91-298 | Virginia Tax

Tax Type

Aircraft Sales and Use Tax

Description

Aircraft Sales and Use Tax; Statute of Limitations

Topic

Collection of Delinquent Tax

Date Issued

11-22-1991

November 22, 1991

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

Dear*****************

This will reply to your letter of March 20, 1991 in which you seek relief from the Virginia aircraft sales and use tax assessed to your client, ************* (the Taxpayer).

FACTS

The Taxpayer purchased an aircraft in the state of North Carolina on October 16, 1985 and moved the aircraft to Virginia shortly after the purchase date. On September 26, 1990, the Taxpayer made application to the Virginia Department of Aviation to license the aircraft in the state of Virginia. On December 17, 1990, the Taxpayer was assessed aircraft use tax, penalty and interest on the purchase price of the aircraft.

The Taxpayer takes exception to the assessment by contending that the tax was assessed outside the statute of limitations under Va. Code §58.1-104.

DETERMINATION

Virginia Regulation (VR) 630-11-1502 (copy enclosed) addresses the levying of the Virginia aircraft sales and use tax and states the following:

- For aircraft not sold in Virginia but required to be licensed for use in Virginia, the amount of tax is two percent of the sale price of the aircraft, wherever sold; however, if the aircraft is not sold in Virginia and is first required to be licensed in Virginia six months or more after its acquisition, the tax is imposed at two percent of the current market value.

Based on the above, any aircraft not sold in the Commonwealth, but required to be licensed for use in the Commonwealth, is subject to the 2% aircraft sales and use tax, This brings us to the question of when was the aircraft required to be licensed. VR 630-11-1502 goes on to say:

- The term "required to be licensed" as used in this section refers to the licensing provisions of Chapter 1 of Title 5.1 of the Code of Virginia § 5.1-5 requires that before operating any aircraft, the owner must obtain from the Department of Aviation an aircraft license for such aircraft. (Emphasis added)

This same requirement is set forth by statute in Va. Code §58.1-1506(A). From the information available to this office, the aircraft in question was operated in the Commonwealth shortly after its acquisition on October 16, 1985. At this time the aircraft was required to be licensed and the owner became liable to pay the 2% aircraft sales and use tax.

Based upon the above, it is clear that the tax was due and payable shortly after October 16, 1985. However, you contend that the department was prohibited from assessing the tax under the provisions of Va. Code §58.1-104. In part, Va. Code §58.1-104 provides:

- Any tax imposed by this subtitle shall be assessed within three years from the date on which such taxes become due and payable. In the case of a false or fraudulent return... or a failure to file a required return, the taxes may be assessed... at anytime within six years from the date on which such taxes became due and payable. (Emphasis added).

Your contention that the six year statute of limitations is inapplicable is based upon your belief that there is no requirement a person purchasing an aircraft outside of Virginia file a return. Va. Code §58.1-202 sets forth the general powers and duties of the Tax Commissioner and subsection 7 authorizes the Tax Commissioner to:

- Prescribe the forms of books, schedules and blanks to be used in the assessment and collection of state taxes and call for and prescribe the forms of such statistical reports, notices and other papers as he may deem necessary to the proper administration of the law, and prescribe and install uniform systems to be used by assessing officials.

The Virginia Aircraft Sales and Use Tax Return, Form AST-3 (enclosed) has been prescribed by the department for the payment of the aircraft sales and use tax under VR 630-11-1502 and Va. Code §58.1-1506(A).

Failure to file Form AST-3 prior to the operation of the aircraft in Virginia extended the statute of limitations for assessment to six years. The assessment dated December 17, 1990 falls within the six year statute of limitations and is therefore a valid assessment. As such, the tax, penalty and interest assessed is due and payable in full.

Sincerely,

W. H. Forst
Tax Commissioner

TPD/5074K

Rulings of the Tax Commissioner