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Aging Agricultural Aircraft Could Be Tax Exempt

  • May 20, 2016 | Gail Cole

 Crop dusters in Arizona.

Agricultural aircraft are officially exempt from Arizona transaction privilege tax (TPT), effective for taxable periods beginning on and after April 17, 1985. That’s right: 1985.

Under Arizona House Bill 2133, gross proceeds of sales or gross income derived from sales of agricultural aircraft are deducted from the tax base. Agricultural aircraft is defined as follows:

“An aircraft that is built for agricultural use for the aerial application of pesticides or fertilizer or for aerial seeding.”

Why bother?

Farm equipment is generally tax-exempt. The agricultural aircraft exemption was deemed essential, according the Arizona Tax Research Association President Kevin McCarthy, because of “concerns the Arizona Department of Revenue was going to reclassify crop dusters as aircraft,” which is normally taxable.

Agriculture is bigger business in Arizona than one might think. Top crops include:

  • Broccoli
  • Cabbage
  • Cantaloupe
  • Cauliflower
  • Lettuce
  • Pecans

Retroactive refunds

Taxpayers may seek a retroactive refund for agricultural aircraft purchased new on or after April 17, 1985, provided the following are true:

  • The aircraft has been “used for commercial production of agricultural, horticultural, viticultural and floricultural crops and products.”
  • The taxpayer can establish “by competent evidence the amount of tax paid for all taxable periods and the amount, if any, attributable to new agricultural aircraft” used for the reasons described above.
  • The refund request is filed on or before December 31, 2016.

For additional details, please see HB 2133.

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photo credit: BRITISH COLUMBIA 1971 MUNICIPAL EXEMPT plate via photopin (license)

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.