We guarantee that you will pass the California Interstate Exemption or we will refund you 100% of our fees!!

If you are purchasing an aircraft and plan to hangar that aircraft in the State of California, the tax-man will be coming for you sooner or later! California is recognized as one of the most aggressive (I actually use the word ‘consistent’) states in the US in enforcing sales and use tax collection on aircraft. They have a mandate to collect every penny they can and they are continually upgrading their methods of finding and enforcing sales tax collection for aircraft every single day.

Exemptions from CA Sales & Use Tax

The State of California does have multiple exemptions that allow taxpayers to legally avoid paying sales tax on aircraft that are located in the State and the “BEST” exemption in California, I believe, is commonly referred to as the ‘California Interstate Exemption’. This exemption allows an aircraft owner to follow a ‘road map’ for passing the exemption over the course of a 6-month test period, and if the test is passed, the State declares that the aircraft owner is exempt from paying the sales tax on the aircraft permanently.

California gets tough

This test is very simple, in theory, and prior to 2017, the test was a very easy one to pass. Prior to the changes implemented by the State in 2017, an aircraft owner could pretty much provide the California Board of Equalization (BOE), the department that reviewed the submissions for the exemption, any kind of documentation they wished to substantiate their claim, and the BOE would likely grant the exemption. The exemption was an ongoing joke in the aircraft community and aircraft owners took advantage of the State’s lackadaisical enforcement methods.

However, in 2017 in response to the ongoing budgetary crises in California, there was an overhaul of the tax collection structure in the State and the California Department of Fee Administration (CDTFA) was created to basically replace the BOE. The CDTFA, among other things, was tasked with enforcing the California Interstate Exemption with an iron fist. Gone were the days of submitting random self-generated evidence of compliance. The CDTFA instituted a process that was thorough and every document was met with the utmost scrutiny.

The Test

The creation of interstate exemptions in California didn’t start with a single legislative act over an aircraft, but was a concept that was developed, starting in the 1970’s, and that has evolved into the current day exemption. The present day rationale for the exemption is that the California legislature wants to provide a sales tax exemption for aircraft that are purchased and brought into the State, but are primarily for business use outside of the State. So, the State has implemented a test they feel verifies that the aircraft owner is using their aircraft in a manner consistent with the exemption.

The test itself requires that the aircraft owner use the aircraft more than 50% of the time for out-of-state business over a 6-month test period. Aircraft owners must follow a simple but specific process before they take delivery of their aircraft and then must achieve the 50% out-of-state business use over the test period. Once they have completed the test period, they must remit their documentation to the CDTFA and wait for any additional document requests or they eventually receive a pass/fail notice. Pretty simple. Right?

The CDTFA increased the scrutiny on the exemption documentation as soon as they replaced the BOE and even now they change the requirements for documentation on an ongoing basis. NOTE: We have NEVER lost an Interstate Exemption claim for one of our clients.

The Ascendant Aviation Guarantee

Our firm has been working with CDTFA staff on California Interstate Exemption submissions for over a decade. We have developed our relationship with these employees, and while I would not say that we are ‘friends’, we have definitely cultivated the rapport that is necessary when working with the State on these types of exemptions. The CDTFA employees appreciate our direct process and specific documentation and we make it easy for them to approve every submission.

We are so confident in our process and our relationships, that we offer our clients a 100% Money-Back Guarantee on the California Interstate Exemption. As we stated earlier, we have never failed with this exemption. Every client that has attempted the exemption with us has passed the exemption with us. That is why we’re not afraid to offer this guarantee.

We provide a free consultation on the California Interstate Exemption so that we can find out more about you and your planned use of your aircraft. We will answer any questions you have about the exemption and we will let you know, right then and there, if we think you can pass the exemption, given your specific circumstances. If we don’t believe you can pass, we will tell you that up front and save you both the time and money. If we do believe you can pass and you hire us, we guarantee that you will pass OR we will refund 100% of the fees you paid to us for our services.

Frequently Asked Questions on the California Interstate Exemption

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