Document Number
21-7
Tax Type
Aircraft Sales and Use Tax
Retail Sales and Use Tax
Description
Refund denial; Statute of Limitations
Topic
Appeals
Date Issued
02-02-2021

February 2, 2021

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

Dear *****:

This is in response to your letter submitted on behalf of ***** (the “Taxpayer”), in which you seek correction of a refund denial issued by the Department. I apologize for the delay in responding to your correspondence. 

FACTS

The Taxpayer is an information technology service provider with its headquarters in Virginia. The Taxpayer was originally based outside of Virginia and moved into Virginia in 2008. The Taxpayer claims that when its headquarters relocated to Virginia, an aircraft was relocated to a hangar within Virginia. The Taxpayer claims it mistakenly remitted the aircraft sales and use tax as a use tax on its retail sales and use tax return for March 2008. The Taxpayer requests a refund of the use tax in the amount of $***** that it claims is computed based on the approximate value of similar aircraft at the time the aircraft in question was purchased.

DETERMINATION

Virginia Code § 58.1-1502 levies tax on aircraft as follows:

There is hereby levied and imposed, in addition to all other taxes and fees of every kind now imposed by law, a tax upon the retail sale of every aircraft sold in the Commonwealth and upon the use in the Commonwealth of any aircraft required to be licensed by the Department of Aviation pursuant to § 5.1-5. The amount of the tax to be collected shall be determined by the application of the following rate against the sales price or gross receipts:

  1. Two percent of the sale price of each aircraft sold in the Commonwealth.
  2. Two percent of the sale price of each aircraft not sold in the Commonwealth but required to be licensed for use in the Commonwealth. However, if the aircraft is licensed in the Commonwealth six months or more after its acquisition, the tax shall be two percent of the market value of such aircraft at the time it is licensed or two percent of the purchase price thereof, whichever is lower.

In accordance with the cited statute, the Taxpayer was required to remit the aircraft sales and use tax to the Department at a rate of 2% once the aircraft was located within Virginia.

The Taxpayer requests a refund of the use tax payment based on the assertion that it opened an aircraft tax account. The Taxpayer contends it is impossible to open an aircraft tax account without paying the aircraft sales and use tax. Thus, the open account should serve as evidence of the overpayment remitted on their 2008 retail sales and use tax return. It is noted that in 2008, the use tax rate was 5%.

The Taxpayer’s aircraft account with the Department shows no activity since its opening in June 2010 and there is no record of any payments of aircraft sales and use tax on any aircraft located in Virginia. Upon review of the March 2008 retail sales and use tax return, the Taxpayer remitted $*****, not $*****. The Department has no record of a payment in the amount of $***** made by the Taxpayer. Also the Department is unable to reconcile these amounts given the differing tax rates.

Upon receiving the refund request from the Taxpayer, the audit staff requested several documents to confirm the Taxpayer’s contention that the tax had been erroneously paid. The documents requested were the original bill of sale or invoice showing the Taxpayer’s purchase of the aircraft, documentation supporting the calculation of any remitted tax, a copy of the aircraft sales and use tax return filed for the aircraft, and various invoices relating to the return in question. The Taxpayer provided invoices for transactions, but did not provide any additional documentation to the auditor and the refund was denied. Upon appeal, the Taxpayer was provided registration information for the original aircraft in addition to sales documents for an aircraft that replaced the aircraft at issue in 2012. The Taxpayer has not, however, provided the aircraft sales and use tax return to show tax has been paid, nor is there support for the amount claimed as aircraft sales and use tax. 

Further, the Taxpayer requests a refund of the Virginia retail sales and use tax, contending the tax remitted was, in actuality, aircraft sales and use tax. As there is no evidence the tax remitted on the March 2008 return is aircraft sales and use tax, nor is there evidence of aircraft sales and use tax remitted to the Department by the Taxpayer at any time, the Department must treat this as a retail sales and use tax refund request. 

Virginia Code § 58.1-1823 states in pertinent part that “Any person filing a tax return or paying an assessment required for any tax administration by the Department of Taxation may file an amended return…three years from the last day prescribed by law for the timely filing of the return….”  Title 23 of the Virginia Administrative Code 10-210-3040 addresses the refund of sales tax to dealers and provides, in pertinent part, that “Refunds cannot be authorized unless the request is made within three years from the due date of the return.”

The Taxpayer’s retail sales and use tax refund request is for the period March 2008. Pursuant to the aforementioned authorities, a refund cannot be authorized for this period as it exceeds the statute of limitations regarding the refund of the Virginia sales tax or Virginia use tax. Based on the facts and circumstances of this case, the refund denial is upheld.

The Code of Virginia and regulation sections cited, along with other reference documents, are available on-line at www.tax.virginia.gov in the Laws, Rules and Decisions section of the Department’s web site. If you have any questions about this response, you may contact ***** in the Department’s Office of Tax Policy, Appeals and Rulings, at *****.

Sincerely,

 

Craig M. Burns
Tax Commissioner

AR/2191L
 

Rulings of the Tax Commissioner

Last Updated 04/09/2021 08:30