Tax Type
Retail Sales and Use Tax
Description
Airline baggage handling equipment
Topic
Exemptions
Property Subject to Tax
Date Issued
01-15-1987
January 15, 1987
Re: Ruling Request/ Sales and Use Tax
Dear***************
This will reply to your letter of December 10, 1986 seeking a ruling on the correct application of the sales and use tax to the sale of passenger and baggage handling equipment to an airline operating in interstate commerce as a common carrier.
§630-10-7 of the Virginia Retail Sales and Use Tax Regulations, copy enclosed, provides that "[t]he tax does not apply to tangible personal property sold or leased to an airline operating in intrastate, interstate or foreign commerce as a common carrier providing service consisting of regularly scheduled flights to one or more Virginia airports at least five days per week for use or consumption by such airline directly in the rendition of its common carrier service."
In addition, the Virginia Supreme Court ruled in the case of Commonwealth of Virginia v. United Airlines, Inc., 219 Va. 374 (1979), that equipment necessary for loading or unloading and the handling of passenger baggage was used directly in the rendition of an airline's common carrier service. Therefore, the Court concluded that purchases of such equipment by the airline qualified for exemption from the tax under former §58-441.6 (u), now §58.1-608(26), of the Virginia Code.
Accordingly, provided the airline purchasing such property is engaged in interstate commerce as a common carrier and provides service in accordance with the requirements stated above, the passenger and baggage handling equipment described in this case would qualify for exemption from the tax.
In addition to the regulation section cited above, please find enclosed a copy of the United Airlines case. I hope all of the foregoing has answered your questions, but please let me know if you have any further questions.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner