Ezel / Tax Rulings / TX
TX 8903L0933F10 Sales and/or Use Tax (State,Local,MTA) 1989-03-24

Were hourly aircraft-use charges by nonprofit flying clubs taxable, and were owner reimbursements taxed?

Short answer: Club-member use was a taxable rental; the club's hourly reimbursement to aircraft owners was a tax-free rental for rerental.

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This page answers the general question as of 1989. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1989
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

Two nonprofit flying clubs obtained use of individually owned aircraft and reimbursed the owners through an hourly maintenance-reserve payment. The clubs then charged members an hourly amount to use the aircraft.

Texas treated the member charges as taxable aircraft rentals under Rule 3.294, requiring the clubs to collect and remit tax.

The maintenance-reserve reimbursement was consideration for the owners' rental of the aircraft to the clubs, but no tax was collected at that stage because the clubs acquired the aircraft for rerental to members.

Common questions

Were member hourly-use charges taxable? Yes.

Were owner reimbursements taxable to the clubs? No, because the aircraft were acquired for rerental.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller March 24, 1989

Dear ***:

Thank you for your letter regarding two non-profit flying clubs
you represent.

I understand from your letter that the clubs arrange with certain
members to allow the clubs to use their individually-owned air-
craft. These members are reimbursed a maintenance reserve amount
on an hourly basis. The clubs, in turn, allow the club members
use of the aircraft for an hourly rate.

The charge to the club members for use of the aircraft are rentals
as defined in Rule 3.294, enclosed. The clubs must collect and
remit the tax on the aircraft rentals.

The reimbursement to the aircraft owners is consideration for
rental of the aircraft, however, sales tax would not be collected
since the aircraft are for rerental to the club members.

Two applications for sales tax permits and general information
about the sales tax are being sent to you under separate cover.

This opinion is based on the facts presented. If there are
additional or different facts, the opinion may change.

If you have any questions or need more information, please call
toll free 1-800-252-5555. My extension is 3-4666. You may write
to Tax Correspondence, Comptroller of Public Accounts.

Sincerely,
Jo Ann Dieck
Tax Correspondence

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