Is aviation fuel bought for aircraft used in an airline's interstate passenger or freight operations exempt from Kansas sales tax?

Plain-English summary

The Department explained that aviation fuel was exempt from Kansas motor-fuel tax, but that did not automatically make its retail sale tax-free. When motor-fuel tax does not apply, Kansas retailers' sales tax applies unless the purchaser qualifies for a separate sales-tax exemption.

An airline operating as an interstate common carrier does qualify when it buys aviation fuel for aircraft used in its actual passenger or freight carrier operations. The exemption comes from K.S.A. 79-3606(f) and K.A.R. 92-20-17.

To document the exemption, the airline must give every Kansas aviation-fuel dealer it uses a completed Form ST-28J, Interstate Common Carrier Exemption Certificate.

What this means for you

Interstate airlines

You may buy qualifying aviation fuel exempt for aircraft used in interstate passenger or freight carrier operations, but you must issue Form ST-28J to each Kansas dealer.

Aviation-fuel dealers

Do not treat all aviation fuel as sales-tax exempt merely because motor-fuel tax is not charged. Obtain the airline's completed ST-28J for fuel claimed under the interstate common-carrier exemption.

Charter and private operators

This short opinion addresses airlines engaged as common carriers in interstate transportation. It does not extend the exemption to every aircraft owner or every aviation-fuel use.

Common questions

Q: Is aviation fuel exempt from Kansas motor-fuel tax?
A: The 2011 letter says yes, but it immediately explains that retailers' sales tax then applies unless another exemption is available.

Q: Which airline fuel purchases qualify for the sales-tax exemption?
A: Fuel for aircraft used in actual interstate common-carrier operations carrying passengers or freight.

Q: What form supports the exemption?
A: Form ST-28J, Interstate Common Carrier Exemption Certificate, given to each Kansas dealer selling the qualifying fuel.

Citations and references

• K.S.A. 79-3648(4) — aviation-fuel motor-fuel-tax provision cited in the letter
• K.S.A. 79-3606(f) — exemption for tangible personal property sold to airlines engaged as interstate common carriers
• K.A.R. 92-20-17 — airline common-carrier exemption rule
• Kansas Notice 09-06 — cited for the sales-tax treatment when motor-fuel tax does not apply
• Form ST-28J — Interstate Common Carrier Exemption Certificate

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: O-2011-006

Original ruling text

Opinion Letter

Body:

Office of Policy & Research

June 16, 2011

XXXXX
XXXXX
XXXXX

RE: Your e-mail received June 10, 2011

Dear XXXXXXX:

Thank you for your recent e-mail. Sales of "aviation fuel" are exempt from Kansas motor fuel tax. K.S.A. 2010 Supp. 79-3648(4). "Aviation fuel" means motor fuel for use as fuel for aircraft. When retail sales of fuel are exempt from motor fuel tax, the retail sale is subject to Kansas retailers' sales tax unless the buyer can claim a sales tax exemption. See Notice 09-06.

The Kansas retailers' sales tax act exempts retail sales of tangible personal property to airlines engaged as common carriers in the interstate transportation of persons or property. K.S.A. 79-3606(f); K.A.R. 92-20-17. These exempt sales include sales of aviation fuel for aircraft used in actual carrier operations.

To claim the sales tax exemption on purchases of aviation fuel, an airline must complete an ST-28J, Interstate Common Carrier Exemption Certificate. The airline is required to provide a completed certificate to each Kansas dealer that sells aviation fuel for use in the airline's aircraft that carry passengers or freight in interstate commerce. The certificate and Notice 09-06 can be downloaded from our website, www.ksrevenue.org. If you have any more questions, please call me at 785-296-3081.

Sincerely,

Thomas E. Hatten
Attorney/Policy & Research

Date Composed: 06/17/2011 Date Modified: 06/17/2011

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