Tax Type
Aircraft Sales and Use Tax
Retail Sales and Use Tax
Description
Taxpayer's purchase of inoperable aircraft is subject to the 2% aircraft sales and use tax
Topic
Computation of Tax
Property Subject to Tax
Date Issued
07-30-2008
July 30, 2008
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear *****:
This is in response to your letter in which you seek correction of the retail sales and use tax assessment issued to ***** (the "Taxpayer") for the period May 2003 through January 2006. I apologize for the delay in responding to your letter.
FACTS
The Taxpayer is an aviation technical school that trains students to be aviation maintenance technicians under Federal Air Regulation Part 147. In addition, the Taxpayer maintains a historical aircraft restoration facility. The Taxpayer purchases inoperable aircraft that the students restore to airworthy condition. The auditor assessed the retail sales and use tax on the purchase of the inoperable aircraft. The Taxpayer contests the retail sales and use tax assessed and claims that the inoperable aircraft is subject to the 2% aircraft sales and use tax when the aircraft becomes airworthy and required to be licensed.
DETERMINATION
In 1984, the Virginia General Assembly enacted legislation that removed the prohibition to the levy of aircraft sales and use tax upon planes not required to be licensed in Virginia. As a result of this amendment to Va. Code §§ 58-685.29 and 58-685.32 (recodified as Va. Code §§ 58.1-1502 and 58.1-1506), inoperable aircraft and aircraft kits are subject to the aircraft sales and use tax and no longer subject to retail sales and use tax.
Based on the above, the Taxpayer's purchase of inoperable aircraft is subject to the 2% aircraft sales and use tax at such time the aircraft becomes airworthy and subject to licensing. Accordingly, the audit will be adjusted to remove the retail sales and use tax assessed on the inoperable aircraft.
CONCLUSION
The Taxpayer has paid the uncontested portion of the audit assessment. The remaining balance of the bill represents the tax and interest assessed on the contested aircraft. Based on the above determination, the Department will abate the remaining balance of the bill.
The Code of Virginia sections cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site. If you have any questions about this determination, please contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
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- Sincerely,
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- Janie E. Bowen
Tax Commissioner
- Janie E. Bowen
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AR/1-1752468616.T
Rulings of the Tax Commissioner