Sales and Use Tax

I. Introduction



This Technical Information Release (TIR) explains new sales and use tax exemptions for aircraft and replacement parts for aircraft enacted by Section 17, Chapter 203 of the Acts of 2001, "An Act Making Appropriations for the Fiscal Year 2002 to Provide for Supplementing Certain Existing Appropriations and for Certain Other Activities and Projects" (the "Act"). To the extent that other public written statements issued by the Commissioner are inconsistent with this TIR, those public written statements are superceded by this TIR. In particular, Example 3 in DOR Directive 01-2 is revoked as of March 1, 2002 because that example relates specifically to the overhaul of aircraft parts.



II. Exemptions



Sales Tax Provisions



Massachusetts law imposes a five percent sales tax on retail sales of tangible personal property in Massachusetts, by any vendor, unless otherwise exempt. G.L. c. 64H, Â§ 2. General Laws Chapter 64H, section 6 contains various exemptions to the sales tax. The Act establishes two new exemptions relating to sales of aircraft and aircraft replacement parts, G.L. c. 64H, Â§ 6(uu) and (vv). The new provisions provide exemptions for:



(uu) Sales of repair or replacement parts exclusively for use in aircraft or in

significant overhauling or rebuilding of aircraft or aircraft parts or components

on a factory basis; and



(vv) Sales of aircraft



No documentation is required to receive the benefit of these exemptions. The Act does not delete language in G.L. c. 64H, Â§ 25A, requiring an owner upon registration of an aircraft with the Aeronautics Commission to establish that no sales tax is due with

regard to the purchase of the aircraft. However, the enactment of G.L. c. 64H, Â§ 6(vv) renders this requirement obsolete.



Use Tax Provisions



If sales tax is not paid on the purchase of tangible personal property, Massachusetts law imposes a complimentary use tax of five percent for storage, use, or other consumption of tangible personal property in Massachusetts. G.L. c. 64I, Â§ 2.

General Laws Chapter 64I, section 7 contains various exemptions to the use tax. The Act establishes two new exemptions relating to use of aircraft and aircraft replacement parts in Massachusetts, G.L. c. 64I, Â§ 7(d) and (e). The new provisions provide exemptions for:



(d) Storage, use or other consumption or repair or replacement parts exclusively for

use in aircraft or in significant overhauling or rebuilding of aircraft or aircraft parts

or components on a factory basis; and



(e) Storage, use or other consumption of aircraft.



No documentation is required to receive the benefit of these exemptions. The Act does not delete language in G.L. c. 64I, Â§ 26A, requiring an owner upon registration of an aircraft with the Aeronautics Commission to establish that no use tax is due with regard to the purchase of the aircraft. In addition, the Act does not delete references in G.L. c. 64I, Â§ 7(b) to taxable purchases of airplanes. However, the enactment of G.L. c. 64I, Â§ 7(e) renders both of these provisions obsolete.



Definition of "Aircraft"



The term "aircraft" in G.L. c. 64H, Â§ 6(uu) and (vv) and G.L. c. 64I, Â§ 7(d) and (e) is not defined in the Act. Therefore, the natural meaning of the words according to the ordinary and approved usage of the language when applied to the subject matter of the act is to be considered as expressing the intention of the Legislature. See Franki Foundation Co. v. State Tax Commission, 361 Mass. 614 (1972). For purposes of the exemptions in G.L. c. 64H, 6(uu) and (vv) and G.L. c. 64I, Â§ 7(d) and (e), the Department will interpret the term "aircraft" to mean "a machine or device, such as an airplane, helicopter, gliderâ€¦that is capable of atmospheric flightâ€¦." The American Heritage Dictionary of the English Language (4th ed. 2000).



Effective Date



The effective date for both sales tax provisions, as well as for both use tax provisions, is March 1, 2002.



/s/Sheila T. LeBlanc

Sheila T. LeBlanc,

Senior Deputy Commissioner of Revenue



STL:DMS:rmh



January 24, 2002

TIR 02-2