Late response here, but here goes...
I called the CA Board of Equilization (BOE) a few months ago with questions about Use Taxes (sales tax) on the kits. Below is a summary of what I was told. Please do your own verification as the BOE is notorious for not knowing their own rules. The woman on the phone gave me two choices when it comes to paying the use tax.
OPTION 1) Pay use taxes when the kit(s) is purchased. If this option is selected, when payment is made, a serial number would need to given to the BOE and they will create an account/file. When the plane is eventually registered (with the same serial number) they will have the prior payment on file and tax will not be assessed for items already taxed and paid. Just be sure to save copies of all your records/receipts/payments she warned.
OPTION 2) Don't report or pay anything now, but pay it all at once when the plane is registered. The registration will trigger a BOE review and subsequent tax bill.
I was surprised to hear her tell me that in either case the Use Tax would be based on the price paid for the kit(s), NOT the value of the aircraft. She confirmed this with someone else in her office and gave me the example that if I paid $10,000 for the kit, even though the aircraft might be worth $80,000 finished, the Use Tax would only be based on the $10,000 kit price. I told her that this is done in stages over years and asked if I should send in additional Use Tax payments (aka Sales Tax) as more kits, engine, etc. were purchased. She said that if this project is multiple purchases over the course of time, it might confuse the BOE, and option #2 above would probably be better. She reiterated that if option 2 were selected the same would hold true, you would only be taxed on the purchase price of what you bought, NOT the value of the aircraft, again saying they would look at the receipts.
My experience from purchasing my last aircraft is that is may take some time for the state BOE to catch up to you, but they will find you. They get a data file from the FAA every so often showing new aircraft registrations in the state and that triggers a tax bill. In my case it took over a year before they mailed me the bill.
Just reporting what I was told... but please take this with a grain of salt and confirm it with the BOE. Telling them you didn't pay Use Tax when you needed to because you read online that you didn't have to is not an excuse in their mind.
In CA, your county will probably assess you a personal property tax, which shouldn't be confused with the one time use tax paid to the state. The annual personal property tax (similar to your home or car) is based on the fair market value of your aircraft. This is where calling your airplane something other than an RV-X comes into play.
Regards,
Brad
RV-7 | Wings | Livermore, CA
www.RV7Factory.com
