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Statutory Interpretation – Sales Tax

WI Court of Supreme Court

Case Name: Citation Partners, LLC v. Wisconsin Department of Revenue

Case No.: 2020AP001683

Officials: Rebecca Frank Dallet, J.

Focus: Statutory Interpretation – Sales Tax

Wisconsin imposes a five percent tax on the sale or lease of tangible personal property, including aircraft, as well as on select services. The tax applies to the “sales price”——that is, “the total amount of consideration” paid for a sale, lease, or service, with no deductions for the seller’s or lessor’s costs. See Wis. Stat. §§ 77.52(1)(a), 77.51(15b)(a) (2013-14).1 The sale of aircraft parts and maintenance, however, are exempt from sales tax. See Wis. Stat. §§ 77.52(2)(a)10., 77.54(5)(a)3.

Citation Partners, LLC owns an aircraft which it leases to third parties, the Lessees. As part of the total amount the Lessees pay to lease the aircraft, Citation Partners charges per-flight-hour rates for aircraft repairs and engine maintenance. Those rates correspond to the amount Citation Partners spends on aircraft repairs and engine maintenance. Citation Partners argues that this portion of the lease payment is tax exempt because it is a sale of aircraft parts or maintenance. The supreme court disagrees. The per-flight-hour charges for aircraft repairs and engine maintenance are taxable because they are part of the total amount of consideration the Lessees pay to lease Citation Partners’ aircraft.


Decided 3/01/23

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