04-216 | Virginia Tax

Tax Type

Aircraft Sales and Use Tax

Description

Corporate Officer Liability; failure to pay 2% aircraft tax

Topic

Basis of Tax

Collection of Tax

Corporate Distributions and Adjustments

Date Issued

12-10-2004

December 10, 2004

Re: § 58.1-1821 Application: Aircraft Sales and Use Tax

Dear ***********:

This is in reply to your letter in which you seek correction of the aircraft sales and use tax assessment issued to ***** (the "Taxpayer") as the responsible officer of ***** (the "Corporation") for the audit period December 2000 through January 2001. I apologize for the delay in the Department's response.

FACTS

Based on the Taxpayer's Virginia Aircraft Sales and Use Tax Return filed with the Department, the Taxpayer purchased a ******** aircraft from the Corporation on December 6, 2000. The Taxpayer did not pay the 2% aircraft tax with the return. Instead, the Taxpayer noted on the return that the Corporation had previously paid the 2% aircraft sales and use tax due on the aircraft.

An audit by the Department revealed that the Corporation had not filed a return and failed to pay the 2% aircraft tax due on the aircraft. As a result, the auditor issued an assessment to the Corporation on April 9, 2002 for the tax, penalty and interest due. Upon failure to collect the deficiency from the Corporation, the Department assessed the Taxpayer penalties in the amount of the tax, penalty, and interest owed by the Corporation pursuant to Va. Code § 58.1-1813. The Taxpayer contests the converted assessment, claiming he does not owe any taxes to the Commonwealth.

DETERMINATION

Aircraft Sales and Use Tax

Virginia Code § 58.1-1502 imposes the aircraft sales and use tax on the retail sale of every aircraft sold in Virginia and to aircraft required to be licensed in Virginia by the Department of Aviation pursuant to Va. Code § 5.1-5. The amount of the tax is 2% of the sales price of the sales price of the aircraft sold in Virginia. Under the law, the aircraft purchased by the Corporation is subject to the aircraft sales and use tax.

Corporate Officer Liability

Virginia Code § 58.1-1813 states, "Any corporate, partnership or limited liability officer who willfully fails to pay, collect or truthfully account for and pay over any tax administered by the Department of Taxation, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall . . . be liable to a penalty of the amount of the tax evaded, or not paid, collected or accounted for and paid over."

The statute defines the term "corporate, partnership or limited liability officer" as an officer or employee of a corporation, or a member, manager or employee of a partnership or a limited liability company, who as such officer, employee, member or manager is under a duty to perform on behalf of the corporation, partnership or limited liability company the act in respect of which the violation occurs and who (1) had knowledge of the failure or attempt and (2) had the authority to prevent it.

In this case, the Taxpayer was the owner of the Corporation during the audit period. The audit report and assessment were sent to the Corporation's physical address. This is the same address used by the Taxpayer. Further, in the auditor's August 19, 2002 correspondence to the Taxpayer, the auditor requested that the Taxpayer complete and return a Virginia Aircraft Sales and Use Tax Worksheet for purposes of determining the liability on the aircraft. In addition, the Taxpayer filed a return claiming that the tax was paid. These facts indicate the Taxpayer had knowledge of the Corporation's aircraft sales and use tax liability. As owner of the Corporation, the Taxpayer had the authority to pay the assessment. Therefore, based on the provisions of Va. Code § 58.1-1813, I find that the Taxpayer is a responsible officer of the Corporation and liable for the assessment issued to the Corporation.

Conclusion

Based on the foregoing, I find that the Taxpayer's claim that he does not owe the tax is unfounded. Further, the Taxpayer has provided no documentation that the Corporation paid the 2% aircraft tax due on the aircraft pursuant to Va. Code § 58.11502. Therefore, the assessment issued to the Taxpayer pursuant to Va. Code § 58.11813 is correct, and there is no basis to abate the liability.

The Taxpayer's 2003 individual income tax refund in the amount of ***** was seized through the Department's Debt Setoff Program and applied to bill number *****. This amount represents ***** tax, ***** penalty and ***** interest. As a result, the Department's records indicate the bill is satisfied in full.

The Code of Virginia sections cited, along with other reference documents, are available on-line in the Tax Policy Library section of the Department of Taxation's web site, located at www.policylibrary.tax.virginia.gov. If you have any questions regarding this determination, please contact ***** of the Department's Office of Policy and Administration, Appeals and Rulings, at *****.

- - - - Sincerely,

- - - - Kenneth W. Thorson
        Tax Commissioner

AR/49333T

Rulings of the Tax Commissioner