Does a Georgia aircraft-painting company charge sales tax for stripping, sanding, and painting aircraft, and who pays tax on the materials?

Plain-English summary

An aircraft service company stripped, sanded, treated, and painted aircraft for major airlines, cargo carriers, and military contractors. It supplied licensed facilities, labor, and generally all materials, although some customers supplied their own paint and decals.

The Georgia Department of Revenue ruled that the customer charges were not subject to sales tax. Georgia taxes services only when the law specifically designates them as taxable, and aircraft painting was not one of those services. The Department applied the same reasoning used for automobile painters, refinishers, painters, and paperhangers.

The company was instead the consumer of the tangible property it used to provide the service. It generally had to pay sales or use tax when purchasing paint, supplies, equipment, and other materials. The ruling also noted that qualifying property installed during maintenance or repair of an aircraft not registered in Georgia, and qualifying major components or repair parts for military craft, may fall under specific exemptions.

What this means for you

Aircraft painters and maintenance businesses

Do not collect Georgia sales tax merely on charges for stripping, sanding, and painting aircraft under these facts. Treat the company as the consumer of the materials used in performing the service and account for tax when buying them unless a specific exemption applies.

Airlines, cargo carriers, and military contractors

The service charge itself was non-taxable, but tax embedded in the service provider's material purchases may still affect pricing. Customer-supplied paint and decals should be reviewed separately from materials bought by the painter.

Accountants and tax professionals

The ruling rests on aircraft painting being a non-enumerated service and the service-provider-as-consumer rule. If the work includes installing qualifying aircraft parts, test the specific exemptions and aircraft-registration facts rather than assuming every material purchase is taxable.

Common questions

Q: Is aircraft painting taxable in Georgia?
A: No on the stated facts. Charges for stripping, sanding, and painting aircraft were non-taxable service charges.

Q: Does the painter owe tax on paint and supplies?
A: Generally yes. The painter is the consumer of tangible personal property used in the service and must pay sales or use tax on those purchases.

Q: Are any aircraft materials exempt?
A: Potentially. The ruling notes exemptions for qualifying property installed during maintenance or repair of aircraft not registered in Georgia and for qualifying military-craft components and repair parts.

Q: What if the customer supplies the paint?
A: The ruling says some customers did so but does not separately rule on the customer's purchase. The holding addresses the painter's service charges and its own material purchases.

Q: Can another aircraft shop rely on this ruling?
A: No. It binds the Department only for the requesting taxpayer and stated facts, and work involving other products or transactions may be treated differently.

Citations and references

Statutes and rules:

• O.C.G.A. §§ 48-8-1 and 48-8-30 (sales and use tax imposition)
• O.C.G.A. § 48-8-3(22) (professional, insurance, and personal service transactions)
• O.C.G.A. § 48-8-63; Ga. Comp. R. & Regs. r. 560-12-1-.14(7) (service providers as consumers)
• O.C.G.A. §§ 48-8-3(86) and (40) (aircraft and military-craft exemptions)
• Ga. Comp. R. & Regs. r. 560-12-2-.08 (automobile painters and refinishers)
• Ga. Comp. R. & Regs. r. 560-12-2-.68 (painters and paperhangers)

Source

• Landing page: Georgia Sales & Use Tax Letter Rulings
• Original PDF: LR SUT-2019-03

Original ruling text

Georgia Letter Ruling: LR SUT-2019-03
Topic: Aircraft Painting
Date Issued: May 31, 2019
This letter is in response to your request for guidance on the application of Georgia sales and use tax to aircraft painting. Facts Presented by Taxpayer Taxpayer performs complete strip, sand, and paint services on aircraft operating under Federal Aviation Administration (“FAA”) certificates. Taxpayer provides licensed facilities, labor, and all materials necessary to accomplish these services. Some customers do elect to provide their own paint and decals. Taxpayer’s customers include major airlines, cargo carriers, and military contractors. Taxpayer will be hired to accept a customer’s aircraft in a Georgia facility, prepare them for either chemical stripping or mechanical sanding, and treat and paint the aircraft to a customer’s specific livery. Upon completion of the operation and proper execution all FAA paperwork, the customer’s pilot will pick up the aircraft and depart. Typically, the work is completed in an 8 to 16day visit. Issue How does Georgia sales and use tax apply to Taxpayer’s operations? Analysis Georgia levies and imposes a tax (subject to certain exemptions) on the retail purchase, retail sale, rental, storage, use, or consumption of tangible personal property and on certain enumerated services. 1 Unlike sales of tangible personal property, sales of services are not subject to sales and use tax unless the service is specifically designated as taxable.2 Typically, service providers are deemed to be the end users and consumers of certain tangible personal property used or consumed during the provision of a service, and service providers generally must pay the tax on tangible personal property used in providing their services. 3 Two regulations are instructive to explain how sales and use tax law applies to Taxpayer’s painting operations. Rule 560-12-2-.08 states that automobile painters and refinishers are engaged primarily in rendering personal services, and their gross receipts are not subject to the tax. 4 Similarly, Rule 560-12-2-.68 provides that painters and paperhangers perform services not subject to sales and use tax. 5 Both regulations explain that the painters are consumers of all tangible personal property used in their business and, consequently, must pay tax on their purchases of materials, such as paint, supplies, and equipment. 6 The rationale behind these regulations applies to aircraft painting. Taxpayer provides a service of stripping, sanding, and painting aircraft. Since the General Assembly has not specifically designated such services as taxable, Taxpayer’s services are not subject to sales and use tax. While the services are not subject to the tax, Taxpayer’s purchases of materials used in providing its services are subject to sales and use tax. 7

O.C.G.A. §§ 48-8-1 and 48-8-30.
Id.; See also O.C.G.A. § 48-8-3(22) (Georgia law further provides that professional insurance, and personal service transactions are not subject to the tax even when such transactions involve sales of tangible personal property as inconsequential elements for which no separate charges are made). 3 O.C.G.A. § 48-8-63; Ga. Comp. R. & Regs. r. 560-12-1-.14(7). 4 Ga. Comp. R. & Regs. r. 560-12-2-.08. 5 Ga. Comp. R. & Regs. r. 560-12-2-.68. 6 Ga. Comp. R. & Regs. r. 560-12-2-.08 and 560-12-2-.68. 7 It is noted that Georgia law provides a sales and use tax exemption for the sale or use of engines, parts, equipment, and other tangible personal property used in the maintenance or repair of aircraft when such property is installed on an aircraft that is being repaired or maintained in this state, so long as such aircraft is not registered in this state. O.C.G.A. § 48-8-3(86). Further, state law provides a sales and use tax exemption for the sale of major components and repair parts installed in military craft, vehicles, and missiles. O.C.G.A. § 48-8-3(40). If Taxpayer’s services 1 2

Georgia Letter Ruling: LR SUT-2019-03
Topic: Aircraft Painting
Date Issued: May 31, 2019
Page 2 of 2
Ruling
Charges made for Taxpayer’s stripping, sanding, and painting services are not subject to Georgia sales and use tax. As a service provider, Taxpayer must pay sales and use tax on the purchase of all tangible personal property used in performing its services.

include the installation of qualifying tangible personal property on aircraft not registered in Georgia or military aircraft, Taxpayer may avail itself of the applicable exemption upon purchase or use of such property.