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Virginia Administrative Code
Title 23. Taxation
Agency 10. Department of Taxation
Chapter 220. Aircraft Sales and Use Tax
5/22/2024

23VAC10-220-30. Credit against tax.

A. Generally. A credit will be given against the Virginia aircraft sales and use tax imposed on the use of aircraft in Virginia for the amount of tax paid by the owner to another state by reason of the imposition of a similar tax on his purchase or use of the aircraft.

1. For purposes of this section, the term "similar tax" includes a general retail sales and use tax or titling tax imposed with respect to aircraft.

2. In order to obtain credit in this Commonwealth for any similar tax paid to another state for the purchase or use of an aircraft, a copy of the invoice covering the transaction must be furnished, showing tax billed and the state to which paid. If required by the Tax Commissioner, an affidavit shall be furnished stating that such tax has been paid and not refunded.

B. No credit for tax paid to another state on lease or rental of aircraft. No credit will be given against the Virginia aircraft sales and use tax for aircraft acquired in another state and taxed on gross receipts from use in another state since the basis for tax in Virginia is the market value of the aircraft at the time it is brought into Virginia. The market value reflects any decrement attributable to use of the aircraft in another state.

C. No credit for sales tax paid. Credit against the tax will not be given for state sales tax paid on kits or component parts used in construction of an aircraft.

Example 1: A moved his aircraft to Virginia in 1982 from another state. The aircraft was originally purchased in 1980 for $20,000 and sales tax was paid in the amount of $600 to the state of his former residence. The published pricing guide value of the aircraft when moved into Virginia was $16,000.

Since the aircraft was not required to be licensed in Virginia until six months or more after its acquisition, the Virginia use tax will be 2.0% of its current market value, or $320. The credit for a similar tax paid to another state completely offsets the Virginia aircraft sales and use tax and no Virginia tax would be due.

Example 2: X purchased an aircraft in State A which imposed no tax on the purchase; the aircraft was moved to State C and a use tax was imposed on the value of the aircraft by State C in the amount of $200. X then moved the aircraft to Virginia for use in this state and the Virginia tax based on the value of the aircraft was $320. X was required to pay $120 Virginia tax ($320 tax liability less $200 credit for a similar tax paid to another state).

Example 3: Y purchased parts and an engine and built an aircraft which cost $12,000 when completed and required to be licensed in Virginia. The aircraft use tax liability was $240 and Y sought credit for $200 retail sales tax which he paid on the parts and engine he purchased to construct the aircraft. No credit was allowable because no similar tax was paid to Virginia or to another state on the aircraft. The tax paid on parts and engine was not a similar tax paid on the purchase or use of an aircraft.

Example 4: In 1975 B leased an aircraft in State D which imposed a use tax on the lease payments. The long-term lease value of the aircraft was $30,000 and use tax was paid in the amount of $900. B moved the aircraft to Virginia in 1983. The current market value of the aircraft is $5,000 and the remaining lease value is $4,500. The Virginia aircraft tax liability was $100 and B sought credit for the tax paid on the lease in State D. No credit was allowable because the Virginia aircraft tax was based upon the remaining current market value of the aircraft when subject to aircraft tax in Virginia.

Statutory Authority

§§ 58.1-203 and 58.1-1504 of the Code of Virginia.

Historical Notes

Derived from VR630-11-1504, eff. January 1, 1985, with retroactive effect according to § 58.1-203 of the Code of Virginia.

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