Could a trust-owned aircraft qualify as nonresident property when a Florida resident ultimately managed the trustee?

Plain-English summary

The Florida Department of Revenue concluded that aircraft owned by this trustee and found in Florida would be subject to sales or use tax because a Florida resident ultimately had authority to manage, direct, or control the trustee.

The proposed structure placed a Delaware corporate trustee beneath a Florida corporation owned by the Florida resident. The trustee held aircraft for non-U.S. persons, while the trustors retained operational control over their aircraft.

Operational control of the aircraft did not decide the nonresident-purchaser test. The Department focused on the Florida resident's authority over the entity's affairs as an owner, officer, and director through the ownership chain.

What this means for you

Aircraft trusts and trustees

Trace management and control through every entity in the ownership structure. A Florida-resident decision-maker can defeat nonresident treatment even if another person controls flight operations.

Aircraft owners and operators

Florida sales and use taxes work as a complementary system. Buying outside Florida did not avoid tax when the aircraft was later brought into the state under these facts.

Accountants and tax professionals

Separate operational control of the aircraft from authority to manage the purchasing or owning entity. The ruling applied the latter test.

Common questions

Q: Did the trustee itself control aircraft operations?
A: No. The trustor retained operational control.

Q: Did that preserve the nonresident exemption?
A: No.

Q: What aircraft were covered by the answer?
A: Aircraft owned by the trustee and found in Florida.

Citations and references

• Fla. Stat. §§ 212.05(1)(a)2., 212.06, 212.21(2), and 213.22
• Fla. Admin. Code r. 12A-1.007(10)(b)1.d.-e.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 17A-001

Original ruling text

Executive
Director
Leon M. Biegalski

QUESTION: WHETHER A NONRESIDENT TRUST MAY BE SUBJECT TO TAX ON
AIRCRAFT IT OWNS WHEN THE INDIVIDUAL WITH AUTHORITY TO DIRECT OR
MANAGE THE TRUST IS A FLORIDA RESIDENT?
ANSWER: YES. BECAUSE THE TRUST HAS A FLORIDA RESIDENT OWNER THAT
CAN DIRECT OR MANAGE THE ENTITY (I.E., TRUST), TAX IS DUE ON AIRCRAFT
FOUND TO BE IN FLORIDA THAT THE TRUST OWNS.
January 9, 2017
Re:

Technical Assistance Advisement 17A-001
Florida Sales and Use Tax – Aircraft Trust Owned By Florida Resident
Sections: 212.05; 212.06; and 212.21, Florida Statutes (F.S.)
Rule: 12A-1.007, Florida Administrative Code (F.A.C.)
Petitioners: XXXX (“Trustee”) and XXXX (“Taxpayer”)

Dear XXXX:
This letter is a response to your petition received on XXXX, for the Department of Revenue’s
(“Department”) issuance of a Technical Assistance Advisement ("TAA") concerning the abovereferenced petitioners and matter. Your petition has been carefully examined, and the
Department finds it to be in compliance with the requisite criteria set forth in Chapter 12-11,
Florida Administrative Code (“F.A.C.”). This response to your request constitutes a TAA and is
issued to you under the authority of Section (“s.”) 213.22, Florida Statutes (F.S.).
FACTS PRESENTED
Taxpayer, a Florida resident, intends to own and be the sole shareholder of a Florida
Corporation. The Florida Corporation will wholly own a Delaware Corporation. The Delaware
Corporation is a trustee. Trustee is engaged in the business of owning aircraft for persons and
entities that are not citizens of the United States of America.
Trustee does not have operational control over the aircraft in its care; rather, the trustor is vested
with operational control. After issuance of the TAA, Taxpayer wishes to become an officer and
director of Trustee. Taxpayer further states that as Trustee’s business grows, it may hire Florida
residents as employees.

Child Support – Ann Coffin, Director  General Tax Administration – Maria Johnson, Director
Property Tax Oversight – Dr. Maurice Gogarty, Director  Information Services – Damu Kuttikrishnan, Director

www.floridarevenue.com
Florida Department of Revenue
Tallahassee, Florida 32399-0100

Technical Assistance Advisement
Page 2
REQUESTED ADVISEMENT
Taxpayer requests that she be allowed to act as an officer, director, and owner of the Florida
Corporation without incurring any presumption that the aircraft owned by Trustee are subject to
sales or use tax.
TAXPAYER ARGUMENT
Taxpayer argues that though she is a resident of Florida, neither Taxpayer nor Trustee exercise
operational control over the aircraft. Based on s. 212.05(1)(a)2., F.S., and Rule 12A1.007(10)(b)1.e., F.A.C., defining a “nonresident,” neither Taxpayer nor Trustee qualify as a
resident, and thus Taxpayer and Trustee do not have “authority to participate in the management,
direction, or control of the entity’s affairs who is a resident of … Florida.”
LAW AND DISCUSSION
The legislature has declared its intention in s. 212.21(2), F.S., that each and every sale, use,
storage, or consumption of tangible personal property in Florida is taxable, subject only to the
exemptions and exclusions contained within Chapter 212, F.S. Therefore, the purchase or use of
an aircraft in Florida is subject to tax, unless an exemption applies.
Section 212.05, F.S., provides every person is engaged in a taxable privilege when engaging in
the business of selling, at retail, tangible personal property1. Tax on a sale of tangible personal
property is levied at a rate of six percent (6%)2. See s. 212.05(1)(a)l.a., F.S.
Generally, a nonresident purchaser may come to Florida to purchase an aircraft exempt from tax,
so long as certain criteria are met. One of the criteria is that a corporate purchaser, or other
artificial entity, cannot have an officer, director, or other individual, which is vested with
authority to manage, direct, or control the entity, that is a Florida resident. See s. 212.05(1)(a)2.,
F.S., and Rule 12A-1.007(10)(b)1.d.-e., F.A.C.
For purchases of aircraft occurring outside of Florida, there is a presumption that use tax applies
if the aircraft is subsequently brought into this State. See s. 212.06, F.S. Because sales and use
taxes are a complementary system, one cannot evade tax with property in Florida, as either a
sales or use tax will be due. Accordingly, if an aircraft is purchased within Florida or outside of
Florida and brought into Florida, by an entity that has a Florida resident as an officer, director, or
other individual, who is vested with authority to manage, direct, or control the entity, then the
aircraft will be subject to tax.

1

Tangible personal property is defined as including “personal property which may be seen, weighed, measured, or
touched or is in any manner perceptible to the senses ....” See s. 212.02(19), F.S.
2
Discretionary county sales surtax, if any, is also owed when tangible personal property is delivered to a county
imposing surtax. See s. 212.054, F.S.

Technical Assistance Advisement
Page 3
In the present case, Trustee will have a Florida resident owner (i.e., the Florida Corporation).
The Florida Corporation has a Florida resident as an officer, director, or other individual, who is
vested with authority to manage, direct, or control the entity (i.e., Taxpayer). Taxpayer is
ultimately an officer, director, or other individual, who is vested with authority to manage, direct,
or control Trustee. Because Trustee has a Florida resident with authority to manage, direct or
control Trustee, Taxpayer is subject to sales or use tax on aircraft she owns, which aircraft are
found to be within Florida.
CONCLUSION
Because Taxpayer is a Florida resident, any aircraft owned by Trustee in the State will be subject
to a sales or use tax.
This response constitutes a Technical Assistance Advisement under s. 213.22, F.S., which is
binding on the Department only under the facts and circumstances described in the request for
this advice, as specified in s. 213.22, F.S. Our response is predicated on those facts and the
specific situation summarized above. You are advised that subsequent statutory or
administrative rule changes, or judicial interpretations of the statutes or rules, upon which this
advice is based, may subject similar future transactions to a different treatment than expressed in
this response.
You are further advised that this response, your request and related backup documents are public
records under Chapter 119, F.S., and are subject to disclosure to the public under the conditions
of s. 213.22, F.S. Confidential information must be deleted before public disclosure. In an effort
to protect confidentiality, we request you provide the undersigned with an edited copy of your
request for Technical Assistance Advisement, the backup material and this response, deleting
names, addresses and any other details which might lead to identification of the taxpayer. Your
response should be received by the Department within 10 days of the date of this letter.
Sincerely,

Taylor Hikes, Esq.
Senior Attorney
Technical Assistance & Dispute Resolution
Florida Department of Revenue
Record ID: 211498