Aviation Taxes – Enforcement and What We're Seeing – Part III
Angel Houck walks through what happens after a state or local tax assessment lands on your desk — and why ignoring it, or paying it too quickly, are both costly mistakes.
In today’s technological environment, information about aircraft is easy to obtain, and government agencies use this data to enforce tax compliance among aircraft owners. We have discussed many types of notices or inquiries that we are seeing, but what do you do if taxes are assessed? This article will focus on tax assessment from state and local jurisdictions.
Far too often, we talk to aircraft owners who ignore notices or fail to respond promptly. Many mistake the inquiries for spam or phishing, while others do not understand what is being requested. If no response is sent, the states or local jurisdictions will often estimate the tax balance and send a notice of tax due. Once an amount has been assessed, the next steps are usually very time-sensitive and will depend on the state.
Some states will still allow an informal review or the provision of additional information to reverse the assessment. However, some states require a more formal lawsuit to be filed, which usually requires a tax attorney’s involvement.
If a tax assessment is left open and a timely response is not submitted, many states will finalize the assessment and enforce collection. Most often, any opportunity to fight the assessment will have passed, and the only remedy at this point will be to pay the tax due and then apply for a refund. The refund process will usually be similar to an appeal, in which evidence must be presented to show why the tax was not due. States are reluctant to refund money, so this can be a lengthy process.
Even if the assessment is correct, there are often opportunities to waive penalties or reduce the amount due. Many states are willing to waive penalties if we can reach a quick resolution or show that the non-payment was not intentional. Sometimes, if the law is unclear, we can reach a settlement agreement on a portion of the tax. Interest will rarely be waived and will likely accrue on the balance until paid. Many states will offer payment plans for large balances if the taxpayer can show that payment in full would cause hardship.
If you receive an inquiry or a notice asking about taxes on your aircraft, do not ignore it. The process to resolve the notice is much quicker and easier if addressed right away. If a balance is assessed, do not pay until you have consulted an aviation tax advisor. Even if tax is due, the first assessment is rarely correct and should be reviewed before payment is made. But as I have written many times before, the most important course of action is early tax planning to avoid surprise tax bills!
EAA Oshkosh: Meet Your Underwriter
Tom Hauge just returned from EAA Oshkosh and explains why OSH week is the single best opportunity of the year to meet your aviation insurance underwriter face to face — and how to make the most of it.
I just wrapped up a grueling week at the world’s largest fly-in airshow event – EAA Oshkosh! Four busy days covering the grounds and seeing a ton of industry colleagues, customers, and OEMs.
OSH week is probably the single biggest opportunity of the year to meet and have a conversation with your insurance underwriter. Virtually all underwriters operating in the USA send representatives to the show – some have a ‘booth’, while others have mobile teams that roam the grounds throughout the week. If you are ever looking to meet with your insurance underwriter, you generally can arrange it during OSH week via your insurance broker. It’s a great casual environment to get together and discuss your specific risk with your insurer directly. While underwriting meetings are more common for commercial risks and turbine aircraft, you certainly can glean some value as a piston operator by visiting with your carrier’s team and covering any questions that come to mind.
In the past few years, as a broker, I have hosted a ‘booth’, but generally speaking, I roam the grounds every day at OSH as that allows me to cover more contacts throughout the day. There are also a good number of insurance brokers represented at OSH who do exactly what I do – network, walk the grounds, and visit with OEM’s and customers. I often find that OSH is the place I can connect with long-time customers I might never have met in person. OSH attracts just about everyone, so if you make the trip, there’s a good chance you’ll run into the folks who handle your policy, both the broker and underwriter alike.
Certainty vs. Uncertainty: What It Means for Aircraft Financing in the Second Half of 2026
Mike Smith breaks down why uncertainty has slowed aircraft loan closings in 2026 — and why year-end pressure may finally be winning the mental tug-of-war with hesitant buyers.
On my way home from EAA Oshkosh last week, I was thinking about how quickly the year is moving. I usually look at that summer event as the kick-off to the second half of the year…as hard as that is to believe.
As we reach the latter stages of summer, I’m reminded of something I’ve discussed previously…this concept of certainty. Over my 15 years of working in aircraft lending, I’ve been reminded that business owners (and, as a result, aircraft buyers) ultimately like to make decisions when they feel like they have clarity of what’s going to happen, which creates an environment of certainty.
Two recent examples prove this point. Back in 2020, the Covid pandemic caused a great pause in aircraft purchasing, for good reason. Once we had an idea of the virus’s actual impacts, purchasing continued. Last year, the back-and-forth on tariffs created tremendous uncertainty and led to another pause in purchasing. Once we had a clearer idea of the tariff impacts, purchasing resumed.
And just when we thought we had things figured out this year, the Iranian War started. You don’t need me to tell you the on-and-off closure of the Strait of Hormuz has created uncertainty in the energy markets, and the entire conflict has created geopolitical uncertainty, which has also indirectly caused a some material increases in interest rates across the board…for example as of July 24 the 10 year treasury rate is about 0.50% higher than it was at the start of 2026.
It’s really not a surprise to me that we experienced periods of slowness in loan closings in the first half of 2026, since in reality, we have been working through yet another period of uncertainty.
Yet, as we enter the second half of 2026, another reality is on the horizon: year-end. At some point, a mental conflict arises around risks: is it a bigger risk to wait for uncertainty to play out, or risk tax implications of not making the business moves you need to make this fiscal year?
I’ll be interested to see how that mental conflict plays out through the rest of this year.
Early indications on our end are that the calendar flipping to July triggered a shift in priorities, and year-end pressure is starting to outweigh current economic uncertainty. But that could be a moment in time. Further increases in oil prices, continued escalation in the Middle East, a material change in interest rates… just more potential to create uncertainty. And we’ve surely seen that in the past couple of weeks (years?).
Cleared to Taxi Is Not Cleared for Takeoff: The BizDev Trap
Dustin Cordier draws a sharp line between business development and sales — and explains why most cold calls fail before they ever get started. If your reps are selling the product, they're already behind.
Most cold calls die from the same mistake. The rep tries to close a sale before earning the right to have one. Business development and sales are two different jobs. Hans Peter Bech draws the line cleanly: business development is the work of finding the match between a solution and a market segment, while sales is the systematic work of generating revenue once that match is proven. One opens the door. The other walks through it.
Here is the simplest way to hold it.
Business development sells exactly one thing: curiosity.
Not the product. Not the price. Only two things create curiosity in a human being, and both are ancient: the thought of gaining pleasure, or the thought of removing pain. Researchers describe curiosity as the gap between what we know and what we want to know, a kind of mental itch. Your job in business development is to create the itch. Not to scratch it.
You know you have done the job when you hear three words.
“Tell me more.”
Before those words, the prospect is not imagining themselves using your product. They are imagining the end of the call. Selling into that mindset is rotating before you reach Vr. Pull back on the yoke all you want. Without airspeed, you settle right back onto the runway. Current events are your best source of lift. They allow you to introduce something new without sounding salesy. Something in the world changed that carries an impact. A regulation, a cost curve, a technology, a competitor's move. “Something changed and you should know about it” is a legitimate reason to interrupt a stranger's day. A pitch is not.
Now the trap.
The moment a prospect says, “Tell me more,” most reps keep talking. That is where the opportunity dies. They are not in the mindset for a sale and providing too much information removes the need to ever talk to you again. Curiosity is gone. When you hear those three magic words, STOP! and set the appointment.
“I know your day is busy. Let's put 30 minutes on the calendar so I can walk you through it properly.”
That handoff does something the call itself never could. The prospect now spends days picturing themselves in your solution before the meeting starts. They arrive having already done the work in their own head.
The second conversation is the sale. What pain leaves, what changes, what it is worth. And the demo that follows is no longer just a feature tour. The demo is proof. You made claims and now they are validating them with their own eyes.
Prove it and nothing stands in the way. The close is not an event you perform. It is what remains after every obstacle has been cleared.
One question for your team this week: are your bizdev reps selling the product, or selling curiosity?
Owning A Plane With Multiple Owners – Shared LLC (Part 1)
John Farrish breaks down why a shared LLC — the most common structure for co-owning an aircraft — is only the right choice about 10% of the time, and what every potential co-owner needs to understand before signing anything.
Aircraft are expensive. But what if you could buy a plane at a 50% discount and only pay for 50% of the ongoing fixed costs?
Buying a plane with someone else is a great way to lower the price tag of private aviation. But doing it correctly can be a challenge.
Over the next three articles, we will walk through the two primary ways for multiple people or businesses to own a plane together: a shared LLC or true co-ownership. We’ll also go through some key points to keep in mind as you consider teaming up with someone on aircraft ownership.
The (Wrongly) Most Common – Shared LLC
Most clients buying a plane together immediately plan to set up a Limited Liability Company with two or more Members (owners). In reality, this arrangement is optimal only about 10% of the time.
The fundamental principle often overlooked is that, in this scenario, the owners don’t actually own a plane together. They each own part of a business; the business owns the plane. The difference between owning a plane together or a business together can be stark.
Changing an Owner
A shared LLC can make it more difficult to sellan owner’s share of the plane. Since the “share” is actually ownership of a business, it’s part of the business that’s being sold rather than part of the plane. This means a new owner also assumes the business’s potential liabilities, which may make the purchase less appealing. Any partial sale will involve corporate law and requirements governing the sale of businesses, rather than a more straightforward partial aircraft sale. The corporate sale will require extra layers of protection, corporate due diligence, potential indemnification language, and updates to the Secretary of State in its place of formation and the FAA.
On the flip side, a partial sale will not require re-registering the plane with the FAA, since the owning LLC is not changing. This is not really a paperwork benefit, since updated LLC documents will still need to be filed with the FAA. However, this could result in a tax benefit. In situations where sales tax was paid on the plane, keeping the registration undisturbed could avoid the need to pay sales tax again. Some states, however, treat the sale of a single-asset entity as a sale of the asset itself for sales tax purposes, so there could be sales taxes anyway.
Tax Treatment
Buying a plane in a shared LLC can also create potential federal income tax traps. Some aircraft expenses may become nondeductible, making it more difficult to meet the requirements for bonus depreciation.
However, for mostly personal-use aircraft where neither owner is pursuing tax deductions, this point is moot, and a shared LLC could provide some simplicity. It is imperative to walk through your planned aircraft use with an aviation CPA before you acquire the plane to determine whether a shared LLC will handicap your tax planning.
Flight Department Company Trap
Perhaps the most overlooked issue with a shared LLC is the “flight department company trap.” The FAA prohibits the owners from using the LLC as their flight department. The LLC cannot operate the plane on behalf of the owners, with each owner reimbursing the LLC for their share of expenses. More on this topic here. This trap can be avoided with proper planning prior to the acquisition.
In sum, a shared LLC can be an effective tool for two or more people to own an aircraft. But the next option, co-ownership (stay tuned for Part 2 next month), should at least be considered before deciding on the ownership structure of any shared aircraft.
This article is not intended, nor should it be construed or relied upon, as legal advice. The comments, recommendations, and analysis expressed in this article are those of the individual author, John Farrish, and are purely informational. Each aircraft owner’s situation is unique and requires its own thorough discussion and analysis. This article does not create an attorney-client relationship between you and the author or his law firm. If specific legal information is needed, each person should retain and consult an attorney with knowledge of the subject matter.