Tax Type
Retail Sales and Use Tax
Description
Scope of local sales and use taxes; Alcoholic beverages; Liquor sales by airline
Topic
Taxability of Persons and Transactions
Date Issued
07-26-1996
July 26, 1996
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear*************
This is in reply to your letters of May 7, 1996, and June 12, 1996, in which you seek correction of retail sales and use tax assessments issued to*********(the "Taxpayer") for March and April 1996.
FACTS
The Taxpayer is an international airline that services major airports in Virginia. The Taxpayer operates as a common carrier and qualifies for the exemption from the sales and use tax provided under Code of Virginia § 58.1-609.3(6). The Taxpayer contests the local tax assessed on in-flight liquor sales, maintaining that the tax conflicts with federal law which preempts a locality's ability to tax service or property transactions on airline flights unless such flights take off or land in the locality.
According to the Taxpayer, liquor sales are not allowed until the aircraft is in level flight. At this point the aircraft is out of a local jurisdiction and in Virginia airspace. The Taxpayer argues that the local sales and use tax cannot be imposed because the situs of the sale is not in a local jurisdiction.
DETERMINATION
In Public Document (P.D.) 96-179 (7/10/96) (copy enclosed), the department ruled that the imposition of the local sales and use tax on in-flight liquor sales is consistent with federal law. The Taxpayer is engaged in departure and landing activity throughout Virginia. Furthermore, the Taxpayer is engaged in other sales and use tax related activities at Virginia airports. As such, the Taxpayer is a dealer in Virginia under Code of Virginia § 58.1-612 and is required to collect the state and local sales tax on all sales in Virginia, including liquor sales occurring in Virginia airspace.
Accordingly, there is no basis to revise the assessments. The Taxpayer will shortly receive updated bills with interest accrued to date. The bills should be paid within 30 days to avoid the accrual of additional interest. If you have any questions regarding this matter, you may contact at ***********.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11437F
Rulings of the Tax Commissioner