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“Common Carrier” and “Sale for Resale” Tax Exemptions Denied to Lessor of Aircraft

The Missouri Administrative Hearing Commission has held that a lessor of an aircraft does not qualify for the “common carrier” or the “sale for resale” tax exemptions, even if the lessee of the aircraft would qualify. In Five Delta Alpha, LLC v. Director of Revenue, a Missouri firm purchased an aircraft out of state for lease to a Missouri air taxi operation. The owner then sought the “common carrier” exemption from the payment of Missouri use tax on the purchase of the jet. The AHC, however, denied this application, ruling that only the lessee was a “common carrier” entitled to the exemption, because only the lessee “held itself out to the general public as engaging in the transportation of passengers or property for hire without refusal if the fare or charge [was] paid.” The Commission further ruled that the aircraft lease was not a resale of the aircraft and therefore did not trigger the “sale for resale” exemption from use tax.The aircraft lessor was thus unable to escape payment of Missouri use tax on its purchase of the aircraft.