Trim ATI-OISNF,Y GENERAL 

OF T+ExAs 

Au-. TNXAIB rev11 

JOEIN I.. HILL 

A- o-AL. 

December 12. 1974 

The Honorable Robert S. Calvert 

Comptroller of Public Accounts 

L. B. J. State Office Building 

Aurtin, Texas 

Opinion No. H- 470 

Re: Exemption of certain 

aircraft from taxation under 

Article 20.04(Q), TaxationGeneral. 

Dear Mr. Calvert: 

You have submitted three questions to ua concerning the interpretation of the Limited Sales, Excise and Use Tax of Chapter 20, 

Taxation-General, V. T. C. S., to certain types of aircraft. 

Article 20.02, Tax. -Gen., imposes a salee tax on the receipts 

from the sale, at retail, of all taxable items and Article 20.03, 

Tax, -Gen. imposes an excise tax on the storage, me or other consumption of taxable itemr purchased, leaeed or rented from any retailer 

for storage, use or other consumption in thin State. “Taxable items” 

are defined in Article 20.01 (WI. as tangible personal property. Article 

20.04 deak’with exemptions. Paragraph (Q) provides: 

Certain Aircraft. There are exempted from 

the taxes imposed by this Chapter the receipts 

from the sale, use, storage, lease or other 

consumption of aircraft sold to persons using 

such aircraft aa certificated or licensed carriers of persons or property, or aold to any 

foreign government of sold to persons who are 

not residents of this State and repair services 

to aircraft operated by a certificated or licensed 

carrier of persons or property. 

p. 2147 
The Honorable Robert S. Calvert page 2 (H-470) 

Your first question is: “Is the sale of an aircraft to a person 

holding an air-taxi certificate exempt within the terms of Article 20.04(Q) 

above? ” 

The operation of air taxis (defined in 14 C. F. F. 5 5 298.2 and 

298.3) is governed by Part 135 of Title 14, C. F. R. and Section 135.9 

calls for an operating certificate. By definition, the holders of such 

certificate are “certificated or licensed carriers of persons or property” 

and are exempt from the taxes in question. See 49U.S.C.A. 31424. 

Your second question asks: “Does either an air worthinees 

certificate, a certificate of registration, or pilots license qualify a 

person to purchase an aircraft tax exempt under Article 20.04(Q) 

above? ” We think not. The certificate to which reference is made 

in 20.04(Q) is a certificate authorizing a particular use of the aircraft. 

The two certificates and the license to which you refer in the question, 

on the other hand, have reference to the safety or identification of the 

aircraft and its pilot. The air-worthiness certificate [49 U.S. C.A. 

51423(c)] is based on a finding that the aircraft conforms to the type 

certificate issued for that plane and on a finding that the aircraft is in 

condition for safe operation. 

A registration certificate 149 U.S. C.A. $14031, is evidence of 

ownership. The pilots license is governed by 49 U. S. C. A~. 9 1422 and 

ia issued only if it is found that the pilot is, in fact, competent and 

physically able to serve as an airman. See 14 C. F. R. $61.1 et seq. 

- 

In our opinion Article 20.04(Q) was designed, inter alia, to exempt 

from taxation receipts from certain uses of the aircraft. Certificates 

about which you inquired refer to the character of the vehicle and its 

pilot and are irrelevant to a determination of exemption under Article 

20.04(Q). 

Your third question asks whether the purchaser of the aircraft 

loses the exemption when the aircraft is used at a flight training school 

for training purposes. 

p. 2148 
, 

The Honorable Robert S. Calvert page 3 (H-470) 

The exemption granted in Article 20.04(Q) does not speak to 

multiple use. However, it is generally held that the primary, as 

distinguished from the incidental use of the property determines 

whether it is exempt from taxation. General Data Corp. v. Porterfieid, 257 N. E. 2d 359 (Ohio 1970); Mead Corp. v. Glander, 93 N. E. 

2d 19 (Ohio 1950); Heller v. Fergus Ford, Inc., 305 N. E. 2d 352 (Ill. 

App. 4th Div. 1973); cf. Hilltop Village, Inc, v, Kerrville Independent 

School District, 426 KW. 2d 943 (Tex. 1968). 

Therefore, the tax exempt status of an aircraft used as a 

certificated or licensed carrier of persons or property and also used 

for flight instruction will depend on the facts of each case. If the nonexempt use is merely incidental, it will not destroy the exemption. 

SUMMA-R Y 

An air-taxi operator, certified as such by the 

Federal Civil Aeronautics Board, is a certificated 

carrier of persons or property and thus exempt from 

taxation under Article 20.04(Q), Taxation-General. 

The exemption will not be destroyed by an incidental 

non-exempt use. Possession of an air-worthiness 

certificate, a certificate of registration or a pilot’s 

license, without more, is insufficient to establish 

an exemption. 

flVery truly yours, ri_ JOHN L. -B& HI L 

Attorney General of Texas 

OVED: 

LL, First Assistant 

C. ROBERT HEATH, Chairman 

Opinion Committee 

p. 2149