The COVID-19 pandemic has caused many airlines to temporarily ground aircraft. Due to its dry desert conditions, Arizona is a popular state for airlines and commercial aircraft lessors to park aircraft while not in active use. Airlines and commercial aircraft lessors should be aware, however, that Arizona’s annual aircraft license tax may apply to an aircraft owned by a nonresident of Arizona if the aircraft is based in the state for more than 90 days in a calendar year. The annual license tax is administered and enforced by the Arizona Department of Transportation (“ADOT”).
For aircraft based in the state for more than 210 days a year, Arizona aircraft license tax rate is one-half of one percent of the aircraft’s value (determined by the average wholesale blue-book value for the make, model and year of the aircraft). For nonresident-owned aircraft based in the state for more than 90 days but fewer than 210 days, a reduced tax rate of one-tenth of one percent is imposed on the aircraft’s value. A special flat annual license tax of $20.00 applies to aircraft stored in the state. However, to qualify for the $20.00 flat tax, the aircraft owner is required to file a sworn affidavit annually with the ADOT affirming the aircraft’s storage in the state no later than the last day of February or within 60 days after the aircraft is placed in storage. Accordingly, if the sworn storage affidavit is not timely filed, then the ADOT is likely to impose the license tax at the standard rates of 0.5% (0.005) or 0.1% (0.001), as applicable.
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