Tax Type
Retail Sales and Use Tax
Description
Deficiency assessments, aircraft sales and use tax
Topic
Collection of Delinquent Tax
Date Issued
07-02-1999
July 2, 1999
Re: § 58.1-1821 Application: Aircraft Sales and Use Tax
Dear**********
This will reply to your letter in which you seek correction of an aircraft sales and use tax assessment issued to ***** (the Taxpayer) for the period December 1993 through September 1998. I apologize for the delay in responding to your letter.
FACTS
The Taxpayer was audited and assessed the aircraft sales and use tax on two aircraft. At issue is the tax assessed on an aircraft (MIG-17) that was obtained by the Taxpayer in a trade for another aircraft. The Taxpayer claims that the method used to determine the value of the MIG-17 aircraft overstates the amount of tax due. The Taxpayer maintains that the value of a similar aircraft purchased by the Taxpayer will provide a more accurate value of the MIG-17 and, thus, a more accurate tax liability.
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 60 days over a twelve-month period is required to license such aircraft with the Commonwealth prior to operating it within the Commonwealth.
Title 23 of the Virginia Administrative Code (VAC) 10-220-10.2 provides that "for aircraft not sold in Virginia but required to be licensed for use in Virginia, the amount of tax is 2 percent of the sale price of the aircraft, whenever sold; however, if the aircraft is not sold in Virginia and is first required to be licensed in Virginia six months or more after acquisition, the tax is imposed at two percent of the current market value of the aircraft if such current market value is less than the sale price of the aircraft....'
Based on Code of Virginia §§ 58.1-1502 and 5.1-5 cited above, the aircraft in question was used in Virginia and required to be licensed in Virginia. Therefore, the aircraft is subject to the 2% Virginia aircraft sales and use tax. In this case, there is no sales price since the MIG-17 was obtained in a trade for another antique aircraft. As the MIG-17 is an antique, the value of the aircraft is not listed in current aircraft valuation publications. To determine the value of the aircraft for computing the aircraft sales and use tax, the auditor used a copy of an available appraisal of the MIG-17 made by a certified appraisal company within six days of the Taxpayer's purchase of the aircraft.
I would note that the information provided on another MIG-17 purchased by the Taxpayer indicates that particular aircraft was not assembled, registered, or airworthy at the time of purchase. As the MIG-17 in question is registered and airworthy, it does not appear that the values would be comparable. Further, while the Taxpayer claims that the appraisal used to compute the audit liability overstates the value of the aircraft in question, it has not provided any documentation to support its claim. Under the circumstances, the use of the value of the aircraft, as found in the appraisal, was appropriate and reasonable to estimate the tax.
Based on the foregoing, the assessment is correct as assessed. The Taxpayer will receive an updated bill with interest accrued to date of protest. The bill should be paid within 30 days to avoid the accrual of additional interest. If you have any questions regarding this letter, please contact ***** in the department's Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/21222T
Rulings of the Tax Commissioner