Were aircraft sales to the Civil Air Patrol exempt from California sales tax?

Plain-English summary

A taxpayer's petition involved aircraft sales to the Civil Air Patrol, along with unrelated periodical and penalty issues. California's property-tax counsel had concluded that the Civil Air Patrol was a federal instrumentality exempt from state taxes.

The business-tax unit reexamined the issue and adopted the same treatment for consistency. It recommended granting the petition for the Civil Air Patrol aircraft sales and removing the penalty attributable to the tax assessed on those sales.

What this means for you

Aircraft sellers, Civil Air Patrol purchasing teams, and tax advisers

The historical exemption rested on Civil Air Patrol's federal-instrumentality status, not merely its public-service mission. Retain current documentation supporting the entity's status and the buyer's identity.

Common questions

Q: Were the aircraft sales exempt?

A: Yes.

Q: How did California classify the Civil Air Patrol?

A: As a federal instrumentality for immunity from state taxation.

Q: What happened to the related penalty?

A: The memorandum recommended granting relief from the penalty based on the tax assessed on those sales.

Citations and references

• The memorandum cited no numbered statute, regulation, or case.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 505.0075
• Original supporting opinion: 505.0075 PDF

Original ruling text

State of California

Board of Equalization
Legal Division (MIC:82)

Memorandum
505.0075
To:

Mr. C. Wayne Philpot
Supervisor, Petition Unit

From:

David H. Levine
Tax Counsel

Subject:

S--- Corp., dba G--- G--- A--SR-- XX-XXXXXX-030

Date:

August 19, 1987

This petition involves three issues: sales of aircraft to the Civil Air Patrol (CAP); out-ofstate purchases of a periodical; and a penalty. Property Tax Counsel Eric Eisenlauer has recently considered whether the CAP is a federal instrumentality exempt from state taxes. He concluded it is an exempt federal instrumentality. A copy of his opinion is attached. We have reexamined this issue and conclude that for purposes of uniformity it is appropriate for the business taxes unit to also treat the CAP as an exempt federal instrumentality. We therefore recommend that taxpayer’s petition be granted with respect to its sales to the CAP and the penalty assessed based on the tax assessed on those sales.

DHL:ss
Attach.