Missouri’s aviation sector is seeing a surge in activity driven by two tax-law changes—one that preserves a sales tax exemption on aircraft parts and materials, and another that eliminates sales-and-use taxes on aircraft bought and flown away by out-of-state buyers.
The two AOPA-backed measures, passed in 2014 and 2015, respectively, “demonstrate to Missouri lawmakers who supported them that the laws have indeed been effective,” said Yasmina Platt, AOPA Central Southwest regional manager. “These successes can also show legislators in other states that such laws do have an impact. They should be encouraged to pass similar exemptions in their states,” she said.
The law that provides a so-called fly-away exemption when a Missouri aircraft is purchased by an out-of-state buyer who flies it out of Missouri within 10 days went into effect last summer, with one aircraft sale closing the day the law took effect. That became the first indication that the law is “already proving to be a success and has helped create and maintain good paying jobs in Missouri,” said John Bales, aviation director of the Spirit of St Louis Airport, where aircraft maintenance businesses have already performed work on aircraft before and after sales.
The law that kept the tax exemption on aircraft parts and materials from being canceled under a sunset provision was also credited with stimulating Missouri’s aviation economy. AOPA vigorously advocated for the measure through contacts with lawmakers; giving testimony at a public hearing; phone calls, emails, letters; and educating officials about its benefits during Missouri’s State Aviation Day at the Capitol.
Platt said at least five aircraft purchased after the law’s enactment underwent “significant maintenance” at repair station KCAC Aviation, and that several of the sales “wouldn’t have happened if it weren’t for the new law.”
One aircraft, a Pilatus PC-12 single-engine turboprop, was headed for Indiana, which is competitive with Missouri, having passed aviation tax relief in 2013. However, the owner decided to get the work done in Missouri, given the new level playing field, because KCAC Aviation specializes in servicing Pilatus aircraft, Platt said.
“In every case, the aircraft received more maintenance work than they would have without the exemption,” she said, listing sales of three Pilatus PC-12s and two Beechcraft King Air-family aircraft for which the combined revenue from maintenance work added up to about $1.2 million.
Chris Faulbaum, KCAC Aviation’s maintenance director, told AOPA he sees more growth coming from the tax-law changes.
“The new law has given us a great opportunity to continue growing the maintenance part of the business where we work with brokers to close on aircraft transactions and make upgrades/repairs to the aircraft before being delivered to the new owner,” he said.
A similar testimonial came from St. Louis-based Aviation Maintenance and Technical Support (AVMATS), where the changes will allow nonresident customers to focus on “quality of the service, rather than tax implications,” company General Counsel Larry Hawkins told AOPA.
At the time of his interview in November, AVMATS was working on several aircraft sales agreements that would require aircraft maintenance. The new tax law provisions will save the seller the expense of delivering an aircraft to a distant buyer, and it also will benefit AVMATS and the buyer, “because they require work on the aircraft they are buying, and AVMATS will do that work once the closing has completed,” Hawkins said.
