New York Flight Schools Face Tax Fight

A New York state flight school owner says he'll be forced to close at the end of June because of a new sales tax ruling that has already cost schools and individual aircraft owners thousands of dollars. Bob Miller, who owns Bob Miller Flight Training in Buffalo, said in an interview with AVweb he predicts flight schools all over the state will be forced to close. He also said aircraft owners involved in leaseback arrangements with schools will be hit with taxes and penalties that will force them to cancel their deals with the schools because of a new interpretation of the sales tax code on flight school aircraft. Miller said that until this week, aircraft purchased for use for flight training were exempt from the 8.75 percent sales tax as were the lease payments schools paid aircraft owners for using the planes. But the state has changed its mind on the exemption. "This wasn't a change in the law, this is just some bureaucrat's new interpretation," he said. They've also made the ruling retroactive, Miller said.

Miller said one of his leaseback clients was hit with a $27,000 levy on a Cessna 172 he bought new in 2011. He was also told to collect more than $4,000 in tax from Miller on the lease payments he received over the last two years. "He pulled out of the leaseback agreement and sold the airplane to pay the taxes," Miller said. He said he's been told by state officials that auditors will be visiting every flight training facility in the state to enforce the new interpretation. Miller said he expects a class action suit to be launched by the New York flight training industry.