Iowa state audit finds hundreds of unregistered aircraft
State recoups $1.6 million in fees and penalties
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DES MOINES — Iowa has cracked down on hundreds of aircraft owners who’ve been dodging registration fees in violation of state rules, according to a state audit released on Monday.
The effort has helped Iowa recoup more than $1 million for airport upgrades, runway markings and weather observation systems, according to the audit.
“We began with an education effort and, being good Iowans, they were coming and working with us,” said Tim McClung, the aircraft registration manager for the Iowa Department of Transportation Office of Aviation. “There were certain elements out there — and still are — that don’t feel they need to register their aircraft and need a little push from the state to get this done.”
The issue of unregistered aircraft is not one of maintenance or safety, but rather users sharing the cost for the aviation system, similar to how motorists pay taxes and fees to own and operate an automobile, said McClung, who also manages planning and outreach for the office.
In 2013, a citizen reported to the State Auditor’s Office the Iowa DOT was not collecting registration fees from all aircraft owners, and some owners were avoiding fees by not registering, according to the audit.
In comparing Federal Aviation Administration records to Iowa DOT records, the auditor’s office verified a significant gap in registrations. The auditor’s office learned the Iowa DOT already had started working on the problem so held the audit until the compliance effort concluded.
In 14 months, between Jan. 1, 2014, and Feb. 28, 2015, the Iowa DOT identified 714 unregistered aircraft, according to the audit. Owners registered 307 of those aircrafts, while another 199 were deemed exempt.
The compliance effort recouped $1.6 million over 14 months: $1.2 million from a use tax, $197,647 from back fees, $105,620 in penalties and $103,981 from registrations.
Since the audit period concluded, the Iowa DOT has pared the list of the remaining 208 aircraft to fewer than 100, McClung said.
McClung said the one-time use tax could be part of why some owners avoid registration.
“What we hear from aircraft owners is that’s a bill they’d just as soon not pay, and sometimes aircraft owners just don’t know about it.”
The use tax is 6 percent of the purchase price and is paid when an aircraft is registered within 30 days of purchase. The registration fee is 1 percent of the manufacturer’s list price in the year of purchase, and it scales down each subsequent registration year. About 3,000 aircraft are registered each year, and the cap is $5,000.
McClung called the lack of recommendations or follow-up requirements in the audit a positive, but State Auditor Mary Mosiman said the audit highlights work still to be done.
For example, the compliance effort sparked a 39 percent boost in registration fee revenue in 2014. A 31 percent uptick was seen in 2009, in another year when the Iowa DOT conducted a compliance effort.
The report also identifies challenges in enforcement processes, Mosiman said. For example, one of the only non-voluntary tools allowed under law are liens but because of how the FAA reports registrations, liens are not a practical solution, according to the audit.
The Iowa DOT has developed a database to track registrations, but the audit shows more work is needed to develop effective enforcement practices and consistently manage aircraft registrations, Mosiman said.
“It’s a matter of making sure the DOT and our office stays on top of compliance initiatives on a regular basis to make sure fees are paid,” Mosiman said.