Tax Type
Aircraft Sales and Use Tax
Description
Aircraft; Basis of tax
Topic
Taxability of Persons and Transactions
Date Issued
06-02-1997
June 2, 1997
Re: § 58.1-1821 Application: Aircraft Sales and Use Tax
Dear**************
This will reply to your letter in which you seek correction of the aircraft tax audit of your client, ******** (the "Taxpayer”), for the period of July 1992 through August 1992.
FACTS
Based on the 1994 Airport Survey at Leesburg Municipal Airport in Leesburg, Virginia, the Taxpayer owned and had based at the airport, a Cessna 441, tail number*************. The Taxpayer contends that the aircraft in question does not meet the aircraft licensing requirements set forth in Code of Virginia § 5.1-5, and is therefore not subject to the Virginia aircraft sales and use tax imposed under Code of Virginia § 58.1-1502.
In the alternative, the Taxpayer contends that the aircraft tax should be computed on the lower of the sale price of the aircraft or it's fair market value when it is determined that the aircraft is subject to licensure in the state of Virginia, since such determination is made six months or more after the date of purchase.
The Taxpayer also implies that the Virginia statute imposes different licensure requirements on residents versus nonresidents. These issues are addressed in what follows.
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.
Based on the above, and based on the 1994 and 1996 Airport Survey furnished to the department by the Department of Aviation, it appears that the Taxpayer's aircraft would be subject to the Virginia aircraft sales and use tax. It is provided in your letter that at the present time the aircraft is now based at Ft. Myers Airport in Ft. Myers, Florida. In order for the department to determine if the aircraft was subject to the 2% Virginia aircraft sales and use tax in 1994, it is imperative that the Taxpayer furnish to the department the following information:
- Flight logs for calendar year 1994
- Purchase date and purchase price
- Documentation of any taxes paid on the aircraft at the time of purchase
- Fair market value of aircraft at the time aircraft entered Virginia and date
- Hangar receipts for calendar year 1994
It should be pointed out that Code of Virginia § 58.1-1504, copy enclosed, allows a credit against aircraft tax for taxes paid on an aircraft purchased in another state. Such credit shall not exceed the 2% Virginia aircraft tax and the Taxpayer would be responsible for any additional taxes due should the credit be less than the Virginia aircraft tax due.
In regard to the tax being assessed based on the fair market value at the time the aircraft is required to be licensed, Code of Virginia § 58.1-1502.2 provides that the application of the aircraft tax shall be applied as follows:
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- Two percent of the sale price of each aircraft not sold in the Commonwealth but required to be licensed for use in the Commonwealth. However, if the aircraft is licensed in the Commonwealth six months or more after its acquisition, the tax shall be two percent of the market value of such aircraft at the time it is licensed or two percent of the purchase price thereof, whichever is lower.
Based on the above, the department will adjust the assessment to reflect the fair market value at the time the aircraft was required to be licensed. This adjustment will be made based on the information provided by the Taxpayer.
It is implied in the Taxpayer's letter that the licensing requirements imposed on residents of the Commonwealth differs from the requirement imposed on nonresidents. The licensing requirements are imposed equally on both residents and nonresidents. If the aircraft is purchased outside the Commonwealth and stored in the Commonwealth for 60 days or more in a calendar year, the aircraft is subject to licensing requirements.
Please forward the information requested to ********Office of Tax Policy, P.O. Box 1880, Richmond, Virginia 23218-1880 within 60 days of the date of this letter. Absent additional information, the department has no alternative but to assume the outstanding aircraft tax assessment is valid. If you should have any questions, please contact ******** at********* .
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12445K
Rulings of the Tax Commissioner