Senate Bill 265
Special Aircraft Property Taxation Limits

In every region of the state, our airports are an important part of the local economy. During the past session, the Legislature adopted Senate bill 265, which limits taxation valuation on special aircraft property. This will provide a targeted tax incentive on all aircraft owned or leased by commercial airlines, charter carriers, private carriers, private companies or private firms.

The bill limits the ad valorem taxation valuation for “special aircraft property” to the lessor of its fair market salvage value or 5 percent of its original purchase price. This applies to all commercial and private carrier helicopters, airplanes and  jets.  It applies to aircraft used to transport people and property over scheduled routes and charters for profit, or private aircraft used for business transportation purposes.

Currently, aircraft that is registered in this state is taxed at 60 percent of its market value, like any other property.  The state has previously granted similar special reduced property tax treatment for pollution control facilities, coal waste disposal power projects, windmills,  specialized manufacturing production property and  capital additions to manufacturing facilities.

The “Special Aircraft Property Valuation Act” values “special aircraft property” (defined as all aircraft owned or leased by commercial airlines or private carriers), at its salvage value for ad valorem property taxation.  The salvage value is the lower of fair market salvage value or five percent of the original cost of the property, whichever is lower.

The assessor of the county in which an aircraft is located is charged with determining, in writing, whether an airplane, helicopter or jet is special aircraft property which is subject to valuation at its salvage value.  Once it is determined whether the aircraft is to be treated as special aircraft property, the county assessor is to notify the tax commissioner of the determination.  If the taxpayer disagrees with the assessor’s decision, he or she may file a protest with the assessor.  If the assessor denies the protest, the Act establishes an appeal process to the tax commissioner.  The provisions of the Special Aircraft Property Valuation Act become effective for valuations beginning July 1, 2009.

Many commercial and private aircraft in use in this state have actually established a domicile or registration in other states for tax purposes, to take advantage of lower taxation rates in other states.  With this tax treatment, it is hoped that more aircraft will be home-based and registered as being domiciled in this state, and attract a larger industry for housing, maintaining and servicing the aircraft, if more aircraft claim West Virginia as their new place of domicile or registration for tax purposes.

The bill requires the West Virginia Aeronautics Commission to provide annual reports for three successive years to the Legislature’s Joint Committee on Government and Finance, beginning March 1, 2012, detailing the economic benefit of adopting the special valuation method (according to salvage value) for specialized aircraft property.  The report is to include the number of new jobs created, the number of additional aircraft relocated to West Virginia, the number of new hangars built, and the associated ad valorem property tax impact.

It’s worth noting that every additional aircraft that is based in West Virginia will be contributing to state taxes through the aviation fuel tax. It is projected that 10,000 new small business jets will be put into service over the next ten years. In addition, it is estimated that for every corporate aircraft that goes into service, five to seven good jobs are created.

I welcome and appreciate your input on these or any other legislative issues. Write to House Majority Leader Joe DeLong, Building 1, Room 228-M, 1900 Kanawha Blvd. E., Charleston, 25305, or joe@joedelong.com, or call 304-340-3220.