By W. Hunter Old, Aviation Law Center
If you own a private plane, helicopter or even an unmanned aerial system (what most of us call a drone), the beginning of each new year always creates questions about taxes: what triggers them, who to pay and how much are common questions. Airports are required to report all aircraft that are housed at the airport, so it is difficult to stay hidden from the regulators for long. Additionally, the Department of Aviation just recently sent out reminders to all aircraft owners in Virginia that all aircraft need to be registered. All of this has led to a variety of questions from local pilots, owners and operators. While a competent accountant should handle the detailed numbers for any particular situation, here is a 10,000-foot view of the overall legal framework.
Virginia aircraft sales and use tax
Virginia charges a tax on the purchase of every “aircraft” that is operated within the state for more than 60 days in a calendar year. The Code of Virginia defines “aircraft” quite broadly, and that definition includes anything not attached to the ground and flown by one or more persons higher than two feet off the ground. That tax is two percent of the sales price for any aircraft sold in Virginia or sold elsewhere but brought to Virginia for use here, whether you are buying from a broker or a private individual. Under the “use” category, Virginia taxes two percent of the monthly gross receipts from a lease, charter or other use of an aircraft licensed for commercial use.
Two other factors also may affect whether the tax applies—or whether the full tax applies. If you purchase the aircraft in Virginia, but fly it away to another state within 60 days, you can pay that state’s sales tax instead. Additionally, if you purchase an aircraft elsewhere, pay sales tax there and then bring it to Virginia, you can receive a credit for the amount of tax you paid elsewhere if that tax was less than Virginia’s two percent.
The Sales and Use Tax also is a different payment than your personal property tax, which is charged by the locality in which your aircraft is housed. So, if you hangar your plane or helicopter at Newport News–Williamsburg International Airport, you owe the City of Newport News property tax in addition to whatever state tax may apply.
Aircraft licensing
Aircraft in Virginia are required to be licensed, although you cannot apply for the license until you have paid any applicable aircraft tax. There are different licenses that depend on the use to which you are putting your aircraft. However, any aircraft that is based or operated in Virginia for more than 60 days over a 12-month period is required to obtain a license. Licensing is required whether the aircraft is kept at a public airport, a private airport, a helipad or other landing area. The physical licenses come in two parts—one that is fixed to the aircraft and one that can be kept with the aircraft papers. It is the duty of a seller to inform the Department of Aviation when an aircraft is sold, providing a name and address for the new owner.
There are also several categories of licenses in Virginia. If you simply own a plane for your own private enjoyment, then a private, noncommercial license most likely applies. However, if you use the aircraft for any commercial purposes, then you must have a contract carrier license. At present, the Department of Aviation considers a contract carrier license to apply to any aircraft that is being flown for flight instruction for a fee, as well as on-demand passenger or freight flights.
Additionally, there is an agriculture license, which is self-explanatory, and a license for commercial aircraft. The commercial license applies to any aircraft that is carrying passengers or freight “for hire,” so many times a commercial and a contract carrier license are both required.
Drones
Make no mistake about it. Drones are aircraft. They are untethered and are flown more than two feet above ground by one or more persons (sophisticated drones have one person operating the controls and another operating a camera). Although there is not presently any state regulation requiring drones to be registered, the FAA does have licensing requirements for any drone that weighs between a half-pound and 55 pounds (called a small unmanned aircraft system, or sUAS). You have to be older than 13 to register, and registration applies to the operator, not the aircraft (so multiple small drones can be operated by the same person without having to register each one). Larger drones have to be registered in much the same way as a traditional plane or helicopter. The FAA website (www.faa.gov) is always a great resource.
Hunter Old is managing partner of Aviation Law Center, a division of the law firm of Heath, Overbey, Verser & Old, PLC. He handles all types of aviation matters, representing almost every sector of the aviation community, from carriers to servicers to pilots. Heath, Overbey, Verser & Old, PLC is a litigation firm, representing businesses and individuals in state and federal courts on the Peninsula and throughout Virginia. Old can be reached at 757-599-0734 or his firm’s website at www.hovplc.com.
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