Tax Type
Aircraft Sales and Use Tax
Description
Aircraft purchased out-of-state
Topic
Taxability of Persons and Transactions
Date Issued
05-23-1997
May 23, 1997
Re: § 58.1-1821 Application: Aircraft Sales and Use Tax
Dear*****************
This will reply to your letter in which you protest the aircraft sales and use tax assessed to********* (the "Taxpayer") for the period of November 1990 through December 1995.
FACTS
The Taxpayer purchased an aircraft in Ohio on October 10, 1990. The Taxpayer promptly brought the aircraft to Virginia, where such aircraft still remains. The Taxpayer was unable to produce any documentation verifying that taxes, fees, duties, etc., were paid on the aircraft at the time of purchase. As the result of the lack of documentation, the department assessed the Taxpayer the aircraft tax, penalty, and interest based on the Aircraft Blue Book value of the aircraft on the date of purchase.
The Taxpayer feels the assessment is invalid, and if not invalid, the Taxpayer feels the department's calculation are incorrect. The Taxpayer has provided to the department a purchase agreement for the aircraft in question which shows a purchase price which is significantly less the Aircraft Blue Book value used by the auditor in assessing the tax. The Taxpayer is seeking relief of the assessment.
DETERMINATION
Code of Virginia § 58.1-1502 levies a 2% aircraft sales or use tax "upon the use in the Commonwealth of any aircraft required to be licensed by the Department of Aviation pursuant to § 5.1-5." Code of Virginia § 5.1-5 provides for the licensing of aircraft as follows:
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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... shall, before the same is operated in this Commonwealth, obtain from the Department an aircraft license for such aircraft.
Due to the fact the Taxpayer has owned and operated the aircraft in question in Virginia since 1991, such aircraft would be subject to Virginia licensing requirements, thus rendering the aircraft subject to the 2% Virginia aircraft sales and use tax. Code of Virginia § 58.1-1504, however, allows a credit against the aircraft tax for taxes paid on an aircraft purchased in another state. Unfortunately, as provided in your letter, the Taxpayer has no record of Ohio taxes being paid on the aircraft at the time of purchase. For this reason, the department cannot find any basis for allowing a credit for any taxes previously paid.
Based on the information provided with your letter, the department will agree to reduce the tax measure from the Aircraft Blue Book value at the time of purchase ($*****) to the actual purchase price per the purchase agreement ($****). In addition, since this is the first audit of the Taxpayer, l will agree to waive all penalty associated with this assessment. A revised assessment will be forthcoming.
If you should have any questions, please contact**** , Office of Tax Policy, at*************.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11554K
Rulings of the Tax Commissioner