A number of Part 135 charter operators have recently received their 2015 public utility property tax assessments from the Washington State Department of Revenue. In some cases these assessment are significantly higher than in prior years. The reason for this increase is that the Washington Department of Revenue is now including Washington Part 91 landings or hours in the numerator of the apportionment factor. In other words, the Department is attempting to tax charter operators on flights where the aircraft is, in fact, being used by and under the operational control of the aircraft’s owner, who is already paying property tax on the aircraft in the state where the aircraft is based.
This change in the Department’s method of assessment appears to be the result of a unilateral decision by the Department without any legislative or regulatory action, and clearly without any input from the stakeholders.
The Department has indicated in its assessments that a written request for a formal hearing must be received by July 15th. A Department representative has also indicated that an opportunity exists for an informal discussion of the issue. In either event, time is of the essence.
The practical effect of this unilateral change is that virtually all business aircraft that are on a charter certificate and/or under a management agreement, will now be taxed on all flights into the State of Washington. As each Part 91 landing could expose the charter operator to an additional and material tax (that may or may not be reimbursable by the Part 91 owner operator) we recommend that business aircraft owners not bring their aircraft into the State of Washington without first considering the implications of this tax.
If you are a charter operator who has recently received an assessment from the Washington State Department of Revenue, you should immediately get in touch with your tax counsel.
Feel free to pass this email along to anyone who might be affected by the Department’s action.
If you have any questions with regard to this Tax Alert please contact Tim Austin at (425) 450-3307 or at firstname.lastname@example.org