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2019 Op. N.D. Att'y Gen. 1 (2019)

handle is hein.sag/sagnd0098 and id is 1 raw text is: 

                                  LETTER OPINION

                                    March 1,2019

Mr. Kyle Wanner
Executive Director
North Dakota Aeronautics Commission
2301 University Drive Bldg 22
Bismarck, ND 58504-7595

Dear Mr. Wanner:

Thank you for your letter requesting my opinion regarding the correct application of the
aircraft excise tax as per N.D.C.C. § 57-40.5-02.

For the following reasons, it is my opinion payment of the aircraft excise tax is a condition
of registration and must be paid, or a statutory exemption must be met, prior to the
issuance of an aircraft registration certificate. Furthermore, if a purchase requiring
registration under the laws of the state of North Dakota occurs, the aircraft excise tax must
be calculated based on the purchase price, not the subsequent lease or rental cost.


North Dakota law imposes an excise tax at a rate of five percent on the purchase price of
any aircraft purchased or acquired either in or outside of the state of North Dakota or on
the lease or rental cost of any aircraft, less fuel, if rented dry and required to be registered
under the laws of this state, except on aircraft or helicopters designed or modified for
exclusive use as an agricultural aircraft ... the excise tax imposed is at the rate of three
percent... .' Purchase price is defined by N.D.C.C. § 57-40.5-01(3).

Prior to implementation of the aircraft excise tax in 1983, aircraft were taxed by the State
Tax Department under the sales and use tax law.2 Under the sales and use tax law, the
sale of a new or used aircraft between private individuals, anyone other than an aircraft
dealer, was tax exempt, regardless of where the transaction occurred.3 As a result, the
majority of aircraft purchases occurred between private individuals.

1 N.D.C.C. § 57-40.5-02.
2 Hearing on H.B. 1518 Before the House Comm. on Approp., 1983 N.D. Leg. (Statement of Harold
G. Varra).

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