Untitled Texas Attorney General Opinion ( 1974 )

Trim ATI-OISNF,Y GENERAL
OF T+ExAs
Au-. TNXAIB rev11
JOEIN I.. HILL
A- o-AL.
December 12. 1974
The Honorable Robert S. Calvert Opinion No. H- 470
Comptroller of Public Accounts
L. B. J. State Office Building Re: Exemption of certain
Aurtin, Texas aircraft from taxation under
Article 20.04(Q), Taxation-
General.
Dear Mr. Calvert:
You have submitted three questions to ua concerning the inter-
pretation of the Limited Sales, Excise and Use Tax of Chapter 20,
Taxation-General, V. T. C. S., to certain types of aircraft.
Article 20.02, Tax. -Gen., imposes a salee tax on the receipts
from the sale, at retail, of all taxable items and Article 20.03,
Tax, -Gen. imposes an excise tax on the storage, me or other consump-
tion of taxable itemr purchased, leaeed or rented from any retailer
for storage, use or other consumption in thin State. “Taxable items”
are defined in Article 20.01 (WI. as tangible personal property. Article
20.04 deak’with exemptions. Paragraph (Q) provides:
Certain Aircraft. There are exempted from
the taxes imposed by this Chapter the receipts
from the sale, use, storage, lease or other
consumption of aircraft sold to persons using
such aircraft aa certificated or licensed car-
riers of persons or property, or aold to any
foreign government of sold to persons who are
not residents of this State and repair services
to aircraft operated by a certificated or licensed
carrier of persons or property.
p. 2147
The Honorable Robert S. Calvert page 2 (H-470)
Your first question is: “Is the sale of an aircraft to a person
holding an air-taxi certificate exempt within the terms of Article 20.04(Q)
above? ”
The operation of air taxis (defined in 14 C. F. F. 5 5 298.2 and
298.3) is governed by Part 135 of Title 14, C. F. R. and Section 135.9
calls for an operating certificate. By definition, the holders of such
certificate are “certificated or licensed carriers of persons or property”
and are exempt from the taxes in question. See 49U.S.C.A. 31424.
Your second question asks: “Does either an air worthinees
certificate, a certificate of registration, or pilots license qualify a
person to purchase an aircraft tax exempt under Article 20.04(Q)
above? ” We think not. The certificate to which reference is made
in 20.04(Q) is a certificate authorizing a particular use of the aircraft.
The two certificates and the license to which you refer in the question,
on the other hand, have reference to the safety or identification of the
aircraft and its pilot. The air-worthiness certificate [49 U.S. C.A.
51423(c)] is based on a finding that the aircraft conforms to the type
certificate issued for that plane and on a finding that the aircraft is in
condition for safe operation.
A registration certificate 149 U.S. C.A. $14031, is evidence of
ownership. The pilots license is governed by 49 U. S. C. A~. 9 1422 and
ia issued only if it is found that the pilot is, in fact, competent and
physically able to serve as an airman. See
- 14 C. F. R. $61.1 et seq.
In our opinion Article 20.04(Q) was designed, inter alia, to exempt
from taxation receipts from certain uses of the aircraft. Certificates
about which you inquired refer to the character of the vehicle and its
pilot and are irrelevant to a determination of exemption under Article
20.04(Q).
Your third question asks whether the purchaser of the aircraft
loses the exemption when the aircraft is used at a flight training school
for training purposes.
p. 2148
,
The Honorable Robert S. Calvert page 3 (H-470)
The exemption granted in Article 20.04(Q) does not speak to
multiple use. However, it is generally held that the primary, as
distinguished from the incidental use of the property determines
whether it is exempt from taxation. General Data Corp. v. Porter-
fieid, 257 N. E. 2d 359 (Ohio 1970); Mead Corp. v. Glander, 93 N. E.
2d 19 (Ohio 1950); Heller v. Fergus Ford, Inc., 305 N. E. 2d 352 (Ill.
App. 4th Div. 1973); cf. Hilltop Village, Inc, v, Kerrville Independent
School District, 426 KW. 2d 943 (Tex. 1968).
Therefore, the tax exempt status of an aircraft used as a
certificated or licensed carrier of persons or property and also used
for flight instruction will depend on the facts of each case. If the non-
exempt use is merely incidental, it will not destroy the exemption.
SUMMA-R Y
An air-taxi operator, certified as such by the
Federal Civil Aeronautics Board, is a certificated
carrier of persons or property and thus exempt from
taxation under Article 20.04(Q), Taxation-General.
The exemption will not be destroyed by an incidental
non-exempt use. Possession of an air-worthiness
certificate, a certificate of registration or a pilot’s
license, without more, is insufficient to establish
-B&
an exemption.
ri_
flVery truly yours,
JOHN L. HI L
Attorney General of Texas
OVED:
LL, First Assistant
C. ROBERT HEATH, Chairman
Opinion Committee
p. 2149