Document Number
11-34
Tax Type
BTPP Tax
Description
Aircraft was not normally garaged, docked, or parked in City 1 and, therefore, not subject to BTPP tax.
Topic
Local Taxes Discussion
Tangible Personal Property
Date Issued
03-04-2011

March 4, 2011





Re: Appeal of Final Local Determination
Locality: *****
Taxpayer: *****
Business Tangible Personal Property Tax

Dear *****:

This final state determination is issued upon the application for correction filed on behalf of ***** (the "Taxpayer") with the Department of Taxation. You appeal a denial of a request for refund of certain business tangible personal property (BTPP) taxes made by the Taxpayer to ***** (City 1) for the 2009 tax year. I apologize for the delay in responding to your letter.

The BTPP tax is imposed and administered by local officials. Virginia Code § 58.1-3983.1 D authorizes the Department to issue determinations on taxpayer appeals of BTPP tax assessments. On appeal, a BTPP tax assessment is deemed prima facie correct, i.e., the local assessment will stand unless the taxpayer proves that it is incorrect.

The following determination is based on the facts presented to the Department summarized below. 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.

FACTS


During the 2009 tax year, the Taxpayer, a venture capital firm based in the ***** (City 2), owned and operated an aircraft for the purpose of transporting employees on company business. The aircraft weighed more than 10, 000 pounds. When not in use, the aircraft was housed in a hangar at an airport located in City 1.

A document obtained from the City 1 airport commission indicates the aircraft is based at the airport in City 1. In addition, the aircraft's 2008 flight schedule indicates it made more stops in Virginia than any other state. The schedule shows the aircraft routinely landed at an airport in ***** (the "County"), which is closer to the Taxpayer's home office in City 2, on its way in and out of Virginia and was rarely parked there overnight. The aircraft made nine flights to ***** (State A) and remained there for up to 16 days. Outside Virginia and State A, the aircraft usually spent a day or less when it landed in other locations.

Based on this information, City 1 concluded that the aircraft was sitused within its jurisdiction and issued a BTPP tax assessment to the Taxpayer for the 2009 tax year. The Taxpayer appealed the assessment to City 1. In its final determination, City 1 found that the aircraft was located in the Taxpayer's state of domicile (Virginia) and was normally garaged at the airport in City 1 when in Virginia. The Taxpayer has filed an appeal with the Tax Commissioner, contending City 1 did not apply the proper test for assessing the BTPP tax on the aircraft. The Taxpayer also asserts that the aircraft travels continuously throughout the United States, and it spent less than six months at the hangar in City 1. Accordingly, the Taxpayer requests correction of the assessment issued by City 1 for the 2009 tax year and a refund of any tax collected.

ANALYSIS


Pursuant to Va. Code § 58.1-3511 A, the situs of motor vehicles, travel trailers, boats and airplanes is, with certain exceptions, the locality where the vehicle is normally garaged, docked or parked. The aircraft owned by the Taxpayer does not appear to fall within any of the exceptions enumerated in Va. Code § 58.1-3511.

In George M. Hogan v. County of Norfolk, 198 Va. 733, 96 S.E.2d 744, (1957), the Virginia Supreme Court found that situs means more than the physical location of the property on tax day. According to the Court, the situs of property for BTPP tax purposes is its permanent location, not a casual or incidental location during the course of transit.

The Taxpayer asserts that the Attorney General has established a standard that property must be located in a taxing jurisdiction for at least six months in order to establish situs there. See Op. Att'y. Gen. 03-004 (2/6/2003).

City 1 argues that the Attorney General was opining on specific facts presented for a singular tax situation regarding a pleasure boat weighing more than 10,000 pounds and Va. Code § 58.1-3503 categorizes aircraft and boats separately for property taxation. As such, City 1 asserts that the Attorney General's opinion does not apply to the Taxpayer's situation.

The Attorney General has repeatedly held that vehicles that were not garaged, docked, or parked in a Virginia locality for at least six months could not be taxed in such locality. Many of these documents point to 1979-1980 Op. Att'y. Gen. 353 (2/1/1980). In this opinion, which addresses the situs of a pleasure boat, the Attorney General stated, "If the boat is not 'normally garaged, docked or parked' in any one locality for a significant portion of the year (e.g., six months), it is then taxed in the jurisdiction in which the owner resides."

Further, while Va. Code § 58.1-3503 establishes categories of property subject to taxation, Va. Code § 58.1-3511 sets forth the rules for determining where an item of personal property may be taxed. Under this statute, the situs for any vehicle, including boats and airplanes, is the locality in which it is normally garaged, docked or parked.

In the Taxpayer's case, the aircraft is hangered at an airport in City 1. The Virginia Department of Aviation confirmed that the aircraft was registered in Virginia and based at the City 1 airport. In addition, the aircraft spent more time hangered at the City 1 airport than any other location during 2009. The evidence also indicates that the aircraft spent less than six months in City 1 during the 2009 tax year.

DETERMINATION


Based on the evidence, the Taxpayer's aircraft was hangered at City 1's airport for less than six months during the 2009 tax year. Pursuant to Va. Code § 58.1-3511 and the precedent established in opinions of the Attorney General, the aircraft was not normally garaged, docked, or parked in City 1 and, therefore, not subject to BTPP tax for the 2009 tax year. Accordingly, the BTPP tax assessment issued to the Taxpayer by City 1 for the 2009 tax year is overturned. Any BTPP tax collected relating to the aircraft for the 2009 year should be refunded to the Taxpayer.

If you have questions regarding this determination, you may contact ***** in the Office of Tax Policy, Appeals and Rulings, at *****.
                • Sincerely,


                • Craig M. Burns
                  Tax Commissioner



AR/1-4069198002.o


Rulings of the Tax Commissioner

Last Updated 08/25/2014 16:46