Tax Type
Aircraft Sales and Use Tax
Description
Out-of-state exchange of Virginia aircraft
Topic
Taxability of Persons and Transactions
Date Issued
04-18-1997
April 18, 1997
Re: § 58.1-1821 Application: Aircraft Sales and Use Tax
Dear*************
This is in reply to your letter in which you seek correction of an aircraft sales and use tax assessment issued to *************(the Taxpayer) for the period October 1993 through August 1996.
FACTS
Based on the information contained in the audit report, the Taxpayer swapped a 1982 aircraft for a 1984 aircraft in the latter part of 1995. The transfer of the aircraft occurred in Georgia. The aircraft obtained by the Taxpayer was immediately transported to Virginia, where the Taxpayer applied to the Department of Aviation for and obtained a license to operate the aircraft.
The department assessed aircraft sales and use tax based on the value of the aircraft as listed in the 1995 Aircraft Bluebook. The Taxpayer's position is that the transaction is not subject to the Virginia aircraft sales and use tax because there was no trade-in and the sales price was zero. The Taxpayer further maintains that the current market value does not apply in this case because the market value is not less than the sales price of the aircraft.
DETERMINATION
Code of Virginia § 58.1-1502 imposes the aircraft sales and use tax on 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 Code of Virginia § 5.1-5." Code of Virginia § 5.1-5 provides that every resident or nonresident owning a civil aircraft based in Virginia for 60 days over a 12 month period is required to license such aircraft with the Commonwealth prior to operating it within the Commonwealth.
Title 23 of the Virginia Administrative Code (VAC) 10-220-10.2 provides that "for aircraft not sold in Virginia but required to be licensed for use in Virginia, the amount of tax is 2 percent of the sale price of the aircraft, whenever sold; however, if the aircraft is not sold in Virginia and is first required to be licensed in Virginia six months or more after acquisition, the tax is imposed at two percent of the current market value of the aircraft if such current market value is less than the sale price of the aircraft...."
The basis for computing the aircraft sales and use tax is the sale price of the aircraft. Title 23 VAC 10-220-20(C) states in part "...where the Commissioner has reason to believe the invoice does not reflect the true sale price, ...the Commissioner may assess the tax. Under these circumstances, the tax may be assessed in accordance with such publications or other data as are customarily employed in ascertaining the maximum sale price of the aircraft."
Based on Code of Virginia §§ 58.1-1502 and 5.1-5 cited above, the aircraft in question was used in Virginia and required to be licensed in Virginia. Therefore, the aircraft is subject to the 2% Virginia aircraft sales and use tax. Under the circumstances, the use of the fair market value of the aircraft, as found in the 1995 Aircraft Bluebook, was appropriate and reasonable to estimate the tax.
Based on the foregoing, the assessment is correct as assessed. The Taxpayer will receive an updated bill with interest accrued to date. The bill should be paid within 30 days to avoid the accrual of additional interest. If you have any questions regarding this letter, please contact ******** of the department's Office of Tax Policy at ********** .
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11942T
Rulings of the Tax Commissioner