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Indiana bill would end tax on 'inventory' aircraft

An AOPA-backed bill that would lift a tax burden on long-unsold aircraft in dealer inventories has cleared an Indiana state Senate committee, and was headed for a vote in the full Senate.

The Indiana Senate Tax and Fiscal Policy Committee on Jan. 20 voted 12-0 to recommend approval of Senate Bill 25 to eliminate a 7-percent sales tax and registration fees now imposed on aircraft that remain in a dealer’s inventory for more than 18 months, said Bryan Budds,  AOPA Great Lakes regional manager.

Current state law provides that an aircraft offered for sale by an Indiana aircraft dealer is not subject to sales tax or aircraft registration excise tax as long as the aircraft is listed for sale. However, the state automatically reclassifies for-sale aircraft as non-inventory aircraft after 18 months, triggering a tax obligation.

This makes aircraft sales more difficult in Indiana compared to neighboring states, after 18 months, he said.

In a letter to committee chairman Sen. Brandt Hershman (R-District 7) on behalf of AOPA’s 7,000 members in Indiana, Budds explained that specialized needs of aircraft buyers can lead to aircraft being carried on a dealer’s inventory for long periods before it sells.

"The imposition of ‘all applicable fees and taxes’ can impose a significant financial burden on aircraft dealers as they attempt to sell their aircraft, and can potentially decrease their ability to compete with aircraft dealers in neighboring states," he wrote.

General aviation in Indiana is a $5.8 billion industry, and includes approximately 12 state-registered aircraft dealers who maintain an inventory and face a “significant financial burden” from the current tax policy, Budds said.

Dan Namowitz
Dan Namowitz
Dan Namowitz has been writing for AOPA in a variety of capacities since 1991. He has been a flight instructor since 1990 and is a 35-year AOPA member.
Topics: Advocacy, Taxes, Ownership

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