Tax Type
Aircraft Sales and Use Tax
Description
Aircraft; Dealer's personal use; delinquent tax; Penalties and interest; Waiver
Topic
Taxability of Persons and Transactions
Date Issued
06-24-1997
June 24, 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 sales and use tax audits of ********* (the "Taxpayer") for the period of April 1993 through March 1996.
FACTS
The Taxpayer was assessed aircraft sales and use tax, penalty, and interest on four aircraft located in Virginia. The first two aircraft, ******* have been in Virginia since 1993. The Taxpayer registered these two aircraft with the Virginia Department of Aviation and the information was forwarded to the Department of Taxation. The Taxpayer claims that they paid the tax on these aircraft at that time, however, shortly thereafter a storm damaged the Taxpayer's storage area and all records were destroyed. The Taxpayer is requesting that the assessed aircraft tax, penalty, and interest on these aircraft be abated.
The Taxpayer purchased two additional aircraft, ********* in late 1995 and early 1996. The Taxpayer is a dealer of this particular type of aircraft and purchased such aircraft for resale. The Taxpayer licensed these two aircraft while they were in their inventory and made personal use of them. The Taxpayer was unaware that this activity constituted a taxable use of the aircraft. The Taxpayer is willing to pay the tax on these aircraft, however, is requesting that the department waive all penalties and interest associated with the assessments.
DETERMINATION
Code of Virginia § 58.1-1502 levies a 2% aircraft sales and 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:
-
-
-
- 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.
-
-
I would like to point out at this time that the Department of Aviation will license aircraft in the state of Virginia prior to payment of the 2% Virginia aircraft sales and use tax.
Keeping the above in mind, I will address the application of the Virginia aircraft sales and use tax in the present case. With regard to aircraft the Taxpayer provides that subsequent to licensing the aircraft, the tax was paid to the Department of Taxation. A search of the department's records indicate that no tax has been paid on these aircraft. A member of my staff also contacted the Department of Aviation to determine if they have a record of tax payment and there is none. It may be possible the aircraft in question had different registration numbers at the time the tax was paid. If this is the case, please forward this information to the department. If this is not the case, the department has no alternative but to uphold the assessments with respect to these aircraft. In fairness to the Taxpayer, however, the department will agree to waive all penalties upon full payment of tax and interest due.
With regard to aircrafts ********* the Taxpayer is in agreement that the tax is due based on the personal use of such aircrafts prior to resale. The Taxpayer is requesting waiver of all penalties and interest associated with these aircraft assessments. Code of Virginia § 58.1-1812 mandates the imposition of interest on all deficiencies of tax. Absent the abatement of associated tax, interest cannot be waived. Due to the validity of the tax assessed on these aircraft, there is no basis for waiver of any portion of the interest. The department will agree to waive all penalties upon full payment of all taxes and interest due.
Any additional information the Taxpayer may have concerning the registration
numbers of the aircraft should be sent to *************, Office of Tax Policy, P.O. Box 1880, Richmond, Virginia 23218-1880, within 30 days from the date of this letter. Absent additional information, I must consider all tax and interest due. Upon payment of tax and interest, the audit penalty associated with the aircraft in question will be abated.
If you should have any questions regarding this determination, you may contact********* at *********** .
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12583K
Rulings of the Tax Commissioner