Are airplane repair services and replacement parts exempt from Tennessee sales tax when the aircraft is based out of state and leaves Tennessee soon after the repairs?

Plain-English summary

An out-of-state company designs and sells FAA-certified replacement airplane parts. It sells those parts directly to aircraft owners (all based outside Tennessee), and the parts are shipped to a Tennessee repair company that installs them. The aircraft are always flown back out of Tennessee shortly after the work is done. The company asked how Tennessee sales and use tax applies to the repair services and to the parts. Tennessee generally taxes repairs to tangible personal property and the sale of parts, but § 67-6-313 carves out specific aviation exemptions. The Department drew three lines.

1. Repair and refurbishment services — exempt (with conditions). Repair/refurbishment work done in Tennessee on an aircraft whose home base (situs) is outside Tennessee is exempt if the aircraft leaves Tennessee within 30 days of completion and the work is performed either (a) by the holder of an FAA supplemental type certificate, or (b) by an OEM-authorized service facility working on a "transport category aircraft" (a federal aviation classification). The Tennessee repair company here qualified as an OEM-authorized facility, so the labor on qualifying transport-category aircraft was exempt.

2. Small-aircraft parts — not exempt. There is no exemption for replacement and repair parts for small aircraft — those with a certified maximum take-off weight under 12,500 pounds — even when the owner is out of state and the plane leaves within 30 days. Those parts are taxable. (Helicopter parts and large-aircraft parts have their own exemptions; small fixed-wing parts don't.)

3. Large-aircraft parts — exempt (with conditions). Replacement parts for large aircraft — 12,500 pounds or more — including mainframes, engines, and accessories, are exempt under § 67-6-313(k)(2) when (a) they're purchased solely for repair and refurbishment performed by an authorized large-aircraft service facility, and (b) the aircraft is based out of state and is removed from Tennessee within 15 days of completion. The parts here fit the statutory definition of "large aircraft and related equipment," so their sale was exempt.

The dividing line for parts is the 12,500-pound weight class; the dividing line for the service exemption is the 30-day removal window plus a qualified repairer.

What this means for you

Aircraft repair stations and MRO facilities in Tennessee

If you repair or refurbish aircraft that are based out of state and leave Tennessee within 30 days of completion, your labor can be exempt — but only if you're the holder of an FAA supplemental type certificate or an OEM-authorized facility doing transport-category work. Keep documentation of the aircraft's out-of-state situs, the removal date, and your FAA authorization.

Parts sellers — the weight class decides

Whether the parts you sell are exempt turns on the aircraft. Large aircraft (12,500+ lbs): parts bought solely for repair/refurbishment by an authorized large-aircraft service facility are exempt (situs out of state, removed within 15 days). Small aircraft (under 12,500 lbs): no exemption — charge tax. Helicopters have a separate parts exemption. Don't assume an out-of-state owner or a quick turnaround makes small-aircraft parts exempt; it doesn't.

Watch the two different removal windows

The service exemption uses a 30-day removal window; the large-aircraft parts exemption uses a 15-day window. They're not the same — track each separately.

Accountants and tax professionals

The aviation exemptions live in § 67-6-313: repair/refurbishment of out-of-state aircraft at (h)(1)(D) (30-day removal at (h)(1)(D)(i); the supplemental-type-certificate-holder or OEM-authorized-facility / transport-category requirement at (h)(1)(D)(ii)); helicopter parts at (h)(1)(C); large aircraft and related equipment at (k)(2), defined at (k)(3)(B). The supporting definitions (authorized large-aircraft service facility, large aircraft, mainframe, engine equipment, accessories) are in § 67-6-302(c)(3). Repair of tangible personal property is otherwise a taxable enumerated service under § 67-6-205(c)(4). "Transport category aircraft" is a federal classification under 14 CFR parts 25, 29, 91, and 121.

Common questions

Q: Is aircraft repair labor taxable in Tennessee?
A: Repairs to tangible personal property are generally taxable, but § 67-6-313(h)(1)(D) exempts repair/refurbishment of aircraft based out of state that leave Tennessee within 30 days of completion, when the work is done by an FAA supplemental-type-certificate holder or an OEM-authorized facility on a transport-category aircraft.

Q: I'm buying parts for a plane under 12,500 pounds and it's leaving Tennessee right after. Are the parts exempt?
A: No. There is no Tennessee exemption for replacement and repair parts for aircraft under 12,500 pounds, even with an out-of-state owner and a fast removal. Those parts are taxable.

Q: What about parts for a large aircraft (12,500 pounds or more)?
A: Those can be exempt under § 67-6-313(k)(2) — when bought solely for repair/refurbishment by an authorized large-aircraft service facility, the aircraft is based out of state, and it's removed within 15 days of completion.

Q: The service exemption says 30 days but the large-aircraft parts exemption says 15 days. Which applies?
A: Both, to different things. The 30-day window is for the repair/refurbishment service exemption; the 15-day window is for the large-aircraft parts exemption. Meet each window for the exemption you're claiming.

Q: Can I rely on this ruling?
A: Not directly. A Tennessee letter ruling binds the Department only as to the taxpayer and exact facts it addressed and cannot be relied on by anyone else. Confirm your own facts with a tax professional.

Citations and references

Tennessee statutes:
- Tenn. Code Ann. § 67-6-313(h)(1)(D) (exemption for repair/refurbishment of out-of-state aircraft removed within 30 days, performed by an FAA supplemental-type-certificate holder or an OEM-authorized facility for transport-category aircraft; 30-day removal at (h)(1)(D)(i), repairer requirement at (h)(1)(D)(ii))
- Tenn. Code Ann. § 67-6-313(k)(2) (exemption for large aircraft and related equipment purchased solely for repair/refurbishment by an authorized large-aircraft service facility, removed within 15 days); defined at § 67-6-313(k)(3)(B)
- Tenn. Code Ann. § 67-6-313(h)(1)(C) (separate exemption for helicopter parts purchased solely for repair/refurbishment)
- Tenn. Code Ann. § 67-6-302(c)(3) (definitions: authorized large-aircraft service facility; large aircraft (12,500+ lbs); mainframe; engine equipment; accessories)
- Tenn. Code Ann. § 67-6-205(c)(4) (repair of tangible personal property is a taxable enumerated service)

Federal reference:
- 14 C.F.R. parts 25, 29, 91, 121 (definition of "transport category aircraft"); 14 C.F.R. part 145 (FAA repair-station certificate)

Source

• Landing page: https://www.tn.gov/revenue/tax-resources/legal-resources/tax-rulings.html
• Original PDF: https://www.tn.gov/content/dam/tn/revenue/documents/rulings/sales/21-11.pdf

Original ruling text

TENNESSEE DEPARTMENT OF REVENUE
LETTER RULING # 21-11
Letter rulings are binding on the Department only with respect to the individual taxpayer being
addressed in the ruling. This ruling is based on the particular facts and circumstances presented and is
an interpretation of the law at a specific point in time. The law may have changed since this ruling was
issued, possibly rendering it obsolete. The presentation of this ruling in a redacted form is provided
solely for informational purposes and is not intended as a statement of Departmental policy. Taxpayers
should consult with a tax professional before relying on any aspect of this ruling.
SUBJECT
The application of the Tennessee sales and use tax to airplane parts and components used for repair and
refurbishment services.
SCOPE
This letter ruling is an interpretation and application of the tax law as it relates to a specific set of existing facts
furnished to the Department by the taxpayer. The rulings herein are binding upon the Department and are
applicable only to the individual taxpayer being addressed.
This letter ruling may be revoked or modified by the Commissioner at any time. Such revocation or modification
shall be effective retroactively unless the following conditions are met, in which case the revocation shall be
prospective only:
(A)

The taxpayer must not have misstated or omitted material facts involved in the
transaction;

(B)

Facts that develop later must not be materially different from the facts upon which the
ruling was based;

(C)

The applicable law must not have been changed or amended;

(D)

The ruling must have been issued originally with respect to a prospective or proposed
transaction; and

(E)

The taxpayer directly involved must have acted in good faith in relying upon the ruling;
and a retroactive revocation of the ruling must inure to the taxpayer’s detriment.
FACTS

[TAXPAYER] (the “Taxpayer”) designs and sells replacement airplane parts and components. The Taxpayer is the
holder of a supplemental type certificate for the design of certain replacement airplane parts and components
that may include mainframes, engines, or other airplane accessories (the “Replacement Parts”). The
supplemental type certificate is issued and approved by the Federal Aviation Administration (the “FAA”) for the
specific Replacement Parts the Taxpayer designs and sells.
The Taxpayer’s principal business location is in [CITY, STATE], and the Taxpayer maintains no office or other
place of business in Tennessee. The Taxpayer has an agreement with a Tennessee-based repair company (the
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“Repair Company”) that is qualified 1 to perform repair services related to the Replacement Parts. These repair
services are generally performed on airplanes that have a certified maximum take-off weight of 12,500 pounds
or greater but are occasionally performed on airplanes with a certified maximum take-off weight of less than
12,500 pounds.
The Repair Company provides repair services to airplane owners that maintain and hangar airplanes in states
other than Tennessee (the “Customers” or the “Customer”). A Customer contacts the Repair Company for the
repair services on the Customer’s airplane. The Repair Company sources the Replacement Parts for the subject
airplane through the Taxpayer, and the Taxpayer enters into a purchase agreement (the “Purchase Agreement”)
directly with the Customer for the sale of the Replacement Parts.
Under the terms of the Purchase Agreement, the purchaser of Replacement Parts is the Customer. The
Customer pays a down payment at the time the Purchase Agreement is executed and is required under the
terms of the Purchase Agreement to pay the balance due prior to shipment. The Replacement Parts are then
shipped to the Repair Company in Tennessee for the repair services to be performed. In some instances,
payment is made after the repair services are completed and the airplane is returned to the Customer outside
Tennessee.
Repair services performed by the Repair Company may include repairs that are only related to the Replacement
Parts. In those instances, the repair services are typically completed within thirty days after the delivery of the
Replacement Parts to the Repair Company in Tennessee, and the Customer’s airplane is removed from
Tennessee within thirty days of delivery of the Replacement Parts. In other instances, the Customer may have
additional repairs performed on the airplane, and the Replacement Parts may not be removed from Tennessee
within thirty days of delivery to the Repair Company. In either instance, however, the airplane and the
Replacement Parts are always removed from Tennessee within fifteen days after the completion of all repair
services performed on the airplane.
RULINGS
1.

Are repair and refurbishment services performed in Tennessee on an airplane with a situs outside of
Tennessee exempt from Tennessee sales and use taxes when the airplane is removed from Tennessee
within thirty days from the completion of all repair and refurbishment services?
Ruling: Yes, provided one of the following conditions is met:
a) The repair and refurbishment services must be performed pursuant to and by a registered
owner of a supplemental type certificate issued by the FAA; or
b) The repair and refurbishment services must be performed by an authorized service facility
designated as an original equipment manufacturer for such service with respect to aircraft
qualifying as “transport category aircraft” in accordance with TENN. CODE ANN. § 67-6313(h)(1)(D)(ii) (Supp. 2020).

2.

Are airplane replacement and repair parts (including the mainframe, engine, and other accessories)
delivered to a repair person in Tennessee for use on aircraft with a certified maximum take-off weight
of less than 12,500 pounds, that are purchased by an airplane owner with a situs outside of Tennessee
and removed from Tennessee within thirty days after delivery to the repair person, exempt from
Tennessee sales and use tax?

According to the Taxpayer, the Repair Company is an authorized service facility designated by an original equipment manufacturer to
perform repair and refurbishment services within Tennessee as described in TENN. CODE ANN. § 67-6-313(h)(1)(D)(ii) (Supp. 2020).

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2

Ruling: No. There is no exemption from Tennessee sales and use tax for airplane replacement and
repair parts delivered to a repair person in Tennessee for use on aircraft with a certified maximum takeoff weight of less than 12,500 pounds, that are purchased by an airplane owner with a situs outside of
Tennessee and removed from Tennessee within thirty days after delivery to the repair person.
3.

Are the sales of mainframes, engines, and accessories for large aircraft (aircraft that have a certified
maximum take-off weight of 12,500 pounds or greater) (“Large Aircraft Replacement Parts”) exempt
from Tennessee sales and use tax, provided that such Large Aircraft, Replacement Parts are intended
to have a situs outside of Tennessee and are in fact removed from Tennessee within fifteen days from
the completion of all the repair and refurbishment services performed on such large aircraft?
Ruling: Yes, such sales are exempt under TENN. CODE ANN. § 67-6-313(k)(2) provided the following
conditions are met:
a) The repair services are performed by an authorized large aircraft service facility 2 and
b) The Large Aircraft Replacement Parts are purchased solely for the purpose of repair and
refurbishment services performed by an authorized large aircraft service facility.
ANALYSIS

Under the Retailer’s Sales Tax Act (the “Act”), 3 the retail sale in Tennessee of tangible personal property and
specifically enumerated services 4 are subject to the sales tax, unless an exemption applies. Although
performing repairs to tangible personal property is generally one such taxable service, 5 TENN. CODE ANN. § 676-313 provides certain exemptions from Tennessee sales and use tax for the sale of airplane repair parts and
service.
REPAIR AND REFURBISHMENT SERVICES
TENN. CODE ANN. § 67-6-313(h)(1)(D) provides an exemption from the sales and use tax for the repair and
refurbishment of airplanes and airplane components if certain requirements are met. The aircraft and aircraft
components must have their situs outside of Tennessee and be removed from Tennessee within thirty days
from the completion of repair and refurbishment services. 6 Additionally, repairs must either be performed
pursuant to and by the registered owner of supplemental type certificate or by an authorized service facility
designated by an original equipment manufacturer for such service with respect to aircraft qualifying as
“transport category aircraft.” 7
Here, the Repair Company is an authorized service facility designated by an original equipment manufacturer
to perform repair and refurbishment services within Tennessee as described in TENN. CODE ANN. § 67-6“Authorized large aircraft service facility” means a repair station located within this state that is engaged in repair and refurbishment
services of large aircraft mainframes, large aircraft engine equipment, and large aircraft accessories under a valid air agency certificate
issued by the federal aviation administration in accordance with 14 CFR Part 145 of the federal aviation regulations, with an authorized
class rating of Air Frame Class IV, and organization designation authority, or such other similar or successor certificate, rating, and authority
as the FAA may provide for from time to time.” TENN. CODE ANN. § 67-6-302(3)(B) (2018).
2

3
Tennessee Retailer’s Sales Tax Act, ch. 3, §§ 1-18, 1947 Tenn. Pub. Acts Ch. 22, §§ 22-54 (codified as amended at TENN. CODE ANN. §§ 67-6101 to -907 (2018 & Supp. 2020)).
4

TENN. CODE ANN. § 67-6-205 (Supp. 2020).

5

TENN. CODE ANN. § 67-6-205(c)(4).

6

TENN. CODE ANN. § 67-6-313(h)(1)(D)(i).

7

TENN. CODE ANN. § 67-6-313(h)(1)(D)(ii). The term “transport category aircraft” is defined pursuant to 14 CFR parts 25, 29, 91 and 121.

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313(h)(1)(D)(ii). Therefore, the repair and refurbishment services performed in Tennessee on an airplane with
a situs outside of Tennessee are exempt from Tennessee sales and use taxes when the airplane is a “transport
category aircraft” as defined in 14 CFR 25, 29, 91, and 121 and is removed from Tennessee within thirty days
from the completion of all repair and refurbishment services.
REPLACEMENT AND REPAIR PARTS
There is no general exemption for aircraft replacement and repair parts. Specific exemptions exist for
helicopter parts purchased solely for repair and refurbishment purposes, 8 and for large aircraft and related
equipment purchased solely for repair and refurbishment purposes. 9 Aircraft replacement and repair parts
delivered to the Repair Company that are not for large aircraft and related equipment solely for repair and
refurbishment purposes are not exempt from Tennessee sales and use tax. 10
LARGE AIRCRAFT AND RELATED EQUIPMENT
TENN. CODE ANN. § 67-6-313(k)(2) provides that the sale of large aircraft and related equipment solely for the
purpose of repair and refurbishment services by an authorized large aircraft facility 11 are exempt from
Tennessee sales and use tax if the aircraft has a situs outside of Tennessee, and the aircraft is removed within
fifteen days from the completion of the repair and refurbishment services. As defined in TENN. CODE ANN. 67-6313(k)(3)(B), “large aircraft and related equipment” means a large aircraft 12 consisting of a large aircraft
mainframe 13 and large aircraft engine equipment, 14 including any large aircraft accessories 15 associated with
large aircraft or aircraft engine, whether installed or uninstalled. 16
The repairs are performed on aircraft that have a certified takeoff weight of 12,500 pounds or greater, which
qualifies the aircraft as large aircraft, and the aircraft are removed from Tennessee within fifteen days from the
completion of the repair service. For repair and refurbishment of large aircraft, the Large Aircraft Replacement
Parts fall under the definition of large aircraft and related equipment, as they comprise large aircraft
mainframes, large aircraft engines, or other airplane accessories for large aircraft. Accordingly, the sale of Large
Aircraft Replacement Parts for the repair and refurbishment of large aircraft are exempt from sales and use tax

8

See TENN. CODE ANN. § 67-6-313(h)(1)(C).

9

See TENN. CODE ANN. § 67-6-313(k)(2).

10
The exemption for the sales of aircraft and related equipment under TENN. CODE ANN. § 67-6-313(h)(1)(A) does not apply to aircraft repair
and refurbishment.
11
“Authorized large aircraft service facility” means a repair station located within this state that is engaged in repair and refurbishment
services of large aircraft mainframes, large aircraft engine equipment, and large aircraft accessories under a valid air agency certificate
issued by the federal aviation administration in accordance with 14 CFR Part 145 of the federal aviation regulations, with an authorized
class rating of Air Frame Class IV, and organization designation authority, or such other similar or successor certificate, rating and authority
as the federal aviation administration may provide from time to time. TENN. CODE ANN. §§ 67-6-302(c)(3)(B) (2018).
12
“Large aircraft” means any aircraft that has a certified maximum take-off weight of twelve thousand five hundred pounds (12,500 lbs.) or
greater. TENN. CODE ANN. § 67-6-302(c)(3)(C).
13
“Large aircraft mainframe” means any aircraft, body, wing, tail assemble, aileron, rudder, landing gear, engine housing, and any other
assembly or component integral to the aerodynamic structure of large aircraft. TENN. CODE ANN. § 67-6-302(c)(3)(F).
14
“Large aircraft engine equipment” means any aircraft engine, including all associated parts, appurtenances, and accessories, for the
propulsion of a large aircraft mainframe. TENN. CODE ANN. § 67-6-302(c)(3)(E).

“Large aircraft accessories” means any accessories, appurtenances, equipment, software, systems, or components for installation in or
use in connection with any large aircraft mainframes or large aircraft engines. TENN. CODE ANN. § 67-6-302(c)(3)(D).

15

16

TENN. CODE ANN. § 67-6-313(k)(3)(B).

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so long as the Large Aircraft Replacement Parts are purchased solely for repair and refurbishment services,
and the repair and refurbishment services are performed by an authorized large aircraft service facility.

APPROVED:

David Gerregano
Commissioner of Revenue

DATE:

11/17/2021

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