Aircraft Sales and Use Tax
Aircraft flight logs; aircraft are not subject to the licensing requirements in Virginia
Taxability of Persons and Transactions
February 19, 1997
Re: § 58.1-1821 Application: Aircraft Sales and Use Tax Audit
This will reply to your letter in which you seek correction of the aircraft sales and use tax audit of ******* (the "Taxpayer") for the period of July 1990 through August 1990.
The Virginia Department of Aviation requires airport managers to complete an Airport Survey annually to list all aircraft that are, in the airport manager's opinion, located at the airport often enough to require licensing in accordance with Code of Virginia § 5.1-5. According to the 1994 Airport Survey, two aircraft (tail numbers) owned by the Taxpayer were based at a Virginia airport.
After an unsuccessful attempt by the auditor to obtain information to determine the tax application to the aircraft in question, the auditor forwarded a draft audit report to the Taxpayer. The Taxpayer responded that the two aircraft were not based in Virginia and forwarded to the auditor the actual values of the aircraft. Unable to determine the tax application based on the information received, the auditor forwarded revised aircraft tax assessments to the Taxpayer. The Taxpayer is contesting the audit assessment on the grounds that the aircraft are not subject to the licensing requirements in Virginia.
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, copy enclosed, 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. (Emphasis added) .
In order to determine whether an aircraft is based in the Commonwealth over sixty days during any twelve-month period, it is necessary for the department to review the aircraft "flight" logs. While I am aware that the Taxpayer has furnished to the department the "pilot" logs and various maintenance invoices, this documentation is not sufficient to determine if the aircrafts in question are required to be licensed. Upon receipt of this information, a determination will be made as to the licensing requirement and tax application to the aircrafts.
If you should have any questions, please contact***************, Office of Tax Policy, at***************.
Danny M. Payne