Could a county tax blue-book aircraft values when the resident claimed he owned only FAA titles for aircraft that no longer physically existed?

Subject

Local Mobile Property

Plain-English summary

Virginia remanded the aircraft assessments because FAA titles did not by themselves prove that tangible aircraft existed in the county. The resident had purchased title documents for two antique aircraft and said the original planes had long been destroyed or scrapped. He claimed to own only documents and “N” numbers that could be used if he rebuilt the aircraft.

Local mobile property tax covered tangible airplanes and required situs where the aircraft was normally garaged, stored, or parked, or at the owner's domicile when that location could not be determined.

Virginia emphasized that tangible property must physically exist in a form that can be seen, weighed, measured, felt, touched, or otherwise perceived. It could not conclude from the title records that taxable aircraft existed.

The county had to determine whether the two aircraft physically existed in the county during 2009. If it could not establish tangible existence, it had to abate the assessments.

What this means for you

• Registration or title records do not always establish that taxable physical property exists.
• Local aircraft tax requires tangible property and a valid local situs.
• Blue-book valuation assumes an aircraft exists in taxable form.
• A remand requires further local fact-finding; it is not an immediate abatement.

Common questions

Did Virginia decide the taxpayer owned no aircraft?

No. It said the current evidence was insufficient and ordered the county to investigate physical existence and location.

What happened if no tangible aircraft existed?

The county was required to abate the 2009 assessments.

Citations and references

• Va. Code § 58.1-3983.1(A) and (D).
• Va. Code §§ 58.1-1100 et seq., 58.1-3506(A), and 58.1-3511(A).
• Virginia Constitution art. X, § 4.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 10-282

Original ruling text

December 27, 2010

Re: Appeal of Tangible Personal Property Tax

Taxpayer: *

Locality: *

Dear *:

This final state determination is issued upon your appeal filed on behalf of * (the "Taxpayer") with the Department of Taxation. You appeal the *** (the "County") assessment of Local Mobile Property (LMP) tax made on certain aircraft titled in the Taxpayer's name.

The LMP tax is imposed and administered by local officials. Virginia Code § 58.1-3983.1 D authorizes the Department to issue determinations on taxpayer appeals of LMP tax assessments. On appeal, a LMP tax assessment is deemed prima facie correct, i.e. , the local assessment will stand unless the taxpayer proves that it is incorrect.

The following determination is based on the facts presented to the Department summarized below. The Code of Virginia sections cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's website.

FACTS

The Taxpayer, a resident, of the County, purchased Federal Aviation Administration (FAA) titles for two antique aircraft. The County determined that the Taxpayer owned the two aircraft and assessed property tax for the 2009 tax year using the valuation provided in an aircraft blue book.

The Taxpayer appealed the assessment to the County, contending he did not actually own the aircraft or any tangible airplane parts. He asserted that all he actually owned was FAA titling documents that would permit him to rebuild the aircraft and use the "N" number from the original aircraft, which had long been destroyed or scrapped by their owners. In its final determination, the County concluded that the Taxpayer owned two aircraft based on the FAA information and upheld the assessment. The Taxpayer appeals the County's determination to the Department, contending he did not have any tangible aircraft in the County during that tax year at issue.

ANALYSIS

Virginia Code § 58.1-3983.1 A defines the LMP tax as the tangible personal property tax on airplanes, boats, campers, recreational vehicles, and trailers. All tangible personal property, unless declared intangible under the provisions of Va. Code § 58.1-1100 et seq. , is reserved for local taxation by Article X, § 4 of the Constitution of Virginia. Virginia Code § 58.1-3506 A establishes separate classifications of aircraft for local tax purposes.

Virginia Code § 58.1-3511 A provides:

. . . the situs for purposes of assessment of motor vehicles, travel trailers, boats and airplanes as personal property shall be the county, district, town or city where the vehicle is normally garaged, docked or parked; . . . In the event it cannot be determined where such personal property, described herein, is normally garaged, stored or parked, the situs shall be the domicile of the owner of such personal property

In Black's Law Dictionary (Eighth Edition, 2004, p. 1254) "tangible personal property" is defined as " . . . personal property that can be seen, weighed, measured, felt , or touched, or is in any way perceptible to the senses . . . ." Under this definition, tangible personal property subject to local taxation must be property that can be experienced through one's senses. Thus, in order for the County to impose property tax on the aircraft based on their blue book value, the aircraft must be in a tangible form and sitused in the County.

DETERMINATION

Based on the information provided, I am unable to conclude that the Taxpayer owned tangible aircraft subject to the tax in the County. Therefore, I am remanding this case back to the County in order for it to determine whether the Taxpayer's aircraft were physically located in the County during the 2009 tax year. If the County is unable to conclude that the two aircraft existed in tangible form in 2009, if must abate the assessments for the 2009 tax year.

If you have any questions concerning this determination, you may contact * in the Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Linda D. Foster

Deputy Tax Commissioner

AR/1-4554166603.B