax exempt as the flight is no longer “designed to lead to a pilot certificate or rating…under the provisions of federal aviation regulations…”)  Once the applicant has met those 1500 hours, future flight time should NOT be logged as tax exempt as the flight is no longer “designed to lead to a pilot certificate or rating…under the provisions of federal aviation regulations…”).

(3)  See CFR § 61.159(a) for ATP aeronautical experience requirements.

(4)  Any flight required by the CFR’s within the near-term of the applicant’s checkride will qualify for tax-exempt status.  (ex. Applicant has a checkride scheduled in the next 60 days.  Applicant needs 3 hours of ATP training from an instructor to be eligible to take the checkride).

b)  ENDORSEMENTS: Can be pursuing an endorsement at any time

i)  Complex

(1)  Only flights with a qualified BAAC Instructor or FAA Examiner will qualify

ii)  High Performance

(1)  Only flights with a qualified BAAC Instructor or FAA Examiner will qualify

iii)  High Altitude

(1)  Only flights with a qualified BAAC Instructor or FAA Examiner will qualify

iv)  Tailwheel

(1)  Only flights with a qualified BAAC Instructor or FAA Examiner will qualify

c)  AIRPLANE CLASS RATING: Can be pursuing a class rating at any time

i)  Single Engine Land

(1)  Only flights with a qualified BAAC Instructor or FAA Examiner will qualify

ii)  Multiengine Land

(1)  Only flights with a qualified BAAC Instructor or FAA Examiner will qualify

d)  BIENNIAL FLIGHT REVIEW

i)  Biennial (NOTE: BAAC Annual Safety Checks do NOT qualify; WINGS flights that are done at the standards of a biennial do qualify and should be recorded as a biennial)

e)  CURRENCY

i)  Instrument approaches do NOT qualify

ii)  Takeoff and Landings to carry passengers do NOT qualify

iii)  Night Takeoff and Landings to carry passengers do NOT qualify

3)  BAAC will not refund sales tax for prior periods.  The conditions above must be met by the end of the current month’s billing period to qualify.

 

NOTE: Training that will not result in a logbook endorsement or new certificate being issued likely does not qualify for this exemption. For example, spin training is specifically excluded unless being provided as a prerequisite for one of the above certificate/ratings, endorsements or categories.

NOTE: There is no exclusion for extra hours on a recreational or private certificate since it is logical to assume that any flight was performed under the supervision of an instructor in pursuance of the recreational or private certificate.  That same assumption can not be made on other certificates/ratings.  The BAAC encourages its members to spend any and all time necessary to be a safe pilot and have a high probability of passing a practical test.  However, the BAAC wishes to protect its own interests and the interests of its members by only providing sales tax exemptions as can be easily supported in case of a sales tax audit.

NOTE: Any additional requests for sales tax free flights must be presented in writing to the BOD and approved by the BOD.  Once approved, this document will be updated with the additional wording.