Section 45IAC2.2-3-6. Use tax; aircraft, watercraft

   (a)(1) The term "aircraft" will include "any device which is designed to provide air transportation for one (1) or more individuals or for cargo."

  (2) The term "watercraft" will include a contrivance used or designed for navigation on water, including a vessel, boat, motor vessel, steam vessel, sailboat, vessel operated by machinery either permanently or temporarily affixed, scow, tugboat, or any marine equipment that is capable of carrying passengers, except a ferry.

  (b) For the purpose of the state gross retail and use tax:

(1) The sale of aircraft by any person licensed as an aircraft dealer in Indiana has been, and will continue to be, a retail sale. Transactions representing isolated or occasional sales of aircraft required to be licensed by the state for use in Indiana shall constitute retail transactions under the provisions of this section. Every sale by a resident or nonresident person who is not a retail merchant as defined in the Indiana gross retail tax act [IC 6-2.5] of an aircraft required to be licensed by the state for use in Indiana shall be deemed a retail transaction, and the use of such aircraft shall be subject to the use tax which shall be paid by the purchaser to the aeronautics division of the department of transportation at the time of the licensing of the aircraft by the purchaser.

(2) The sale of watercraft by any person licensed as a watercraft dealer in Indiana has been, and will continue to be, a retail sale. Transactions representing isolated or occasional sales of watercraft required to be licensed by the state for use in Indiana shall constitute retail transactions under the provisions of this section. Every sale by a resident or nonresident person who is not a retail merchant as defined in the Indiana gross retail tax act [IC 6-2.5] of a watercraft required to be licensed by the state for use in Indiana shall be deemed a retail transaction, and the use of such watercraft shall be subject to the use tax which shall be paid by the purchaser to the division of natural resources at the time of the licensing of the watercraft by the purchaser.

  (c)(1) Persons licensed as aircraft dealers in Indiana will collect sales tax on their sales of aircraft and will record the selling price of the aircraft and the amount of sales tax collected on sales tax form ST-108AC. Form ST-108AC will be used by the purchaser as proof of payment of sales tax when registering the aircraft in Indiana. If the aircraft is purchased from any person other than an aircraft dealer licensed in Indiana, the purchaser must pay all sales or use tax due to the aeronautics division of the department of transportation at the time the aircraft is first registered in Indiana by the purchaser.

  (2) Persons licensed as watercraft dealers in Indiana will collect sales tax on their sales of watercraft and will record the selling price of the watercraft and the amount of sales tax collected on sales tax form ST-108WC. Form ST-108WC will be used by the purchaser as proof of payment of sales tax when registering the watercraft in Indiana. If the watercraft is purchased from any person other than a watercraft dealer licensed in Indiana, the purchaser must pay all sales or use tax due to the division of natural resources at the time the watercraft is first registered in Indiana by the purchaser.

  (d)(1) If the aircraft has been registered previously in Indiana, the seller must assign certificate of ownership to the purchaser showing the selling price, trade-in, description, and price. If the aircraft has not been previously registered in Indiana, the seller must furnish a bill of sale, signed by the seller, showing the make, model, year, selling price, and trade-in on the aircraft. At the time of registration, the purchaser must furnish the aeronautics division of the department of transportation with either the properly assigned certificate of ownership or bill of sale.

  (2) If the watercraft has been registered previously in Indiana, the seller must assign certificate of ownership to the purchaser showing the selling price, trade-in, description, and price. If the watercraft has not been previously registered in Indiana, the seller must furnish a bill of sale, signed by the seller, showing the make, model, year, selling price, and trade-in on the watercraft. At the time of registration, the purchaser must furnish the division of natural resources with either the properly assigned certificate of ownership or bill of sale.

  (e) Only the trade-in value of an aircraft for another aircraft, or the trade-in value of a watercraft for another watercraft, may be deducted from the selling price for sales tax purposes.

  (f) Aircraft which are purchased to be taken immediately to another state for registration in that state, and not for registration or use in Indiana, are not subject to the Indiana sales tax. The purchaser must furnish the seller with exemption certificate ST-136AC, in triplicate. The seller is required to keep one copy for his files. Two copies of the exemption certificate must be certified by the dealer and forwarded to the sales tax division of the Indiana department of revenue. (Department of State Revenue; Ch. 3, Reg. 6-2.5-3-2(b)(020); filed Dec 1, 1982, 10:35 am: 6 IR 11; filed Aug 6, 1987, 4:30 pm: 10 IR 2612)