Tax Type
Aircraft Sales and Use Tax
Description
Aircraft; Out-of-state sale
Topic
Taxability of Persons and Transactions
Date Issued
04-12-1985
April 12, 1985
Re: Request for Ruling/Aircraft Sales and Use Tax
Dear ****
This will reply to your letter of March 20, 1985 requesting a ruling on the correct application of the Aircraft Sales and Use Tax to a transaction involving ***** ("Taxpayer").
Taxpayer plans to purchase an aircraft from a Kansas Corporation for lease to the ****** It is Taxpayer's understanding that if it does not take delivery of the aircraft in Virginia, it will not be liable for sales and use tax to Virginia.
§58.1-1502 of the Virginia Code, levies a tax upon the retail sale of every aircraft sold in Virginia and upon the use in Virginia of any aircraft "required to be licensed" by the Department of Aviation pursuant to §5.1-5.
§5.1-5 of the Code provides, in pertinent part, that each resident of Virginia who owns an aircraft must, "before [such aircraft] is operated in Virginia, obtain from the Department [of Aviation] an aircraft license for such aircraft."
Therefore, you are correct in your understanding that as long as the aircraft is purchased outside Virginia, and not "required to be licensed" in Virginia, it will not be subject to Virginia Sales and Use Tax.
However, please note that even if not purchased in Virginia, if the aircraft is required to be licensed in Virginia more than six months after its acquisition, a tax equal to 2 percent of the current market value of such aircraft, including the cost of any modifications, improvements or additions thereto, subsequent to its initial acquisition, will be imposed.
All of the above assumes that Taxpayer's lease of the aircraft to will be for a period of time "substantially equal" to the remaining useful life of the aircraft, as determined at the beginning of the lease; or, in which the total of lease payments to Taxpayer during the term of the lease will be "substantially equal" in value to the value of the leased aircraft, as determined at the beginning of the lease. "Substantially equal," as used herein, means equals or exceeds 80%. (See §§630-11-1501(6)(b) & 630-11-1505 of the Aircraft Sales and Use Tax Regulations)
I have enclosed a copy of the relevant provisions of the regulations for your convenience.
I hope this has answered your questions, but if you have any further questions, please contact me.
Sincerely,
W. H. Forst
Tax Commissioner
Re: Request for Ruling/Aircraft Sales and Use Tax
Dear ****
This will reply to your letter of March 20, 1985 requesting a ruling on the correct application of the Aircraft Sales and Use Tax to a transaction involving ***** ("Taxpayer").
Taxpayer plans to purchase an aircraft from a Kansas Corporation for lease to the ****** It is Taxpayer's understanding that if it does not take delivery of the aircraft in Virginia, it will not be liable for sales and use tax to Virginia.
§58.1-1502 of the Virginia Code, levies a tax upon the retail sale of every aircraft sold in Virginia and upon the use in Virginia of any aircraft "required to be licensed" by the Department of Aviation pursuant to §5.1-5.
§5.1-5 of the Code provides, in pertinent part, that each resident of Virginia who owns an aircraft must, "before [such aircraft] is operated in Virginia, obtain from the Department [of Aviation] an aircraft license for such aircraft."
Therefore, you are correct in your understanding that as long as the aircraft is purchased outside Virginia, and not "required to be licensed" in Virginia, it will not be subject to Virginia Sales and Use Tax.
However, please note that even if not purchased in Virginia, if the aircraft is required to be licensed in Virginia more than six months after its acquisition, a tax equal to 2 percent of the current market value of such aircraft, including the cost of any modifications, improvements or additions thereto, subsequent to its initial acquisition, will be imposed.
All of the above assumes that Taxpayer's lease of the aircraft to will be for a period of time "substantially equal" to the remaining useful life of the aircraft, as determined at the beginning of the lease; or, in which the total of lease payments to Taxpayer during the term of the lease will be "substantially equal" in value to the value of the leased aircraft, as determined at the beginning of the lease. "Substantially equal," as used herein, means equals or exceeds 80%. (See §§630-11-1501(6)(b) & 630-11-1505 of the Aircraft Sales and Use Tax Regulations)
I have enclosed a copy of the relevant provisions of the regulations for your convenience.
I hope this has answered your questions, but if you have any further questions, please contact me.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner