Who had to pay or collect Texas use tax when a non-Texas lessor leased helicopters to a Texas company and the aircraft entered Texas?

Plain-English summary

The Texas Comptroller said a non-Texas helicopter lessor did not have to collect Texas use tax when the lessee picked up the helicopters at an out-of-state location. That remained the answer even if the lessor knew the lessee would hangar the helicopters in Texas. The lessee bore responsibility for paying the use tax.

If the lessor delivered the helicopters into Texas, the result changed: the lessor had to collect use tax from the lessee and remit it to Texas.

What this means for you

The place and method of delivery controlled the collection duty under the letter. Out-of-state pickup shifted payment responsibility to the Texas lessee; lessor delivery into Texas made the lessor the collector.

Common questions

Did a lessor collect Texas use tax after out-of-state pickup? No.

Who paid the tax in that situation? The lessee.

Did the lessor's knowledge that the aircraft would be hangared in Texas change the answer? No.

What if the lessor delivered the aircraft into Texas? The lessor had to collect and remit the tax.

Citations and references

• Comptroller Rule 3.294 — enclosed for reference.
• Comptroller Rule 3.297 — enclosed for reference.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8702L0798G05

Original ruling text

February 24, 1987

Dear *****:

Thank you for your recent letter which is restated with the response below.

Question:

Our firm has a non-Texas client that leases helicopters to a firm in the State
of Texas, however thus far, all of these helicopters are based in other states.
Since they are dealing with a Texas concern, even though they are dealing with
a Texas concern, even though none of the activity occurs in the State of Texas,
other than the paper work and remittances, is there any possible liability for
sales tax?

In the event we have not given you sufficient information to respond, please
advise so that we might arrange a telephone call to further explain my clients
position.

Response:

If the helicopters are picked up by the lessee at an out-of-state location, we
will not hold the lessor liable for collection of Texas use tax even if the
lessor has knowledge that the lessee will hangar the helicopters in Texas. The
onus for payment of Texas use tax would be on the lessee.

However, if the lessor delivers the helicopters into Texas, he is required to
collect the use tax from the lessee and remit the tax to the State of Texas. I
am enclosing Rules 3.294 and 3.297 for your reference.

If you have any questions or need more information, please call me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Administration Division.

Sincerely,

Al Van Allen
Tax Administration Division