Newsletters & Posts

  • 12 Jun 2014 1:44 PM | Anonymous

    In 2010, the Washington State Legislature resolved its budget impasse with a broad tax bill which included amongst its provisions, specific language designed to disregard certain transactions the legislature had identified as “unfair tax avoidance”.[1] As it may relate to an aircraft entity structure and any related leasing operations, the new law identified as potential “tax avoidance” any transaction or arrangement through which a taxpayer “attempted to avoid sales or use tax on property located in Washington by vesting legal title or ownership in another entity over which the taxpayer effectively retains control.” (See RCW 82.32.655(3)(c))

    In Washington, one of the longstanding tax planning ideas used by aircraft owners was to purchase the aircraft in a separate entity (special purpose entity or “SPE”) that would lease the aircraft back to the ultimate user(s) of the aircraft — generally the owner(s) or member(s) of the entity. Assuming the formalities of the structure were followed, this planning complied with the regulatory provisions of the Federal Aviation Regulations (FARs)[2] which otherwise limit the ability of an aircraft owner to seek any reimbursement for the costs incurred for use of the aircraft. In addition to resolving some of the regulatory complexity regarding cost reimbursement, the structure had the secondary benefit of satisfying the resale provisions of Washington tax law. Under the leasing company structure, the aircraft-owning entity avoided tax on the initial purchase, but collected sales tax on the fair market value lease payments that were made by the aircraft users.

    Under the tax avoidance provisions, however, the Department of Revenue was provided with the statutory authority to disregard the otherwise exempt resale nature of the initial aircraft acquisition by the leasing company assuming the transaction met the statutory definition of “unfair tax avoidance.” That is, the Department could treat the aircraft as if it was always owned directly by the individual owner, LLC member, or user of the aircraft, thereby invalidating the “resale” exemption as applied to the original purchase.

    To date, the Department of Revenue has been working with taxpayers and other stakeholders including the PNBAA and NBAA to develop a regulation better defining the scope and intended impacts of the tax avoidance statute to aircraft transactions and operations, however, no regulation has yet been promulgated. Because of the broad language of RCW 82.32.655(3)(c) though, and without any additional clarification that may result from an interpretative regulation, the typical aircraft entity structure employed by most businesses may be deemed “unfair tax avoidance” in a subsequent Department of Revenue audit. The impact of such a result would include an assessment of sales/use tax on the purchase price of the aircraft, as well as tax avoidance penalties equaling 35% of the unpaid tax related to the purported “avoidance” – this is in addition to the other statutory penalties and interest resulting from any assessment.

    On June 3rd, 2014, the Department finally published its initial “preproposal”; the first official draft of a proposed regulation to commence the rule-making process for a “tax avoidance” regulation. Given the efforts of the PNBAA, the NBAA, and other interested stakeholders, the Department of Revenue’s initial draft regulation now contemplates certain safe-harbors designed specifically to address general business aviation operations.

    As currently contemplated by the initial draft rule, for property such as an aircraft that is owned by a “controlled” entity, the following elements create a “potential tax avoidance arrangement”:

    • The taxpayer engages in a transaction in which the taxpayer, or persons acting in concert with taxpayer, vests title or any other ownership interest of tangible personal property in an entity; and
    • The taxpayer exercises control over the entity in such a manner to effectively control the underlying tangible personal property; and
    • The tangible personal property is used by the taxpayer in Washington without payment of sales or use tax on its “its full value”.


    Whether or not a taxpayer controls an entity is based upon the following considerations:

    • The taxpayer possesses directly or indirectly more than 50% of the voting power or more than 50% of the power to direct or cause the direction of the management and policies of the entity; or
    • The taxpayer effectively retains control over the underlying tangible personal property by virtue of the taxpayer’s right to control the use or disposition of the property.


    At present, the current draft regulation includes the following “safe harbors”, which if satisfied, would prevent the Department from disregarding title in or ownership by a controlled entity:


    1) Arrangements by which no additional exemption, deduction, or reduction in sales or use taxes accrues to the benefit of the taxpayer which would have otherwise been available if the taxpayer owned the property directly;

    2) Arrangements arising out of or related to the sale of stock or ownership interests in a substantive operating business, including as part of a statutory merger; and most relevant to aircraft-leasing structures . . .

    3) Arrangements where substantially all use of the property is under a lease, at a reasonable rental value, by a substantive operation business, for bona fide business purposes.


    For purposes of the leasing safe harbor, “substantially all” is currently defined to mean at least 95% of the use of the property, as determined by actual use and irrespective of the location of such use. According to the proposed rule, “reasonable rental value” is determined as nearly as possible by the “value of such use at the places of use of similar property of like quality and character.” A “substantive operating business” is a business that is adequately capitalized and engaged in substantial business activities using its own property or employees. Finally, “bona fide business purposes” is use of the property that is ordinary and necessary for the business of the user. Although the presence of this safe-harbor is positive, PNBAA believes that this safe-harbor can be made more workable with a more suitable threshold.

    The official rule-making process for the “tax avoidance” regulation will commence with an initial public meeting at 10:00 a.m. on July 1st, 2014 at the Department of Revenue’s office in Olympia. As part of the formal rule-making process, stakeholders will be provided with the opportunity to address concerns related to the proposed rule, including open issues, unintended, or even unacceptable tax consequences resulting from application of the rule. To this end, as part of the ongoing efforts of interested taxpayers or their representatives in any rulemaking process, it is not uncommon for the final as-promulgated rule to differ significantly from the Department’s initial draft. While the public meeting represents the first opportunity to interact directly with the Department in a formal capacity, it will likely not be the only or final opportunity to do so. As it pertains to the business use of aircraft, the rulemaking process may involve several meetings with the Department to better understand the regulatory framework impacting taxpayers, the specific language of the rule and corresponding examples, and a discussion regarding the Department’s goals and concerns regarding both imposition and administration. Given the broad imposition of the tax avoidance statute, however, the presence of the initial leasing safe-harbor represents a significant move forward by the Department of Revenue in recognizing and understanding the legitimate and necessary uses of business aircraft.

    [1] See Washington 2ESSB 6143 (2010).

    [2] The Federal Aviation Regulations effectively require that the lease of an aircraft in non-commercial operations be in the form of a so called “dry lease,” i.e., a “bare” lease of the aircraft not accompanied by pilots who fly it, in order to avoid FAR Part 135 “for-hire” requirements.



  • 11 Jun 2014 12:35 AM | Anonymous

    Our next event will be PNBAA’s annual Friends & Family BBQ, held in conjunction with the Blue Angels practice session prior to SeaFair.  This year, the BBQ will be held on Thursday, July 31st but we are still working out the details for the event, so please stay tuned!

  • 07 Feb 2014 1:47 PM | Anonymous

    Representatives from the PNBAA Board have attended the past two Washington State Legislature General Aviation Caucus meetings.  At the February 25th meeting, Alan Burnett, PNBAA’s Director of Government Affairs, had the opportunity to give legislators an overall picture of the benefits of business aviation in the state of Washington, and a synopsis of PNBAA’s mission and accomplishments.

    In addition to PNBAA’s presence at these meetings, representatives from other aviation groups around the state and nationally were in attendance:  NBAA, AOPA, Washington Pilots Association, Washington Airport Management Association, Recreational Aviation Foundation, etc.

    PNBAA would like to thank Senator Jim Honeyford (R-15th) and Representative Gael Tarleton (D-36th) for leading this newly formed WA General Aviation Caucus, and we are pleased that this Caucus will continue to grow into the next legislative session.  We ask our members to reach out to your respective legislators to help educate them about the importance of business aviation in the state.

    Why is this GA Caucus important?  The General Aviation community in Washington (of which Business Aviation is a part) now has a conduit for our issues and concerns, and to help educate legislators about the importance of our industry to the state of Washington.  Did you know…that General Aviation supports over 7,600 jobs and contributes over 490 million dollars of economic output in the state of Washington?  Please use the following links for more advocacy tools:


    Feel free to contact us at and let us know your thoughts on our advocacy efforts.  Thank you!

  • 02 Feb 2014 12:37 AM | Anonymous

    PNBAA is pleased to announce our 6th annual Safety Day, scheduled for April 3, 2014 at Seattle’s Museum of Flight.  We recommend that you register early to secure your seat as this event fills up quickly every year.  Please use the link below for more information and to register today!

  • 13 Nov 2013 1:59 PM | Anonymous

    PNBAA is excited to announce a new development that will positively impact the aviation stakeholders in the state of Washington. A bipartisan Washington State Legislative Aviation Caucus held their first meeting this month with the plans for two future meetings in early 2014. This caucus is being spearheaded by Senator Jim Honeyford (r) 15th Legislative District, and thier first meeting had 10 participants from both the House and the Senate, and from both sides of the aisle. Senator Honeyford recently told NBAA "our goals will include the promotion of general aviation in Washington and support for smaller airports in the state. I also would like to try to make sure that the tax on avgas-which currently helps fund all of transportation not necessarily general aviation-goes back to enhance general aviation."

    As we all know, aviation has a tremendous positive economic impact in Washington state, and it is up to each of us to advocate and educate others about this.  Your PNBAA has joined with other aviation organizations in WA such as the Washington Pilots Association, the Washington Airport Management Association, & others to support this great initiative.

    PNBAA recommends that you encourage your respective legislators to participate in the newly-formed Washington State Legislative Aviation Caucus.  Here are some valuable advocacy tools you can use:

  • 06 Nov 2013 12:19 AM | Anonymous

    Your PNBAA board is continuously monitoring development and implementation of the FAA Greener Skies project for SeaTac and thus far, we have not noticed any negative impact on operations into or out of satellite airports in the area.

    An update to the Boeing Field Research Report is being developed in conjunction with your PNBAA board and Boeing Tower to update the current report on the NBAA website.  The report will include items such as Airspace Hot Spots that see heavy concentration of VFR aircraft in close proximity to regularly used inbound arrival routes, the potential for a descending missed approach off of the 13R ILS, and an overview of the complexity of operations due to Boeing Field / SeaTac proximity.

    Please stay tuned to future PNBAA newsletters and to our website for further information, and send any questions or comments to

  • 02 Nov 2013 1:39 AM | Anonymous

    December 4, 2013 | 4-6 pm
    at Seattle’s Museum of Flight BFI

    PNBAA will host our annual meeting of members and holiday social NEXT WEDNESDAY, December 4th from 4-6 pm in the View Lounge at Seattle’s Museum of Flight on Boeing Field. Please join your fellow PNBAA members and friends for this great opportunity to network and socialize, learn about what your PNBAA has accomplished this year, and what we hope to accomplish going forward.  This event is free for all attendees – hors d’oeuvres and beverages will be served.  Hope to see you all there! 

  • 12 Oct 2013 12:40 AM | Anonymous

    by Kory Watson, PNBAA Intern and RAHS Student

    On Thursday, October 17th, a Boeing 737-900ER filled with students, teachers, and prominent figures in the aviation industry landed at Boeing Field while hundreds of people watched. This was no ordinary Alaska Airlines 737: the company had agreed to paint the 737 specially for Raisbeck Aviation High School, a special school for students in the Seattle area looking for a career in aviation. On the side of the plane was painted “Supporting Education, Making Dreams Soar.” Near the front entrance of the plane, the words “Proud Supporters of Raisbeck Aviation High School” were displayed.

    This event was held to commemorate the grand opening of Raisbeck Aviation High School’s new building. This three-story, 47-million dollar building is full of state of the art equipment and materials for the school’s teachers and students to use daily. Each classroom has a large TV monitor, and each student received a laptop to use during class and for homework after school. Additionally, the building is located across the street from Seattle’s very own Boeing Field and the Museum of Flight, both of which have volunteered to offer their vast resources to the school’s students and teachers.

    The grand opening was most definitely a large step for the aviation industry in the Seattle area. Raisbeck Aviation High School, as conveyed by its name, is a high school created for kids dreaming of joining the aviation industry whether by becoming a pilot, engineer, or something completely different.  Boeing and other aerospace companies are counting on the school’s students to become their next generation of engineers, scientists, pilots, etc.

    This special occasion had been planned for a very long time. Since the school started years ago, Reba Gilman, the school’s principal, has been working rigorously to not only create the school itself, but also to find donors for the new building. Over time, through showing what the old Aviation High School and its impressive students and teachers were already doing, RAHS received funding from many companies, organizations, and individuals in the Seattle area – including the proceeds raised from PNBAA’s annual charity golf tournaments. The largest donor was Dr.James Raisbeck, the founder of Raisbeck Engineering and the person for whom the school was renamed.

  • 18 Sep 2013 12:41 AM | Anonymous

    PNBAA is partnering with NBAA to host an informational Town Hall meeting to discuss the current legislative and regulatory environment affecting our members nationwide and in the state of Washington.


    Lisa Piccione, NBAA’s Senior VP of Government Affairs will be on hand to bring us up to speed on the legislative issues our industry currently faces.  Mike Nichols, NBAA’s Vice President, Operational Excellence & Professional Development will partner with PNBAA’s Alan Burnett to discuss the current regulatory and tax issues of importance to our members.


    Please save the date and plan to join us for this informative event on Monday, September 23rd from 3:30 – 5:30 pm in the Museum of Flight’s William M. Allen Theater at Boeing Field in Seattle.

  • 14 Aug 2013 2:23 PM | Anonymous
    Sept 17, 2013:  NOON to 4 pm at Galvin Flying BFI

    PNBAA would like to share this event information on behalf of our friends at the Pacific Rim Schedulers & Dispatchers Association (PRSDA): 

    PRSDA will be hosting a “Mini International Operators Conference” on the afternoon of Tuesday, September 17, 2013 at Galvin Flying Service’s new hangar at King County Int’l Airport.  We have conveniently scheduled this event the day prior to PNBAA’s 5th Annual Charity Golf Event.

    All are welcome to this informational workshop – schedulers, dispatchers, flight crews, etc.  PRSDA has confirmed speakers from International Trip Planning Services, Universal Weather and Aviation, and BaseOps, who will cover a wide range of topics and regions related to international trip planning.   If your current duties include scheduling, dispatching, and/or flying internationally…this workshop is for YOU!

    Cost is free for current PRSDA members and $75 for non-members, and includes lunch.

    Please use the link below to RSVP for the PRSDA Sept 17 Mini IOC:

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