Is aircraft repair and maintenance work performed by a Class IV FAR Part 145 facility still exempt from Illinois sales tax under 35 ILCS 105/3-5(35), regardless of the aircraft's weight class?

Subject

Miscellaneous

Plain-English summary

A taxpayer wrote to the Illinois Department of Revenue asking about the sales tax exemption in 35 ILCS 105/3-5(35) for materials, parts, equipment, components, and furnishings incorporated into an aircraft during modification, refurbishment, completion, replacement, repair, or maintenance. Specifically, the taxpayer asked whether that exemption applied to aircraft repairs and maintenance performed by a Class IV Part 145 FAA-certified maintenance facility, regardless of whether the aircraft being serviced was itself a "Class IV" aircraft (all-metal construction, over 12,500 lbs. gross weight). The taxpayer argued the statute's text only required the facility to be Class IV/Part 145 certified, not the aircraft being worked on.

The Department did not answer that specific weight-class question. Instead, it explained that the exemption itself "sunset on December 31, 2014 by operation of law pursuant to the sunset provisions of Section 2-70 of the Retailers' Occupation Tax Act," and that this sunset is reflected in 86 Ill. Adm. Code 130.120(rr). In other words, the exemption the taxpayer was asking about no longer exists, so the underlying question of which aircraft or facilities qualify is moot — nothing qualifies anymore because the exemption itself is gone.

As with all GILs, this letter is not a statement of Department policy and is not binding on the Department (2 Ill. Adm. Code 1200.120).

What this means for you

Aircraft repair, maintenance, and refurbishment businesses

If your business performs modification, refurbishment, completion, replacement, repair, or maintenance work on aircraft — even through a Class IV Part 145-certified facility — this letter confirms you cannot rely on the exemption formerly found at 35 ILCS 105/3-5(35) for parts and materials incorporated into the aircraft. That exemption sunset by operation of law on December 31, 2014, and the Department's regulations (86 Ill. Adm. Code 130.120(rr)) reflect that it is no longer available, regardless of the aircraft's or facility's certification class.

Accountants and tax professionals advising aviation clients

Be aware that some clients or contracts may still reference the pre-2015 exemption language in 35 ILCS 105/3-5(35), which described a fairly detailed carve-out (excluding engine/power-plant work, excluding commercial Part 121/129 carriers, etc.). This letter is a reminder that the exemption's substance is now irrelevant for sales tax purposes going forward, because the entire provision expired via the Retailers' Occupation Tax Act sunset mechanism — not because of any dispute over what qualifies.

Common questions

Q: Is the aircraft parts/maintenance exemption in 35 ILCS 105/3-5(35) still available?
A: No. The Department's response states plainly that this exemption "sunset on December 31, 2014 by operation of law" under the Retailers' Occupation Tax Act's sunset provision, and "is no longer available."

Q: Did the Department decide whether a Class IV FAR Part 145 facility could perform exempt work on any aircraft, regardless of weight class?
A: No. The letter does not answer that specific question. The Department instead pointed out that the exemption sunset entirely, so the weight-class distinction the taxpayer asked about no longer matters.

Q: Where can I see the sunset reflected in the regulations?
A: The letter cites 86 Ill. Adm. Code 130.120(rr) as the regulatory provision addressing the sunset of this exemption.

Q: Is this letter binding on the Illinois Department of Revenue?
A: No. This is a General Information Letter, which "is not a statement of Department policy and is not binding on the Department" under 2 Ill. Adm. Code 1200.120. A taxpayer wanting a binding answer on specific facts would need to request a Private Letter Ruling under 2 Ill. Adm. Code 1200.110.

Q: Does this mean all aircraft parts and maintenance are now taxable in Illinois?
A: This letter only addresses the specific exemption at 35 ILCS 105/3-5(35), which is no longer available. The letter does not discuss any other exemptions that might separately apply to aircraft transactions.

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2018.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2018/st-18-0026-gil.pdf

Original ruling text

ST 18-0026-GIL 11/21/2018 MISCELLANEOUS
The exemption for materials, parts, equipment, components, and furnishings incorporated into
or upon an aircraft as part of the modification, refurbishment, completion, replacement, repair,
or maintenance of the aircraft sunset on December 31, 2014 by operation of law pursuant to
the sunset provisions of Section 2-70 of the Retailers’ Occupation Tax Act [35 ILCS 2-70]. See
86 Ill. Adm. Code 130.120(rr). (This is a GIL.)

November 21, 2018

RE:

Clarification re 35 ILCS 105/3-5(35)

Dear Xxxxx:
This letter is in response to your letter, in which you requested information. The Department
issues two types of letter rulings. Private Letter Rulings (“PLRs”) are issued by the Department in
response to specific taxpayer inquiries concerning the application of a tax statute or rule to a
particular fact situation. A PLR is binding on the Department, but only as to the taxpayer who is the
subject of the request for ruling and only to the extent the facts recited in the PLR are correct and
complete. Persons seeking PLRs must comply with the procedures for PLRs found in the
Department’s regulations at 2 Ill. Adm. Code 1200.110. The purpose of a General Information Letter
(“GIL”) is to direct taxpayers to Department regulations or other sources of information regarding the
topic about which they have inquired. A GIL is not a statement of Department policy and is not
binding on the Department. See 2 Ill. Adm. Code 1200.120. You may access our website at
www.tax.illinois.gov to review regulations, letter rulings and other types of information relevant to your
inquiry.
The nature of your inquiry and the information you have provided require that we respond with
a GIL. In your letter you have stated and made inquiry as follows:
Our office is in need of your assistance to determine whether or not aircraft repairs and
maintenance performed by a Class IV Part 145 of the Federal Aviation Regulations
(FAR) maintenance facility are Illinois sales tax exempt.
The Illinois statute (35 ILCS 105/3-5(35)) makes no mention of the aircraft needing
repair services having to be a Class IV type of aircraft (all metal construction, over
12,500 lbs. gross weight); only that the maintenance facility be a Class IV FAR Part 145
facility. Our specific question is whether or not maintenance work performed by a Class
IV FAR Part 145 facility on any aircraft, whether or not over 12,500 lbs., is Illinois sales
tax exempt (other than engine work and aircraft specifically excluded per the statute
below).
35 ILCS 105/3-5(35) beginning January 1, 2010, materials, parts, equipment,
components, and furnishings incorporated into or upon an aircraft as part of the
modification, refurbishment, completion, replacement, repair, or maintenance of the
aircraft. This exemption includes consumable supplies used in the modification,
refurbishment, completion, replacement, repair, and maintenance of aircraft, but

ST 18-0026-GIL
Page 2

excludes any materials, parts, equipment, components, and consumable supplies used
in the modification, replacement, repair and maintenance of aircraft engines or power
plants, whether such engines or power plants are installed on uninstalled upon any such
aircraft. “Consumable supplies” include, but are not limited to, adhesive, tape,
sandpaper, general purpose lubricants, cleaning solution, latex gloves, and protective
films. This exemption applies only to the use of qualifying tangible personal
property by persons who modify, refurbish, complete, repair, replace, or maintain
aircraft and who (i) hold an Air Agency Certificate and are empowered to operate
an approved repair station by the Federal Aviation Administration, (ii) have a
Class IV Rating, and (iii) conduct operations in accordance with Part 145 of the
Federal Aviation Regulations. The exemption does not include aircraft operated by a
commercial air carrier providing scheduled passenger air service pursuant to authority
issued under Part 121 or Part 129 of the Federal Aviation regulations. The changes
made to this paragraph (35) by Public Act 98-534 are declarative of existing law.
Thank you in advance for your assistance. If you should have any questions, please do
not hesitate to contact me. I may be reached at 630-488-4002.
DEPARTMENT’S RESPONSE:
The exemption you asked about in your letter was subject to the sunset provisions of Section
2-70 of the Retailers’ Occupation Tax Act and sunset on December 31, 2014 by operation of law and,
thus, is no longer available.
I hope this information is helpful. If you require additional information, please visit our website
at www.tax.illinois.gov or contact the Department’s Taxpayer Information Division at (217) 782-3336.
Very truly yours,

Debra M. Boggess
Associate Counsel
DMB:bkl