Sales of aircraft parts
Effective July 1, 2014, the sales of and the storage, use, and consumption of parts used to modify or repair aircraft are exempt pursuant to sec. 77.54(5)(a)3., Wis. Stats., as affected by 2013 Act 185.
Services to aircraft and aircraft parts
Effective July 1, 2014, charges for the repair, service, alteration, fitting, cleaning, painting, coating, towing, inspection, and maintenance of any aircraft or any aircraft parts are not subject to sales tax pursuant to sec. 77.52(2)(a)10, Wis. Stats., as amended by 2013 Act 185.
No exemption certificates are needed for these exemptions to apply. A purchaser does not need to give a retailer an exemption certificate for these purchases; and a retailer does not need to obtain an exemption certificate from the purchaser.
Important: Supplies for aircraft remain taxable. The exemptions above do not apply to supplies used to operate aircraft. Examples of items that are supplies for an aircraft (and not parts used to modify or repair an aircraft) include engine oil, hydraulic fluid, deicing fluids, and oxygen.
Example 1 - Old Law: Service Provider changes spark plugs, engine oil, and oil filter on an aircraft's engine. Service Provider may purchase the spark plugs, engine oil, and oil filter without tax for resale. Service Provider's charges for the spark plugs, engine oil, oil filter, and labor are taxable unless Service Provider accepts a fully completed exemption certificate from the purchaser.
Example 2 - New Law: Service Provider changes spark plugs, engine oil, and oil filter on an aircraft's engine. Service Provider may purchase the spark plugs, engine oil, and oil filter without tax for resale. Service Provider's charge for the engine oil is taxable, unless Service Provider accepts a fully completed exemption certificate from the purchaser, claiming a valid exemption (e.g., resale or common carrier). Engine oil is a supply and is not exempt as a part used to modify or repair an aircraft. Service provider's charges for the spark plugs and oil filter are exempt, as the spark plugs and oil filter are parts used to modify or repair an aircraft. Service Provider's charges for labor to replace the spark plugs and to change the engine oil and oil filter are not subject to tax.
| Invoice: | Spark plugs (8) | $250.00 | E |
| Labor to install spark plugs | $160.00 | E |
| Engine oil (6 qt.) | $ 50.00 | T |
| Labor to change engine oil | $ 50.00 | E |
| Oil filter (1) | $ 20.00 | E |
| Labor to install oil filter | $ 25.00 | E |
| Subtotal | $555.00 | |
| Tax at 5.5% | $ 2.75 | |
| Total Invoice | $557.75 | |
June 17, 2014