Tax Type
Aircraft Sales and Use Tax
Description
Deficiency Assessments, LLC, aircraft sales and use tax
Topic
Collection of Delinquent Tax
Date Issued
07-24-1998
July 24, 1998
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 your client, ***** (the "Taxpayer'), for the periods March 1997, October 1997, and November 1997.
FACTS
The Taxpayer is a Delaware limited liability company with a business location in Virginia. The Taxpayer was assessed Virginia aircraft sales and use tax on three (3) aircraft it owned. Based on information received by the Department, the aircraft in question may have been based in Virginia 60 days or more during a twelve month period and may have been required to be licensed in Virginia under Code of Virginia § 5.1-5..
The Taxpayer contends that the licensing of aircraft in Virginia, and subsequent taxation thereof, hinges on the department definition of the term "based.' The Taxpayer believes that neither the Code of Virginia nor the department's regulation define the term "based' for purposes of applying the licensing requirements or taxation. The Taxpayer requests that the department waive the tax and associated interest assessed on the three 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 sixty days over a twelve-month period is required to license such aircraft with the Commonwealth prior to operating it within the Commonwealth.
The Taxpayer believes that the Virginia statutes and regulations do not adequately define the term "based' in order to determine licensing requirements and thus taxability. It is the department's position that if an aircraft operator/owner in the course of business or in the course of routine flying leases, rents or owns a hanger or tie down space at an airport in Virginia, it would indicate that they intended to "base' or operate in Virginia on more than as occasional basis [see P.D. 98-14 (2/3/98) enclosed]. Therefore, if an operator/owner operates an aircraft in Virginia on sixty or more occasions during a twelve month period, and also leases space at a Virginia -- airport for sixty days or more at a Virginia airport, this would subject such aircraft to Virginia licensing requirements and taxation.
Based on information obtained by the department, it appears the Taxpayer's aircraft are subject to the 2% Virginia aircraft sales and use tax. In order to determine whether or not the aircraft are actually subject to the tax, it will be necessary for the Taxpayer to furnish to the auditor flight logs, pilot records, or airport hangar receipts and tie-down receipts. Once this information is reviewed by the auditor, it will be determined whether the aircraft in question are subject to licensing requirements and taxation as set forth above. Absent any additional information within 60 days, the department has no alternative but to assume the aircraft are subject to the Virginia aircraft sales and use tax.
If you should have any questions, please contact *****, Office of Tax Policy, at *****.
Sincerely,
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 your client, ***** (the "Taxpayer'), for the periods March 1997, October 1997, and November 1997.
FACTS
The Taxpayer is a Delaware limited liability company with a business location in Virginia. The Taxpayer was assessed Virginia aircraft sales and use tax on three (3) aircraft it owned. Based on information received by the Department, the aircraft in question may have been based in Virginia 60 days or more during a twelve month period and may have been required to be licensed in Virginia under Code of Virginia § 5.1-5..
The Taxpayer contends that the licensing of aircraft in Virginia, and subsequent taxation thereof, hinges on the department definition of the term "based.' The Taxpayer believes that neither the Code of Virginia nor the department's regulation define the term "based' for purposes of applying the licensing requirements or taxation. The Taxpayer requests that the department waive the tax and associated interest assessed on the three 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 sixty days over a twelve-month period is required to license such aircraft with the Commonwealth prior to operating it within the Commonwealth.
The Taxpayer believes that the Virginia statutes and regulations do not adequately define the term "based' in order to determine licensing requirements and thus taxability. It is the department's position that if an aircraft operator/owner in the course of business or in the course of routine flying leases, rents or owns a hanger or tie down space at an airport in Virginia, it would indicate that they intended to "base' or operate in Virginia on more than as occasional basis [see P.D. 98-14 (2/3/98) enclosed]. Therefore, if an operator/owner operates an aircraft in Virginia on sixty or more occasions during a twelve month period, and also leases space at a Virginia -- airport for sixty days or more at a Virginia airport, this would subject such aircraft to Virginia licensing requirements and taxation.
Based on information obtained by the department, it appears the Taxpayer's aircraft are subject to the 2% Virginia aircraft sales and use tax. In order to determine whether or not the aircraft are actually subject to the tax, it will be necessary for the Taxpayer to furnish to the auditor flight logs, pilot records, or airport hangar receipts and tie-down receipts. Once this information is reviewed by the auditor, it will be determined whether the aircraft in question are subject to licensing requirements and taxation as set forth above. Absent any additional information within 60 days, the department has no alternative but to assume the aircraft are subject to the Virginia aircraft sales and use tax.
If you should have any questions, please contact *****, Office of Tax Policy, at *****.
Sincerely,
Rulings of the Tax Commissioner