Q: What are the licensing requirements for an aircraft in Virginia?
A: In general, any aircraft that is based in Virginia or operating in Virginia for more than 60 days over a 12 month period is required to obtain a Virginia Aircraft License. A Virginia aircraft license cannot be issued unless the aircraft is properly insured and the 2% Aircraft Sales and Use Tax has been paid to the Commonwealth of Virginia. The Department of Aviation does not require an aircraft license on aircraft that are not airworthy.
Q: What is Aircraft Sales and Use Tax?
A: Aircraft Sales and Use Tax is a one time tax that is placed on every aircraft sold in the Commonwealth and the use of any aircraft in the Commonwealth for more than 60 days and that is required to be licensed with the Department of Aviation.
Q: What is the Aircraft Sales and Use Tax rate?
A: The 2% Aircraft Sales and Use Tax is calculated on the sales price of the aircraft or the fair market value of aircraft brought into Virginia six months or more after acquisition, provided the aircraft is required to be licensed with the Department of Aviation.
No credit is allowed for trade-ins. In the absence of a bill of sale or other written evidence of purchase price, the Commonwealth of Virginia uses an average retail price to estimate the taxable amount of the aircraft.
Q: Who is responsible for paying the tax?
A: The “owner”, either the individual or entity which holds title to the aircraft, is responsible for payment of the 2% Aircraft Sales and Use Tax.
Q: How did you obtain the average retail price?
A: We use the Price Digest’s Aircraft Bluebook Historical Value Reference. For aircraft not listed (i.e. kits, assembled from parts, experimental), we determine the average retail price based on the average price of similar aircraft being offered for sale.
The average retail price used for calculating the tax is the purchase amount from the year it was first required to be licensed.
Please note, a bill of sale with a nominal value such as “$1 and other valuable consideration” will not be considered adequate documentation of the purchase price.
Q: I pay personal property tax every year. Isn’t my Aircraft Sales and Use Tax included in these fees?
A: Many people confuse the 2% Aircraft Sales and Use Tax with personal property tax. The 2% Aircraft Sales and Use Tax is based on the sales price, and is due only once on each individual sale. It should be paid to the Virginia Department of Taxation at the time of purchase and prior to applying for an aircraft license. Personal property tax is an annually imposed, locally administered tax.
Q: Aircraft Sales and Use Tax was already paid on the aircraft. What kind of documentation can I use to show this?
A: Please provide a receipt, invoice, or purchase/sales agreement that shows where the 2% Aircraft Sales and Use Tax has been paid. A credit against the 2% Aircraft Sales and Use Tax is allowed for Aircraft Sales and Use Tax paid correctly to another state.
100 DOAVCE 20091113 Aircraft Licensing FAQs
Under the “dealer exclusion”, a 2% tax will be remitted to the Department of Taxation on the monthly gross receipts.
Q: If an airplane is purchased from a private individual, isn’t it exempt from the 2% Aircraft Sales and Use Tax?
A: No. Although there is a Retail Sales and Use Tax exemption for “isolated or occasional sales” in the Code of Virginia §58, that exemption does not apply to the sale of aircraft.
Q: Are there any exemptions from paying the 2% Aircraft Sales and Use Tax?
A: Code of Virginia §58.1-1505 allows an exemption from paying the 2% Aircraft Sales and Use Tax on any aircraft sold or used by:
1.United States or federal agency
2.Commonwealth of Virginia or state agency
3.any air carrier operating in intrastate, interstate or foreign commerce providing regularly scheduled air service a defined in §58.1-1501
4.any nonprofit organization which is exempt from taxation under §501(c)(3) of the Internal Revenue Code AND which is operating exclusively for the purpose of providing charitable, long distance, advanced life support, air ambulance services for low-income medical patients in the Commonwealth
5.an organization which is exempt from taxation under §501(c)(3) of the Internal Revenue Code which is organized for the primary purpose of distributing food, clothing, medicines and other necessities for needy persons in the United States and throughout the world.
6. any aircraft that is considered a Warbird, manufactured and intended for military use, excluding those manufactured after 1954, and (ii) used only for (a) exhibit or display to the general public and otherwise used for educational purposes (including such flights as are necessary for testing, maintaining, or preparing such aircraft for safe operation), or (b) air show and flight demonstrations (including such flights necessary for testing, maintaining, or perparing such aircraft for safe operation), but not including any aircraft used for commercial purposes, including Transportation and other services for a fee.
7. any aircraft that is purchased or used by a qualified company shall be exempt from the tax imposed by the chapter. A qualified company shall be an aviation-related company, limited liability company, partnership, or a combination of such entities that have a common ownership interest through a parent, as a direct or indirect subsidiary of a parent, or as affiliated brother-sister entities that (i) is headquartered in the Commonwealth (ii) between January 1, 2010 and December 31, 2014, makes a new capital investment of at least $4 million in aviation-related real estate and real estate improvements in the Commonwealth on publicly-owned, public use airports (iii) between January 1, 2010 and December 31, 2014, creates in the Commonwealth at least 50 new jobs that pay at least one and a half times the prevailing average wage in the locality in which the jobs are located, (iv) owns or used aircraft that are primarily for intrastate, interstate, or foreign commerce, and (v) has entered into a memorandum of understanding with the Virginia Economic Development Partnership, after consultation with the Virginia Department of Aviation, on or before December 31, 2014, that at a minimum provides the details for determining the amount of capital investment and jew job goals, the repayment obligations should those goals not be achieved, and any conditions under which repayment by the qualifying person claiming the exemption may be required.
8. Any aircraft sold in the Commonwealth as evidenced by Federal Aviation Administration Bill of Sale AC Form 8050-2 and registered outside the Commonwealth as evidenced by Federal Aviation Administration Aircraft Registration AC Form 8050-1 shall be exempt from the sales tax imposed by this chapter, so long as the aircraft is removed from the Commonwealth within 60 days of the date of purchase on the Bill of Sale. If the aircraft is removed from the Commonwealth within 60 days of the date of purchase, the time between the date of purchase and the removal of the aircraft shall not be counted for purposes of determining whether the aircraft is subject to the use tax imposed by this chapter on aircraft that are based in the Commonwealth for over 60 days in any 12 month period.
Q: What if the aircraft in question has been sold?
A: Because the 2% Aircraft Sales and Use Tax is on the purchase of property, not on the possession of property, the 2% Aircraft Sales and Use Tax is due on the sales price when you purchased the aircraft that was required to be licensed with the Department of Aviation, regardless of whether you still own it.
Q. Does teh 2% Aircraft Sales and Use Tax apply to sale price of aircraft kits and inperable or wrecked aircraft?
A. Yes. The 2% Aircraft Sales and Use Tax applies to aircraft kits, parts and accessories when the aircraft becomes airworthy.
Q: If an individual owns several aircraft and licenses them in his individual name and later desires to form a corporation and transfer ownership of the aircraft to the corporation, is he required to pay the 2% Aircraft Sales and Use Tax before being allowed to license the aircraft in the name of the corporation?
A: Virginia’s law is that the 2% Aircraft Sales and Use Tax does not apply when the ownership of an aircraft is transferred from an individual or partnership when such transfer is incidental to the formation, organization or dissolution of a corporation in which the individual or partnership has the majority interest.
Q: How and when are taxes paid on restored aircraft?
A: Once an aircraft has been restored, is airworthy, and is ready to be licensed, the value is based on all of the components purchased such as; airframes, engines, kits, parts, and accessories.
Q: Under what circumstances do penalties and interest apply?
A: When any person fails to file a return or pay the full amount of tax required by the Code of Virginia within the thirty days required for filing and payment, a penalty in the amount of 6% is added to the 2% Aircraft Sales and Use Tax. An additional 6% of the tax is charged for each additional thirty-day period. The additional penalty will not exceed 30%.
Interest is determined at a rate in accordance with the Code of Virginia §58.1-15 and applies to the unpaid amount of the tax from the day after the due date for timely filing. Interest on the payment of the tax will accrue until the tax is paid.
Q: If an aircraft owner did not register the aircraft or pay the 2% Aircraft Sales and Use Tax and it is now destroyed, is the owner still liable for tax payment?
A: Yes. The aircraft owner is liable for the 2% Aircraft Sales and Use Tax if the aircraft was purchased or operated in Virginia for more than 60 days, if required to be licensed with the Department of Aviation and it is within a six-year statute of limitations.
Q: How do I pay the 2% Aircraft Sales and Use Tax when I apply for a license?
A: You can download the Aircraft License Application from www.doav.virginia.gov and the Aircraft Sales and Use Tax Return from www.tax.virginia.gov .
Make checks payable to Treasurer of Virginia.