The Indiana General Assembly passed two exemptions in its recently concluded session that will advance the State’s aviation industry. The legislature passed a new exemption for aircraft repair parts. The exemption, which is codified at Ind. Code 6-2.5-5-46, takes effect July 1, 2013, and provides:
(a) Transactions involving tangible personal property (including materials, parts, equipment, and engines) are exempt from the state gross retail tax, if the property is:
(2) consumed; or
in furtherance of, or in, the repair, maintenance, refurbishment, remodeling, or remanufacturing of an aircraft or an avionics system of an aircraft.
(b) The exemption provided by this section applies to a transaction only if the retail merchant, at the time of the transaction, possesses a valid repair station certificate issued by the Federal Aviation Administration under 14 CFR 145 et seq. or other applicable law or regulation.
See Public Law 288, Sec. 30. Previously, the exemption was limited to aircraft registered outside the United States. The exemption only applies where the retail merchant is a certified FAA repair station.
In addition, lawmakers added a new exemption for aviation fuel, also effective July 1st. Ind. Code § 6-2.5-5-49. The new statute provides:
(a) As used in this section, “aviation fuel” refers to:
(1) gasoline used to power an aircraft;
(2) jet fuel; or
(3) a synthetic fuel or fuel derived from any organic matter used as a substitute for a fuel described in subdivision (1) or (2).
(b) A transaction involving aviation fuel is exempt from the state gross retail tax.
See Public Law 288, Sec. 31.
But along with these two new exemptions, the General Assembly created a new aviation fuel excise tax (effective July 1st) at Ind. Code § 6-6-13-1 to -15. See Public Law 288, Sec. 67. The tax of ten cents ($0.10) per gallon is imposed on the “gross retail income received by a retailer on each gallon of aviation fuel purchased in Indiana.” Ind. Code § 6-6-13-6(a). The law further provides that a retailer “shall add the per gallon amount of tax to the selling price of each gallon of aviation fuel sold by the retailer so that the ultimate consumer bears the burden of the tax.” Id. “Gross retail income” excludes “the amount of any excise tax imposed upon the sale under federal law.” Ind. Code § 6-6-13-6(b). And the sale of aviation fuel is exempt if it is placed into the fuel supply tank of an aircraft owned by:
(1) the United States or an agency or instrumentality of the United States;
(2) the state of Indiana;
(3) the Indiana Air National Guard; or
(4) a common carrier of passengers or freight.
Ind. Code § 6-6-13-7. The new exemptions and excise tax are included in House Enrolled Act 1545 and can be viewed here.