Tax in TN

[ajudson]

I finally received the dreaded tax notice from the state of Tennessee (currently hangared). I have seen some mixed opinions on how to respond -- the BOS states the sale was for $1+OVC. Should I respond with the true purchase price or will they assess their own value after some time (which I believe would come in lower)?

I have seen some horror stories about back-dated interest exceeding the price of the plane in some states. I plan on responding with the true purchase price, but I wanted to see if anyone has experience with taxes in TN before volunteering an extra few AMU.

[mike_elliott]

Sales tax departments make it cheaper to be honest than to try and wiggle thru a crack in their baffonery. To me, the real issue isnt the amount of sales tax, it is how it is wasted.

[Utah20Gflyer]

58 minutes ago, ajudson said:

I finally received the dreaded tax notice from the state of Tennessee (currently hangared). I have seen some mixed opinions on how to respond -- the BOS states the sale was for $1+OVC. Should I respond with the true purchase price or will they assess their own value after some time (which I believe would come in lower)?

I have seen some horror stories about back-dated interest exceeding the price of the plane in some states. I plan on responding with the true purchase price, but I wanted to see if anyone has experience with taxes in TN before volunteering an extra few AMU.

When I was in this situation (in Utah) I declared the amount I paid because that is the best approximation of the value of the aircraft at the time I bought it.  
 

Personally I wouldn’t knowingly make a false statement to the government regarding my tax liability.  

[TNIndy]

I didn't reply to the state of TN quick enough because I was working out of town. Their assessment was less than I paid so I ended up paying less. This was in 2021

[Danb]

I’d use the actual purchase price, don’t know if it was purchased out of state or not. Obviously the BOS says $1 so the seller got out of paying the sales tax to Tn, now using the correct purchase you’ll file as use tax, same amount and file. I believe you have a month to pay sales or use at end of year. I’m clueless regarding Tennessee tax so take my comments as a grain of salt. Good luck be smart,

DB 

 

 

[ajudson]

17 minutes ago, Utah20Gflyer said:

Personally I wouldn’t knowingly make a false statement to the government regarding my tax liability.  

Just clarifying that I am not planning on making a false statement concerning the purchase price. I am simply curious if they will assess their own value without volunteering information, which it seems they might. I guess another conversation could be had about the ethics of that approach.

[mike_elliott]

My guess would be they would assess a high value and let it fall on you to prove otherwise with reciepts of actual sale price if you contest. Suprised me that they came in lower than @TNIndy actually paid. Wonder if that tax assessor still has a job

 

[Red Leader]

In Alabama, they research the plane, take the average cost of a similar year, make and model then assess the value on what they find. I have always had nice planes, so my assessed value has been much less than retail. Your state may be similar - a quick phone call to the tax office might be useful. Mine is always pleasant to deal with and has been forthright with their techniques in taxation. 

[Utah20Gflyer]

1 hour ago, ajudson said:

Just clarifying that I am not planning on making a false statement concerning the purchase price. I am simply curious if they will assess their own value without volunteering information, which it seems they might. I guess another conversation could be had about the ethics of that approach.

In my case I was required to declare the value of the aircraft so I did so.   If the state provides you with a value without asking you for your input and it is favorable to you I wouldn’t correct them.   They have made a decision that they know what the correct value is and I don’t think you have any responsibility to correct them.   After all they could have asked you or requested documentation but they didn’t, that was their choice.  
 

 

[M20F]

4 hours ago, mike_elliott said:

My guess would be they would assess a high value and let it fall on you to prove otherwise with reciepts of actual sale price if you contest. Suprised me that they came in lower than @TNIndy actually paid. Wonder if that tax assessor still has a job

 

This would be my answer.  

[A64Pilot]

The $1 bill of sale isn’t any kind of dodge or being slick, it’s industry standard practice. I don’t know why but all the new aircraft we sold ea about 1 mil had a $1 bill of sale.

Usually and again I don’t know why but usually assessed value is less than actual. I think I’d let them assign a value if there is an appeal process if they come in high. 

Edited July 8, 2023 by A64Pilot

[Danb]

38 minutes ago, A64Pilot said:

The $1 bill of sale isn’t any kind of dodge or being slick, it’s industry standard practice. I don’t know why but all the new aircraft we sold ea about 1 mil had a $1 bill of sale.

Usually and again I don’t know why but usually assessed value is less than actual. I think I’d let them assign a value if there is an appeal process if they come in high. 

Agreed consider adding OVC to the BOS so the taxing agency realizes the sale is more than $1.00, confidentiality is mainly the reason $1..00+OVC is an accepted practice within the FAA. 

[kortopates]

And if you have a loan on it, then you’ll have a lien for the loan filed on the title, generally for the loan amount, which the state can look up.


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[Bartman]

I moved from KY to TN in 2018.  Despite being on multiple lists for a hangar I have not secured a hangar, and I will not park outside. We still have the home in KY so my Mooney remains there in my hangar.  Soon TN.gov came asking for $5,800 and since my aircraft does not live in TN, we fought it not once but twice.  
 

The first time we submitted tax records, flight records and some other documents and they left me alone for a year. The next year they decided they still wanted my money so we fought it again. In addition to the previous records I got a document from the airport manager and submitted hangar rental records. In 2022 they closed the case and finally quit harassing me. 
 

If and when we get an acceptable hangar I will move my Mooney here, and I know I will have to pay taxes at that time. 

[Rwsavory]

2 hours ago, M20Doc said:

Is this an annual taxation?

No. It’s a one-time Sales and Use Tax. 

[Ragsf15e]

On 7/6/2023 at 1:04 PM, mike_elliott said:

My guess would be they would assess a high value and let it fall on you to prove otherwise with reciepts of actual sale price if you contest. Suprised me that they came in lower than @TNIndy actually paid. Wonder if that tax assessor still has a job

 

I paid WA use tax when i moved here.  I went down there with some thoughts on “value” of my airplane, but I let them tell me what they thought first.  They asked make, model, year and gave me a value.  They did not ask about hours, condition, avionics, etc.  I felt their value was (very) acceptable, so I wrote a check.  
 

To the OP: I’d at least see if they will give you an idea of their valuation before providing a purchase price.

[bcg]

I moved from KY to TN in 2018.  Despite being on multiple lists for a hangar I have not secured a hangar, and I will not park outside. We still have the home in KY so my Mooney remains there in my hangar.  Soon TN.gov came asking for $5,800 and since my aircraft does not live in TN, we fought it not once but twice.  
 
The first time we submitted tax records, flight records and some other documents and they left me alone for a year. The next year they decided they still wanted my money so we fought it again. In addition to the previous records I got a document from the airport manager and submitted hangar rental records. In 2022 they closed the case and finally quit harassing me. 
 
If and when we get an acceptable hangar I will move my Mooney here, and I know I will have to pay taxes at that time. 

If you paid tax in another state, you should not have to pay again just because you moved. You don't pay sales/use tax on a car when you move from one state to another, just annual registration. That's the way it is here anyway, seems like any other state would be the same.

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[Hank]

24 minutes ago, bcg said:

If you paid tax in another state, you should not have to pay again just because you moved. You don't pay sales/use tax on a car when you move from one state to another, just annual registration. That's the way it is here anyway, seems like any other state would be the same.

That sounds logical, but it's not how the world works. TN isn't the only state that does this. When I moved to WV in 2004, if I had purchased a home on the south side of the River instead of the north side, I'd have had to pay WV 6% of the current value of my cars, despite having paid sales tax in NC and OH when I originally bought them.

[redbaron1982]

I'm glad I live in the great state of Texas! 

[Ragsf15e]

43 minutes ago, redbaron1982 said:

I'm glad I live in the great state of Texas! 

Well maybe. If you buy from a broker in TX, you owe sales tax too.

[redbaron1982]

Just now, Ragsf15e said:

Well maybe. If you buy from a broker in TX, you owe sales tax too.

Yes, that's why I bought from a individual. Maybe a broker could have been better in the long run if it could have help me avoid but a lemon Mooney