What does Illinois General Information Letter ST 20-0010-GIL conclude about Aircraft Use Tax?

Plain-English summary

The Illinois Department of Revenue answered a taxpayer's question about whether a homebuilt experimental aircraft, purchased in the United Kingdom and later brought into Illinois when the owner immigrated to the United States, was subject to Illinois Aircraft Use Tax. The Department explained that when one non-retailer transfers an airplane to another non-retailer in Illinois, the transaction is governed by the Aircraft Use Tax Law (35 ILCS 157/10-1 et seq.), not the general Use Tax Act. That law taxes the privilege of using an "aircraft" in Illinois after it is acquired by gift, transfer, or purchase, but only if the use is not already taxed under the Use Tax Act.

The key issue was whether an aircraft kit counts as an "aircraft" for purposes of the Aircraft Use Tax Law. The Department's position is that it depends entirely on whether the FAA has issued a certificate of airworthiness: if no airworthiness certificate has been issued, the kit (regardless of how complete it is) is not yet an "aircraft" and its acquisition is not subject to the Aircraft Use Tax Law. Once an airworthiness certificate is issued, the item remains an "aircraft" for these purposes going forward, whether or not it is airworthy at the moment of any later acquisition.

Applying that rule to the facts presented, the Department found that the taxpayer's homebuilt aircraft was constructed and purchased from an individual in the United Kingdom, then shipped into Illinois. At the time it entered Illinois it did not yet have an FAA airworthiness certificate, so at that point it was not subject to Aircraft Use Tax. However, the aircraft later received its FAA airworthiness certificate while already in Illinois, and the Department concluded that once that certificate was issued, the aircraft became subject to Aircraft Use Tax.

Because this is a General Information Letter rather than a Private Letter Ruling, it does not resolve the taxpayer's specific liability with binding force — it only explains how the Department applies the relevant statutes and regulations to situations like this one.

What this means for you

Owners of homebuilt or experimental aircraft

If you build, buy, or import an aircraft kit, the timing of the FAA airworthiness certificate matters for Illinois tax purposes. Bringing an incomplete, non-airworthy kit into Illinois is not, by itself, a taxable event under the Aircraft Use Tax Law. But once the FAA issues an airworthiness certificate, the aircraft becomes subject to Aircraft Use Tax based on its use in Illinois from that point forward, and that status does not go away even if the aircraft later becomes non-airworthy again.

People relocating to Illinois with an aircraft they already own

This ruling involved someone who owned and flew the aircraft abroad before immigrating and did not purchase or acquire it while it was already an "aircraft" for FAA purposes located in Illinois. The Department's analysis focused on when the airworthiness certificate was issued relative to the aircraft's presence in Illinois, not simply on the fact that the aircraft was imported as part of a move. If you are in a similar situation, the exact sequence of events (purchase date, entry into Illinois, and airworthiness certificate date) is central to the analysis.

Accountants and tax professionals

Note that the Aircraft Use Tax Law is a separate statutory scheme (35 ILCS 157) from the general Use Tax Act, and it specifically does not apply if the use of the aircraft is already taxed under the Use Tax Act (35 ILCS 157/10-15). The tax applies regardless of whether the aircraft is actually registered under the Illinois Aeronautics Act (86 Ill. Adm. Code 152.101(a)). Also remember that a GIL, unlike a PLR, is not binding on the Department and does not resolve a specific taxpayer's liability — it merely explains the Department's general approach.

Common questions

Q: Is an aircraft kit taxed the same as a finished aircraft in Illinois?
A: No. According to this GIL, whether an aircraft kit counts as an "aircraft" for Aircraft Use Tax purposes depends on whether the FAA has issued a certificate of airworthiness. Without that certificate, the kit is not treated as an aircraft, regardless of how much of it has been built.

Q: What tax applies when one individual sells or transfers an airplane to another individual in Illinois?
A: The Department states that a transfer of airplanes in Illinois between two parties, neither of whom is a retailer, is subject to the Aircraft Use Tax Law (35 ILCS 157/10-1 et seq.), not the general Use Tax Act.

Q: Once an aircraft kit becomes airworthy, does that status ever change back for tax purposes?
A: No. The Department's letter says that once an airworthiness certificate has been issued by the FAA for an aircraft, it remains an "aircraft" for purposes of the Aircraft Use Tax Law regardless of whether it is actually airworthy at the time of any later acquisition.

Q: Does bringing an aircraft into Illinois as part of a household move trigger Aircraft Use Tax?
A: Not by itself, based on this letter. The Department's analysis turned on whether the aircraft already had an FAA airworthiness certificate at the relevant time, not on the fact that it was imported along with other personal belongings during an immigration move.

Q: Is this letter a final answer on the taxpayer's liability?
A: No. This is a General Information Letter (GIL), which directs a taxpayer to relevant regulations and explains the Department's general approach. It is not a statement of Department policy and is not binding on the Department, unlike a Private Letter Ruling (PLR), which is binding as to the specific taxpayer and facts presented.

Citations and references

Statutes and regulations:

• 35 ILCS 157/10-1 et seq. (Aircraft Use Tax Law)
• 35 ILCS 157/10-15 (imposition of Aircraft Use Tax; not applicable if use is otherwise taxed under the Use Tax Act)
• 86 Ill. Adm. Code 152.101(a) (Aircraft Use Tax applies regardless of Illinois Aeronautics Act registration)
• 86 Ill. Adm. Code 130.101 (Retailers' Occupation Tax Act imposition)
• 86 Ill. Adm. Code 150.101 (Use Tax Act imposition)
• 86 Ill. Adm. Code 150.130 (retailer credit against Use Tax for Retailers' Occupation Tax paid)
• 2 Ill. Adm. Code 1200.110 (Private Letter Ruling procedures)
• 2 Ill. Adm. Code 1200.120 (General Information Letters)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2020.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2020/st20-0010-gil.pdf

Original ruling text

ST 20-0010-GIL 06/19/2020 AIRCRAFT USE TAX
This letter concerns the tax liabilities involving the purchase of a homebuilt aircraft kit. See 86
Ill. Adm. Code 152.101. (This is a GIL).

June 19, 2020
Dear Xxxx:
This letter is in response to your letter dated January 18, 2020, 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 the information you have provided require that we respond with a GIL. In your
letter you have stated and made inquiry as follows:
Based on an advice from NAMEl (Illinois Department of Revenue, ROT Discovery) I
Kindly request your ruling to confirm the IL Use Tax exemption for my personal
experimental aircraft (US FAA: NXXXXX).
Here is the history in points with some explanation of each point:
•

I am a Jordanian Citizen (non-US Citizen, Non-Resident) that was living in the United
Kingdom (UK Immigrant Resident) in 20XX.

•

On April 20XX, I purchased an experimental 2-seater airplane that was UK registered and
flying in the UK. (UK CAA: X-XXXX)

•

I transferred ownership and was regularly flying the airplane starting April 20XX.

•

On October 20XX; my family (Wife and 3 Children) and I were fortunate to be accepted
to immigrate permanently to the United States.

•

On November 20XX, we made our “Immigrate first Landing” trip to USA to finalize the
paperwork and submit the required documents issue our Green Cards. This was just for
10 days trip to formalize the acceptance as there was a time to arrive to USA to submit
the paperwork.

ST 20-0010-GIL
Page 2
•

Our actual move and residency in IL was April 20XX. This is when we selected IL as our
residence and was able to reside in IL long enough to be considered IL residence.

•

The airplane was put into a sea-freight container and was shipped to the USA a few days
before our final arrival to USA (April 20XX). The airplane status was entered and declared
into USA port as “New Immigrant used personal items” along with other personal
belonging that we moved from UK to US.

•

Airplane arrived in the USA in May 20XX and was put in Hangar at AIRPORT. Airplane
was still under UK Registration with valid UK registration and Permit to Fly.

•

I started the N-Number conversion in August 20XX. Someone outside the USA wanted
to buy it and the airplane was just on-hold hangered waiting for the sale to finalize and
when it did not happen, the application to convert it to USA registration started on July
20XX and completed by August 20XX.

•

Once the aircraft was registered into the FAA system (NXXXXX) with IL address, I
received a letter from REGISTRAR (IL Aircraft Registration) requesting to complete the
registration for IL. I replied to REGISTRAR explaining that the airplane is not yet airworthy
(See copy of my email and REGISTRAR’s Reply on Sept 20XX). I spoke with NAME
over the phone and I was under the impression that the Aircraft is exempted. (See email
copy)

•

The aircraft got the Airworthiness Certificate in July 20XX. Due to my misunderstanding
and oversight on my part; I did not complete the IL registration. It slipped my mind and I
truly thought we completed that part. Though I do declare the airplane only flew ONE
TIME since it got the airworthiness to remove the restrictions on the airplane and it’s been
hangared since then with no flight, as I do own another experimental airplane which is
registered in IL & Tax paid.

•

While renewing the other airplane registration; and trying to also pay for IL registration for
NXXXXX, i discovered that the airplane was still pending registration and I was unable to
pay for the airplane online. I emailed REGISTRAR with the fact (See Copy of that email
attached)

•

I’ve sent the documents to NAME showing I’ve owned the airplane, and flew it for more
than 3 months before becoming US Residence, he suggested to request a ruling to
confirm.

From the above; I’ve owned, operated and used the aircraft for personal use while living in the
UK before knowing that we will be immigrating to the USA. I have imported the airplane as part
of personal used items belonging to new immigrants moving to the USA for the first time. I believe
I do not own IL Use Tax on this item and would like your confirmation of this fact to allow me to
complete the IL registration of this aircraft.
Please find attached (Please note, Dates in UK/EU are Day/Month/Year)
1- Signed Sale Agreement. (9th April 20XX).
2- UK CAA registration confirming change of ownership completed (April 24th 20XX)

ST 20-0010-GIL
Page 3
3- My US Green Card showing Residence Since: Nov 7th 20XX. (Actual permanent move was
April 20XX)
4- Insurance Cert in UK for airplane to fly;
5- Photo of the airplane while in the UK under UK registration; X-XXXX.
6- Copy of Email communication on Sept 20XX.
7-Copy of Email sent on Dec 20XX about my oversight to continue the registration of my airplane
in IL.
DEPARTMENT’S RESPONSE:
The Illinois Retailers' Occupation Tax Act imposes a tax upon persons engaged in this State in
the business of selling tangible personal property to purchasers for use or consumption. 86 Ill. Adm.
Code 130.101. Use Tax is imposed on the privilege of using, in this State, any kind of tangible personal
property that is purchased anywhere at retail from a retailer. 86 Ill. Adm. Code 150.101. These taxes
comprise what is commonly known as “sales” tax in Illinois. If the purchases occur in Illinois, the
purchasers must pay the Use Tax to the retailer at the time of purchase. The retailers are then allowed
to reduce the amount of Use Tax they must remit by the amount of Retailers' Occupation Tax liability
which they are required to and do pay to the Department with respect to the same sales. 86 Ill. Adm.
Code 150.130.
A transfer of airplanes in Illinois between two parties, neither of whom is a retailer, is subject to
the Aircraft Use Tax Law, not the Use Tax Act. (35 ILCS 157/10-1 et. seq). Under the Aircraft Use
Tax Law, a tax is imposed on the privilege of using, in this State, any aircraft as defined in Section 3
of the Illinois Aeronautics Act acquired by gift, transfer, or purchase after June 30, 2003. This tax
does not apply if the use of the aircraft is otherwise taxed under the Use Tax Act. 35 ILCS 157/10-15.
The tax is imposed on the use of aircraft in this State regardless of whether the aircraft is actually
registered under the Illinois Aeronautics Act. See 86 Ill. Adm. Code 152.101(a).
It is the Department’s position that whether the acquisition of an aircraft kit is considered the
acquisition of an aircraft for purposes of the Aircraft Use Tax Law depends on whether a certificate of
airworthiness has been issued by the Federal Aviation Administration. If a certificate of airworthiness
has not been issued for the aircraft kit (regardless of the state of completion of the aircraft), the
acquisition of the aircraft or aircraft kit is not subject to the provisions of the Aircraft Use Tax Law. If an
airworthiness certificate has been issued for that aircraft and the aircraft is acquired from a non-retailer,
the acquisition of the aircraft is subject to the provisions of the Aircraft Use Tax Law. Once an
airworthiness certificate has been issued by the FAA for an aircraft, that “aircraft” remains an aircraft
for purposes of the Aircraft Use Tax Law regardless of whether or not it is airworthy at the time of
acquisition.
The facts presented in your letter indicate you did not purchase the aircraft in Illinois.
According to the Aircraft Sales Agreement, the aircraft was constructed as a “homebuilt” and purchased
from an individual in the United Kingdom in April 20XX. It was brought into Illinois in May 20XX and
stored at the AIRPORT near CITY, Illinois. At the time it was brought into Illinois it was not airworthy
and was not subject to Aircraft Use Tax. The aircraft received its airworthiness certificate in May 20XX,
at which point it was subject to Aircraft Use Tax.

ST 20-0010-GIL
Page 4
I hope this information is helpful. If you have further questions related to the Illinois sales tax
laws, please visit our website at www.tax.illinois.gov or contact the Department’s Taxpayer Information
Division at (217) 782-3336.
Very truly yours,

Richard S. Wolters
Associate Attorney
RSW:bkl