Sec. 03.06.01.26. Aircraft, Motor Vehicles, Railroad Rolling Stock, and Vessels used in Interstate and Foreign Commerce

A. The sale or a sale for use of an aircraft, motor vehicle, railroad rolling stock, or vessel that is used principally in interstate or foreign commerce and a sale or a sale for use of a replacement part or other tangible personal property to be used physically in, on, or by it, are exempt from the tax.

B. An aircraft, motor vehicle, railroad rolling stock, or vessel is used principally in interstate or foreign commerce if during the first year of its use, or if the use does not extend to 1 year, then during the lesser period of use, any one of the following tests is met:

(1) More than 50 percent of the total mileage traveled is mileage between a pickup or delivery point in one state and a pickup or delivery point in another state or the District of Columbia (uninterrupted by intervening pickups or deliveries), between a pickup or delivery point within the United States and a pickup or delivery point outside the United States, or between pickup and delivery points wholly outside the United States. The mileage traveled directly between one pickup or delivery point to another pickup or delivery point within the same state or the District of Columbia is not qualifying mileage.

(2) More than 50 percent of all trips between a pickup or delivery point and the next pickup or delivery point, are between a pickup or delivery point in one state and a pickup or delivery point in another state or the District of Columbia, between a pickup or delivery point within the United States and a pickup or delivery point outside the United States, or between pickup and delivery points wholly outside the United States. For the purposes of this test, each segment of a fixed or variable route between one pickup or delivery point and the next pickup or delivery point is a distinct trip, and trips wholly within one state or the District of Columbia are not qualifying trips.

(3) More than 50 percent of the total days of use are days during which there has occurred or is occurring a trip between a pickup or delivery point in one state and a pickup or delivery point in another state including the District of Columbia, between a pickup or delivery point within the United States and pickup or delivery point outside the United States, or between pickup and delivery points wholly outside the United States. A day in which trips are made or are being made solely between pickup and delivery points within any one state or the District of Columbia is not a qualifying day.

C. Repealed.

D. If tax is not paid at the time of purchase or use of tangible personal property on the basis that one of the tests set forth in §B of this regulation will be met, but in fact none of these tests is met, the exemption does not apply. The tax shall be payable to the Comptroller from the buyer as of the date the buyer has reason to believe that the exemption does not apply.

E. Lease or Rental-----Tax Exemption.

(1) In the case of a lease or rental, entitlement to the exemption is determined on the basis of use during each billing period of the lease or rental.

(2) If a lease or rental agreement extends over more than one billing period, and if the lessee reasonably believes that the exemption will apply in more than 50 percent of the billing periods covered by the lease or rental agreement, the lessee may:

(a) Claim the exemption for all of the billing periods covered by the lease or rental agreement, and pay the tax on any lease or rental payment for any billing period for which the exemption does not apply; or

(b) Claim no exemption for any of the billing periods covered by the lease or rental agreement, and file an application for refund of any taxes paid on any lease or rental payment for any billing period for which the exemption applies.

(3) An exemption may not be claimed if a lessee does not reasonably believe that the exemption will apply in more than 50 percent of the billing periods covered by the lease or rental agreement, but a lessee may file an application for refund of any taxes paid on any lease or rental payment for any billing period for which the exemption applies.

F. Statement For Tax Exemption.

(1) A vendor may overcome the presumption of taxability by requiring of the buyer and retaining with the records of the transaction, a statement signed by the buyer in substantially the following form:

To: (Name of Vendor)

Reference: (Invoice Number and Date)

I hereby certify that the property covered by the foregoing invoice is an aircraft, motor vehicle, railroad rolling stock, or vessel which will be used principally in interstate or foreign commerce or is tangible personal property which will be physically used in, on, or by a qualifying aircraft, motor vehicle, railroad rolling stock, or vessel.

(Signature, Title, Address)

(2) A vendor may also accept a signed statement covering a number of specified transactions or all transactions with a particular buyer, subject to notification to the contrary.