200804086H



HEARING NO.  47,633

RE: **************
TAXPAYER NO.: **************
AUDIT OFFICE: BART
AUDIT PERIOD: FEBRUARY 1, 2001 THROUGH FEBRUARY 28, 2003

SALES AND USE TAX/RDT

BEFORE THE COMPTROLLER 
OF PUBLIC ACCOUNTS 
OF THE STATE OF TEXAS

ROY G. SCUDDAY
Administrative Law Judge

JOHN D. BOSTICK
Representing Tax Division

**************
Representing Petitioner


COMPTROLLER’S DECISION

PRELIMINARY DISCUSSION:

At Petitioner’s request, this Decision is based on the written submissions of 
the parties.

Official notice has been taken of all records of the Comptroller's office that 
pertain to Petitioner and the issues involved in the case.  Unless otherwise 
indicated, all Section references are to Title 2 of Texas Tax Code and all 
references to Rules are to sections of Title 34, Texas Administrative Code. 
On December 19, 2006, a Proposal for Decision was issued in the above 
referenced matter.  The parties were given fifteen days from the date of the 
Decision to file exceptions.  No exceptions were filed, and the Comptroller has 
determined that the Administrative Law Judge’s Proposal for Decision in these 
cases should be adopted as written.

PETITIONER’S CONTENTIONS:

1. Petitioner contends that the aircraft it purchased were used more than 50% 
outside Texas, causing them not to be subject to Texas use tax.

2. Petitioner contends that interest should be waived.

FINDINGS OF FACT:

1. ************** (Petitioner) is a Delaware corporation.

3. In February 2001, Petitioner purchased an aircraft (Serial No. 
**************) for $************** after trade-in from COMPANY A, in CITY A, 
Arizona.  In February 2003, Petitioner purchased a second aircraft (Serial No. 
**************) for $************** after trade-in from COMPANY A.  Both of the 
aircraft were hangared part-time in Texas.

4. The Comptroller’s Business Activities Research Team (“BART”) requested 
Petitioner to provide information on both the aircraft purchases.  When 
Petitioner failed to respond, BART assessed tax on both transactions by issuing 
a Texas Notification of Exam Results on September 30, 2005.  Petitioner timely 
requested redetermination and that request resulted in the docketing of the 
above-captioned hearing.  

5. On December 13, 2005, BART issued a Texas Notification of Amended Exam 
Results reflecting the accurate sales prices of the aircraft.  By cover letter, 
BART notified Petitioner that penalty would be waived if payment was made 
within thirty days, which it was.  On January 19, 2006, BART issued a second 
Texas Notification of Amended Exam Results showing the tax had been paid and 
penalty had been waived, leaving a balance due of interest only.

6. Petitioner submitted summaries of credit card purchases for fuel purchases, 
showing that about 68% of those charges were made outside of Texas.

CONCLUSIONS OF LAW AND DISCUSSION:

PETITIONER’S FIRST CONTENTION:

Petitioner’s first contention should be denied.

Section 151.101 imposes the use tax on the storage, use or consumption in this 
state of a taxable item, including tangible personal property, purchased for 
storage, use or consumption in this state.  Section 151.102 imposes liability 
for the tax on the person storing, using or consuming the taxable item.  Under 
Section 151.104, a sale of a taxable item for delivery in this state is 
presumed to be a sale for storage, use or consumption in this state.  

Comptroller Rule 3.297(c)(3) provides that aircraft purchased outside this 
state is not subject to use tax “if it is hangared outside this state and used 
more than 50% outside this state.”  

Petitioner does not contest the fact that the aircraft were hangared, at least 
part-time, in Texas.  Comptroller Decision No. 39,806 (2001) held that the fact 
that an aircraft is hangared outside as well inside the state does not qualify 
it for the exemption.  

The fuel purchase records show that about 68% of the aircraft fuel was 
purchased outside Texas.  However, as pointed out by the Tax Division, the 
exemption in the rule requires that the aircraft be both hangared outside the 
state and used more than 50% outside the state.  Inasmuch as the aircraft were 
hangared inside Texas, the use outside of the state does not exempt the 
aircraft from the use tax.

PETITIONER’S SECOND CONTENTION:

Petitioner’s second contention should be denied.

Comptroller Rule 3.5(d) sets forth the factors to consider in waiving interest, 
including undue delay, detrimental reliance, and natural disasters.  Petitioner 
has provided no basis for the waiver of interest.

RECOMMENDATION:

The amended audit liability should be upheld in its entirety.


ROY G. SCUDDAY
Administrative Law Judge


Hearing No. 47,633

ORDER OF THE COMPTROLLER

The above decision resulting in Taxpayer's liability as set out in “Attachment 
A,” which is incorporated by reference, is approved and adopted in all 
respects.  The decision becomes final twenty days after the date Petitioner 
receives notice of this decision, and the total sum of the tax, penalty, and 
interest amounts is due and payable within twenty days thereafter.  If such sum 
is not paid within such time, an additional penalty of ten percent of the taxes 
due will accrue, and interest will continue to accrue.  If either party desires 
a rehearing, that party must file a Motion for Rehearing, which must state the 
grounds for rehearing, no later than twenty days after the date Petitioner 
receives notice of this decision.  Notice of this decision is presumed to occur 
on the third day after the date of this decision.

Signed on this 7th day of April 2008.


SUSAN COMBS
Texas Comptroller of Public Accounts

by: Martin A. Hubert
Deputy Comptroller




ACCESSION NUMBER: 200804086H
SUPERSEDED: N
DOCUMENT TYPE: H
DATE: 04/07/2008
TAX TYPE: SALES
1