Does a New York resident owe use tax on an aircraft bought and hangared out of state when it lands and stays overnight in New York?

Plain-English summary

George Sexton, a New York resident, bought a used aircraft in May 1988. He took delivery in New Jersey and permanently hangared it in Linden, New Jersey, using it mainly for business. As a volunteer pilot for the Civil Air Patrol, he made three overnight stops in New York:

• an emergency landing at Stewart Airport, Newburgh (April 29, 1989) caused by an equipment malfunction and bad weather; and
• overnight stays at Ithaca (March 18–19, 1989) and Syracuse (June 3–4, 1989) for Civil Air Patrol training and conference activities.

None of the flights was for business in New York. He asked whether this limited New York use kept him out of the compensating use tax.

The Department worked through it step by step.

• No New York sales tax. Delivery outside New York means no sales tax under the destination-tax rule (§ 525.2(a)(3); Jamco Investments).
• But use tax can still apply to a resident. Out-of-state delivery does not shield a New York resident from compensating use tax under § 1110 for a "use" of the property in New York (§ 1101(b)(7)).
• Which stops counted. The Ithaca and Syracuse overnight stays created a taxable "use." The emergency landing at Newburgh did not (Jamco).
• How the tax is measured. Because first New York use (March 18, 1989) came about ten months after purchase — more than six months — the tax is based on the aircraft's current market value at first New York use, or its cost, whichever is less (§ 1111(b)(1); § 531.4(b)).
• State tax only, no local tax. Because Sexton was not a resident of Ithaca or Syracuse and did no business there, his liability is limited to the New York State 4% use tax; no local use tax applies.
• Possible reciprocal credit. He may claim a credit under § 1118(7)(a) for state sales or use tax paid to New Jersey — the state portion only — but only with documentation from a New Jersey official that New Jersey grants a corresponding (reciprocal) exemption and that no refund or credit is available there.

What this means for you

Buying and keeping property out of state doesn't end the New York story for a resident

New York can't impose sales tax on a purchase delivered in another state, but if you're a New York resident, it can reach the property with use tax the moment you actually use it in New York. Owners of aircraft, boats, and vehicles bought and based out of state should understand that a New York use — not just New York delivery — can trigger tax.

Not every landing is a taxable "use"

An emergency stop forced by mechanical failure or weather is not a taxable use. Deliberate overnight stays for your own activities are. The line is whether you chose to use the property in New York, not whether it merely touched down here.

Timing sets the tax base — and residency sets the rate

If the property was used out of state for more than six months before its first New York use, the tax is measured on its value at first New York use (capped at cost), not the original purchase price — often a lower number for a depreciating asset. And because Sexton wasn't a local resident and did no business at the landing sites, only the state rate applied, sparing him local use tax. Where you live and do business affects which local tax, if any, attaches.

Tax paid to the other state may offset New York's — with paperwork

A reciprocal credit can reduce the New York use tax by the state-level tax already paid to the other state, but only if that state gives New York the same courtesy and you produce official documentation. No documentation, no credit.

Common questions

Q: I'm a New York resident but bought and hangar my plane out of state. Do I owe New York tax?
A: Not sales tax (delivery was out of state), but you can owe New York State use tax once you actually use the aircraft in New York.

Q: Does an emergency landing in New York create a taxable use?
A: No. An emergency landing forced by malfunction and weather is not a "use." Deliberate overnight stays for your own activities are.

Q: How is the use tax calculated if I used the plane out of state first?
A: If used out of state more than six months before its first New York use, the tax is based on its market value at first New York use, capped at cost — not the original purchase price.

Q: Do I owe local use tax too?
A: Not here. Because Sexton wasn't a resident of the landing localities and did no business there, only the New York State 4% use tax applied.

Q: Can I offset tax paid to the other state?
A: You may claim a reciprocal credit under § 1118(7)(a) for the state portion of tax paid to the other state, if that state reciprocates and you provide official documentation.

Citations and references

Statutes and regulations:

• Tax Law § 1110 — imposition of compensating use tax
• Tax Law § 1101(b)(7) — definition of "use"
• Tax Law § 1111(b) — basis of use tax on property purchased and used out of state first (value at first NY use, capped at cost)
• Tax Law § 1118(7) — reciprocal credit for sales/use tax paid to another state
• 20 NYCRR §§ 525.2(a)(3), 531.1, 531.3, 531.4 — destination tax; imposition and basis of use tax; property used out of state before New York use

Cited authority:

• Matter of Jamco Investments, Inc., Dec. St. Tax Comm., January 17, 1986, TSB-H-86(19)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1990.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a90_31s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-90 (31) S
Sales Tax
June 29, 1990

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S900417A

On April 17, 1990 a Petition for Advisory Opinion was received from George Sexton, 1601
3rd Avenue #34J, New York, New York 10128.
The issue raised by Petitioner, George Sexton, is whether the use within New York State of
a private aircraft owned by Petitioner, a resident of New York State, wherein delivery of such aircraft
occurred in the state of New Jersey and such aircraft has remained to be permanently hangared at an
airport in Linden, New Jersey, falls within the limited use in New York State specified for "private
aircraft" in TSB-M-78(12)S dated September 25, 1978 and thus is not subject to the compensating
use tax.
Petitioner, a self-employed resident of New York State, purchased a used aircraft in May
1988. Delivery of the aircraft occurred within the state of New Jersey. The aircraft is permanently
hangared at an airport located in Linden, New Jersey and is used primarily for business purposes.
Petitioner, an aircraft pilot, performs various services gratuitously for the Civil Air Patrol.
Petitioner uses his personally owned aircraft, automobile, and other equipment in performing such
volunteer services. Petitioner pays the entire cost of maintenance and repair including purchases of
fuel and oil (with the exception of that consumed for certain "Air Force authorized missions") and
is not otherwise reimbursed for such expenses.
Since being purchased, this aircraft has remained overnight at a New York State airport on
three separate occasions. In each instance, Petitioner was engaged in performing a service for the
Civil Air Patrol.
On April 29, 1989 while participating in an emergency search and rescue mission conducted
by the Civil Air Patrol, an equipment malfunction and inclement weather resulted in an in-flight
emergency, necessitating landing at Stewart Airport, Newburgh, New York. The aircraft remained
there until weather conditions permitted departure the following day.
On March 18 and 19, 1989 in Ithaca, New York and on June 3 and 4, 1989 in Syracuse, New
York Petitioner participated in Civil Air Patrol training and conference activities. On each of these
occasions, the flight originated outside of New York State and terminated with a single landing in
New York State. The aircraft remained overnight and departed the following day, flying directly to
a point outside New York State with no intervening landings in New York State.
None of these flights was for the purpose of conducting business within New York State, nor
was any business, trade, employment, or profession conducted while in New York State.
TP-9 (9/88)

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Sales Tax
June 29, 1990

Petitioner was a resident of New York City on the date the aircraft was purchased. Petitioner
has never been a resident of Newburgh, Ithaca or Syracuse, New York nor carried on any
employment trade, business or professional activities at those locations.
Section 1105 of the Tax Law states, in part:
Imposition of sales tax.--. . . there is hereby imposed and there shall
be paid a tax. . . upon:
(a) The receipts from every retail sale of tangible personal property.
. ..
Section 525.2 of the Sales and Use Tax Regulations states, in part:
Nature of tax:
(a)(3) The sales tax is a "destination tax," that is, the point of delivery
or point at which possession is transferred by the vendor to the
purchaser or designee controls both the tax incident and the tax rate.
Section 1110 of the Tax Law states, in part:
Imposition of compensating use tax.--Except to the extent that
property or services have already been or will be subject to the sales
tax under this article, there is hereby imposed on every person a use
tax for the use within this state. . .except as otherwise exempted under
this article, (A) of any tangible personal property purchased at retail.
. ..
Section 531.1 of the Sales and Use Tax Regulations states, in part:
Imposition of compensating use tax. (Tax Law, §1110).
(a) Imposition. The compensating use tax is imposed on the use
within the State of tangible personal property and certain services,
except to the extent they have been or will be subject to sales tax. . ..
(b) Taxable uses. The uses enumerated herein are subject to tax.
(1) Tangible personal property purchased at retail. . ..
Section 1111 of the Tax Law states, in part:
Special rules for computing receipts and consideration.
(b)

Tangible personal property, which has been purchased by a

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Sales Tax
June 29, 1990

resident of New York State outside of this state for use outside of this
state and subsequently becomes subject to the compensating use tax
imposed under this article, shall be taxed on the basis of the purchase
price of such property, provided, however:
(1) That where a taxpayer affirmatively shows that the property was
used outside such state by him for more than six months prior to its
use within this state, such property shall be taxed on the basis of
current market value of the property at the time of its first use within
the state. The value of such property, for compensating use tax
purposes, may not exceed its cost.
Section 531.3 of the Sales and Use Tax Regulations states, in part:
Basis of tax.
(a) Tangible personal property purchased at retail.
(1) The compensating use tax is due upon the use of tangible
personal property in this State which has been purchased out of state.
The applicable tax rate is imposed on the consideration given or
contracted to be given for the property. . ..
Section 531.4 of the Sales and Use Tax Regulations states, in part:
Property used outside of State prior to use in New York.
(a) General rule. When tangible personal property is purchased
outside of the State by a resident of the State, for use outside of the
State, and is subsequently used in the State, the compensating use tax
is due on the purchase price.
(b) Use outside the State in excess of six months. Where a resident
affirmatively shows that he used such property outside the State for
more than six months prior to its first use in New York, the use tax is
based on the current market value of the property, not to exceed its
cost, at the time of first use within New York.
Example:

A New York State resident absent from the State for an extended period
purchased a boat outside of this State for $2,000 on November 1, 1974. On
August 1, 1975, the resident brought the boat, having a fair market value of
$1,500, into New York State. The resident is liable for the combined State
and local tax on the $1,500 at the rate in effect on August 1, 1975.

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TSB-A-90 (31) S
Sales Tax
June 29, 1990

Section 1118 of the Tax Law states, in part:
Exemptions from use tax.--The following uses of property shall not
be subject to the compensating use tax imposed under this article:
(7)(a) In respect to the use of property. . .to the extent that a retail
sales or use tax was legally due and paid thereon, without any right to
a refund or credit thereof, to any other state but only when it is shown
that such other state or jurisdiction allows a corresponding exemption
with respect to the sale or use of tangible personal property. . . upon
which such a sales tax or compensating use tax was paid to this state.
To the extent that the tax imposed by this article is at a higher rate
than the rate of tax in the first taxing jurisdiction, this exemption shall
be inapplicable and the tax imposed by section eleven hundred ten of
this chapter shall apply to the extent of the difference in such rates,
except as provided in paragraph (b) of this subdivision.
The sales tax is a "destination tax"; that is the point of delivery or point at which possession
is transferred by the vendor to the purchaser or designee controls both the tax incident and the tax
rate in accordance with Section 525.2(a)(3) of the Sales and Use Tax Regulations. In the instant
matter, Petitioner took delivery of the aircraft outside New York State. Accordingly, the transaction
was not subject to the tax imposed under Section 1105(a) of the Tax Law. (Matter of Jamco
Investments, Inc., Dec St Tax Comm, January 17, 1986, TSB-H-86(19)S).
However, since Petitioner is a resident of New York State, delivery of the aircraft outside
New York State does not preclude Petitioner from being subject to the compensating use tax
imposed under Section 1110 of the Tax Law ". . .for the use within this state. . .of any personal
property purchased at retail. . .", where Petitioner "uses" such aircraft within New York State as the
term use is defined under Section 1101(b)(7) of the Tax Law.
Petitioner's "use" of the aircraft, while participating in Civil Air Patrol training and
conference activities wherein the aircraft landed and remained overnight between March 18 and 19,
1989 at Ithaca, New York and June 3 and 4, 1989 at Syracuse, New York created a "use" as defined
under Section 1101(b)(7) of the Tax Law thereby resulting in Petitioner incurring a compensating
use tax liability. Petitioner's emergency landing at Stewart Airport, Newburgh, New York in April
29, 1989 because of equipment malfunction and inclement weather is not considered to have created
a "use" within New York State as defined in Section 1101(b)(7) of the Tax Law. (Matter of Jamco
Investments, Inc., Dec St Tax Comm, January 17, 1986, TSB-H-86(19)S)
Since Petitioner purchased and took delivery of the aircraft outside New York State in May
1988 and as first "use" of such aircraft within New York State did not occur until approximately ten
months later on March 18, 1989, Petitioner's compensating use tax liability will be based on the

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Sales Tax
June 29, 1990

aircraft's current market value at the time of such first "use" within New York State or its cost,
whichever is less. Because Petitioner was not a resident of Ithaca or Syracuse on the date the aircraft
was purchased nor on the date of first "use" within New York State, and as Petitioner has never
carried on any employment, trade, business or professional activities at either location, Petitioner's
tax liability will be limited to the New York State 4% compensating use tax. Petitioner will not be
liable for any local compensating use tax at this time.
As Petitioner purchased the aircraft outside New York State, Petitioner may be entitled to a
credit against the New York State use tax due for the amount of sales or use tax paid to the other
state where the aircraft was purchased or permanently hangared, provided such state has a reciprocal
exemption for sales or use taxes paid to New York State. As Petitioner is not liable for any local use
tax within New York State, the credit will be limited to the state portion of sales or use tax paid to
such state. No credit will be allowed for any local sales or use tax paid to such other state. In order
to claim a credit for such sales or use taxes paid, Petitioner must submit documentation, from a
qualified official of the relevant state, indicating that the reciprocal exemption still exists and that
no right to a refund or a credit exists for the particular taxes paid. The credit allowed pursuant to
Section 1118(7)(a) of the Tax Law will not be granted without such documentation.

DATED: June 29, 1990

s\PAUL B. COBURN
Deputy Director
Taxpayer Services Division

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.