Tax Type
Aircraft Sales and Use Tax
Description
Aircraft Purchased in Virginia
Topic
Taxability of Persons and Transactions
Date Issued
12-21-1992
December 21, 1992
Re: §58.1-1821 Application: Aircraft Sales & Use Tax
Dear***************
This will reply to your letter of August 12, 1992 in which you seek relief from the aircraft sales and use tax recently assessed as a result of the recent tax audit of **********(the Taxpayer).
FACTS
The Taxpayer is a corporation resident in and organized under the laws of Hong Kong, a British Crown Colony. The Taxpayer's parent corporation purchased an aircraft in Virginia on October 22, 1991. On November 1, 1991, the parent transferred ownership of the aircraft to the Taxpayer at cost. The aircraft remained in Virginia until February 12, 1992, at which time it was transferred to a foreign country. The aircraft was located in Virginia for the purpose of maintenance and testing. The Taxpayer is taking issue with the aircraft sales and use tax assessed on the aircraft.
DETERMINATION
Va. Code §58.1-1502 provides that there shall be imposed, "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."
Va. Code §5.1-5 sets forth the licensing requirements of aircraft located in Virginia and subsection (a) states the following:
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- Every resident of this Commonwealth owning a civil aircraft, every nonresident owning a civil aircraft based in this Commonwealth over sixty days during any twelve-month period and every owner of an aerial application aircraft operating within this Commonwealth or of a civil aircraft operated in this Commonwealth as a for-hire intrastate air carrier shall, before the same is operated in this Commonwealth, obtain from the Department an aircraft license for such aircraft. (Emphasis added).
- Every resident of this Commonwealth owning a civil aircraft, every nonresident owning a civil aircraft based in this Commonwealth over sixty days during any twelve-month period and every owner of an aerial application aircraft operating within this Commonwealth or of a civil aircraft operated in this Commonwealth as a for-hire intrastate air carrier shall, before the same is operated in this Commonwealth, obtain from the Department an aircraft license for such aircraft. (Emphasis added).
Prior to July 1, 1984, former Va. Code §58-685.32 provided that "[n]o tax shall be levied or collected... upon the sale or use of an aircraft for which no license is required." However, this provision was repealed effective July 1, 1984, and the introduction to the Aircraft Sales and Use Tax Regulations clearly states that the regulations do not reflect law changes taking effect on or after July 1, 1984. Therefore, as Va. Code §58.1-1502 imposes the tax upon the retail sale of every aircraft sold in the Commonwealth, the fact that the aircraft in question was purchased in Virginia automatically subjects it to the tax.
In addition, based on the fact that the Taxpayer, a nonresident, based the aircraft in Virginia for over sixty days during a twelve month period, would subject the aircraft to licensure, based on advice received from the Department of Aviation.
Based on the above, I must deem the Taxpayer liable for the aircraft tax. However, based on the circumstances set forth in your letter, I will waive the penalty. Upon receipt of the outstanding aircraft sales tax and interest due, penalty will be waived.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/6379K
Rulings of the Tax Commissioner