# Title 57 — Taxation

## Chapter 57-40.5 — Aircraft Excise Tax

### § 57-40.5-01. Definitions.

The following words, terms, and phrases, when used in this chapter, have the meaning
ascribed to them in this section, except when the context clearly indicates a different meaning:
1. "Aircraft" includes airplanes, helicopters, manned balloons, and ultralight vehicles.
2. "Director" means the director of aeronautics.
3. "Purchase price" means the total amount paid for the aircraft whether paid in money or
otherwise, provided, however, that when an aircraft or a motor vehicle that will be
subject to the motor vehicle excise tax imposed by chapter 57-40.3, is taken in trade
on an aircraft taxable under this chapter, the trade-in value allowed by the person
selling the aircraft must be deducted from the selling price to establish the purchase
price of the aircraft being sold and the trade-in allowance allowed by the seller on an
aircraft accepted as a trade-in constitutes the purchase price of an aircraft. "Purchase
price" also means the fair market value when no current purchase is involved and the
aircraft is moved by the owner or user from any other state into this state and on which
no sales, use, or excise tax was paid by the owner or user to any other state, or on
which a sales, use, or excise tax was paid by the owner or user to another state which
does not have reciprocity with this state, and for which aircraft registration is required
by section 2-05-11 or registration and licensing required is by section 2-05-18. If an
aircraft is purchased by a person who has paid the excise tax and who has had an
aircraft stolen or destroyed, a credit must be allowed in the amount the purchaser has
paid in tax on the stolen or destroyed aircraft. The purchaser must provide the director
with a notarized statement from the insurance company verifying the fact that the
original aircraft was a total loss and stating the amount compensated by the insurance
company for the loss. The statement from the insurance company must accompany
the purchaser's application for a certificate of registration for the replacement aircraft.
In instances in which a licensed aircraft dealer or established fixed-base aviation
operator located at an airport open for public use and approved by the aeronautics
commission, places into service a new or used aircraft for the purpose of renting,
leasing, or dealership or fixed-base aviation operator utility service, the reasonable
value of the new or used replacement aircraft must be included as a trade-in value if
the new or replacement aircraft is properly registered with the aeronautics
commission. "Purchase price" when the aircraft is acquired by gift or other transfer for
a nominal or no monetary consideration also includes the average value of similar
aircraft, established by standards as determined by the director. "Purchase price"
when an aircraft is manufactured by a person who registered it under the laws of this
state means the manufactured cost of such aircraft and manufactured cost means the
amount expended for materials, labor, and other properly allocable costs of
manufacture except that, in the absence of actual expenditures for the manufacture of
a part or all of the aircraft, manufactured cost means the reasonable value of the
completed aircraft, as determined by the director.
4. "Purchaser" means any person owning or in possession of an aircraft who makes
application to the director for registration of such aircraft.
5. "Sale", "sells", "selling", "purchase", or "acquired" includes any transfer of title or
ownership of an aircraft by way of gift, exchange, barter, or by any other manner for or
without consideration.
6. "Use" means the exercise by any person of any right incident to ownership of an
aircraft, except that it does not include the sale or holding for sale of such an aircraft in
the regular course of business.
### § 57-40.5-02. Tax imposed.

There is imposed an excise tax at the 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 agricultural
aircraft for aerial application of agricultural chemicals, insecticides, fungicides, growth
regulators, pesticides, dusts, fertilizer, or other agricultural materials, the excise tax is imposed
at the rate of three percent on the purchase price of any such aircraft purchased or acquired in
or outside of this state, including the leasing or renting of such agricultural aircraft to users for
agricultural purposes.
### § 57-40.5-03. Exemptions.

There are specifically exempted from the provisions of this chapter and from computation of
the amount of tax imposed by it, the following:
1. Aircraft acquired by disabled veterans as defined by the provisions of Public Law
No. 79-663 [38 U.S.C. 3901]. This exemption shall be allowed only with respect to one
aircraft owned by any disabled veteran.
2. Any aircraft owned by or in possession of the federal or state government or any of the
political subdivisions, departments, agencies, or institutions thereof.
3. Aircraft which were previously titled or registered in the names of two or more joint
tenants and subsequently transferred without monetary consideration to one or more
of the joint tenants; the transfer of aircraft by gift, inheritance, or devise between a
husband and wife, parent and child, or brothers and sisters; and the transfer of aircraft
to reflect a new name of the owner caused by a business reorganization, if the
ownership of the business organization remains in the same person or persons as
prior to the reorganization.
4. Aircraft transferred between a lessee and lessor, if the lessee has been in continuous
possession of the aircraft for a period of one year or longer, and if the lessor has paid
either the tax imposed under this chapter at the time of registering the aircraft in this
state or the use tax imposed by chapter 57-40.2.
5. Aircraft acquired by any parochial or private nonprofit school. To qualify, a school must
normally maintain a regular faculty and curriculum and must have a regularly
organized body of students in attendance. The aircraft is not to be used for commercial
activities.
6. Aircraft for use as an air ambulance, when purchased by the operator of an
emergency medical services operation licensed under chapter 23-27.
7. Aircraft acquired by an aviation museum located in this state that is exempt from
federal income taxation under section 501(c)(3) of the United States Internal Revenue
Code [26 U.S.C. 501(c)(3)]. For purposes of this subsection, the term "acquired" has
the meaning as provided in section 57-40.5-01. Any aviation museum acquiring an
aircraft under this subsection shall comply with sections 57-40.5-04 and 57-40.5-05.
The aircraft may not be used for commercial activities. For purposes of this
subsection, commercial activities do not include activities for which a fee is charged
when the proceeds are used for the benefit of the aviation museum.
### § 57-40.5-04. Purchaser to furnish aircraft purchaser's certificate to director of

aeronautics.
Any person acquiring an aircraft shall complete an "aircraft purchaser's certificate" in the
form the director prescribes, showing a complete description of the aircraft, the seller's name
and address, the buyer's name and address, the full purchase price of the aircraft, with no
trade-in of aircraft or other property allowed and whether the aircraft was the subject of a gift or
inheritance, and any other information that the director may require.
### § 57-40.5-05. Presentation of aircraft purchaser's certificate to director.

No registration may be issued by the director for an aircraft until the applicant presents a
properly executed aircraft purchaser's certificate with the application for registration. If a
registration application is made for an aircraft that has been previously registered in this state
and the applicant is the same person in whose name the registration had previously been
issued, the aircraft purchaser's certificate need not be submitted to the director.

### § 57-40.5-06. Aircraft registration not to be issued unless tax paid.

No registration may be issued by the director for the ownership or operation of any aircraft
to any applicant for registration unless the tax imposed by this chapter has been paid by the
applicant to the director except for those aircraft which have been previously registered and the
applicant for registration is the same person in whose name the registration had previously been
issued and for aircraft exempt from the tax imposed by this chapter.
### § 57-40.5-07. Presumption.

For the purpose of the proper administration of this chapter, the following presumptions
apply:
1. Evidence that an aircraft was sold for delivery in this state is prima facie evidence that
it was sold for use in this state.
2. When an application for registration of an aircraft is received by the director within
thirty days of the date it was purchased or acquired by the purchaser, it is presumed,
until the contrary is shown by the purchaser that it was purchased or acquired for use
in this state. This presumption applies whether or not such aircraft was previously titled
or registered in another state.
### § 57-40.5-08. Credit for excise tax paid in other states - Reciprocity.

If any aircraft has been subjected to a sales tax, use tax, or excise tax in any other state, in
an amount less than the tax imposed by this chapter, the provisions of this chapter apply at a
rate measured by the difference between the rate fixed in this chapter and the rate by which the
previous tax paid in the other state upon the sale or use was computed. If the tax imposed in
another state equals or exceeds the tax imposed by this chapter, then no tax is due on such
aircraft. The provisions of this section apply only if such other state allows a credit with respect
to the excise tax imposed by this chapter which is substantially similar in effect to the credit
allowed by this section.
### § 57-40.5-08.1. Aircraft excise tax refunds - Three-year limitation.

If it appears that any aircraft excise tax paid on or after July 1, 1983, was paid in error, or for
any other reason the tax was not due under the provisions of this chapter, the tax must be
refunded to the person who paid the tax upon an application made and duly allowed in
accordance with section 57-40.5-08.2, provided that the application is made within three years
from the date of payment of the tax.
### § 57-40.5-08.2. Procedure for refunding.

Any person entitled to a refund of aircraft excise tax may make application for refund to the
tax commissioner in the manner prescribed by the commissioner. Upon the presentation of
proof satisfactory to the commissioner, the commissioner shall authorize the refund to be made
from moneys appropriated for that purpose. No refund may be authorized by the commissioner
until the commissioner is fully satisfied through the production of necessary purchase
agreements, tax receipts, and other documents and information that the refund is warranted.
Payment of the refund must be made by warrant after approval by the office of management
and budget and approval of the voucher by the office of the budget.
### § 57-40.5-09. Allocation of revenue.

All moneys collected and received under this chapter must be transmitted monthly by the
director to the aeronautics commission special fund.
### § 57-40.5-10. Penalties.

1. Any person who violates any of the provisions of this chapter is guilty of a class B
misdemeanor.
2. Any person who fails to submit a purchase certificate or who submits a false or
fraudulent aircraft purchaser's certificate is subject to a penalty of five percent of the
true amount of the tax which was due or five dollars, whichever is greater, plus one

percent of such tax for each month or fraction thereof subsequent to the month in
which the false or fraudulent aircraft purchaser's certificate was furnished to the
director. Any penalty must be paid to the tax commissioner or the director. The director
or the tax commissioner, if satisfied that the delay in payment of the tax was
excusable, may waive, and if paid, refund all or any part of such penalty and interest.
Unpaid penalties may be enforced in the same manner as the tax imposed by this
chapter.
3. Whenever a person, including an aircraft dealer, has collected from a person acquiring
an aircraft, an aircraft excise tax in excess of the amount prescribed or due under this
chapter, and if the person does not refund the excessive tax collected to the person
who remitted it, the person who collected the tax shall pay it to the tax commissioner in
the quarterly period in which the excessive collection occurred. The penalty and
interest provisions of this section apply beginning at termination of each reporting
period.
### § 57-40.5-11. Director to act as agent of tax commissioner in administration of aircraft

excise tax - Provisions of motor vehicle excise tax applicable.
The tax commissioner is charged with the administration of this chapter. The provisions of
chapter 57-40.3, pertaining to the administration of the motor vehicle excise tax, including
provisions for the audit and assessment, not in conflict with the provisions of this chapter,
govern the administration of the tax levied in this chapter. The tax commissioner may prescribe
all rules, not inconsistent with the provisions of this chapter, for the administration of this
chapter. The collection of the aircraft excise tax must be carried out by the director who shall act
as the agent of the state tax commissioner and who is subject to all rules, not inconsistent with
the provisions of this chapter, that may be prescribed by the tax commissioner.
