USE TAX IN MAINE

[170C]

A friend just sent me this. I don't know if it is legit or not. Its the first I have heard of it. Hope it turns out to be wrong of if not hope it gets defeated. Maybe some of you folks in Maine or the NE may be able to add input.

Must GA Pilots Stay Out Of Maine?

That's the question that Steve Kahn and dozens of other pilots are wondering about, after being hit by the state of Maine with tax bills in the thousands of dollars for flying into the state. Kahn, an investment advisor who lives in Boston, flies his Cirrus SR-22 frequently into Maine to visit a summer home and other destinations, and as a volunteer with Angel Flight. He's been doing that since 2003, but this year, he got a tax bill from the state of Maine saying he owes them a "use tax" that totals over $26,000 with interest. Kahn says he had no way of knowing that flying in Maine would trigger the tax until he got the bill. "It's so unreasonable and unfair," he says. He has hired a lawyer to appeal the assessment, but since the appeal is heard by the state tax division, he doesn't have much hope of success. If the appeal is denied, he can take the matter to court, but then expenses will pile up fast. "I'm willing to fight this on principle," he says. "But there is a point where you just give up, even though you know you're right." AOPA has been talking with officials in Maine.

A meeting was set up for this week, but was canceled due to a snowstorm. "We're working now to set up another meeting, probably in January," Greg Pecoraro, AOPA's vice president for regional affairs, told AVweb on Wednesday. Some pilots who fly into Maine, even if just for a handful of trips, have received tax bills up into the six figures, he says.

[doug8082a]

I read this yesterday on AVWeb. Here's a some dated (June '07) info from AOPA. Anyone from Maine got any insight into this? It sounds like what Rhode Island was trying to do a couple years ago.

http://www.aopa.org/whatsnew/newsitems/ ... 608me.html

Boyer challenges Maine tax on out-of-state aircraft
Out-of-state general aviation aircraft owners are being unfairly singled out in Maine, AOPA President Phil Boyer wrote to Gov. John Baldacci this week.

The Maine Revenue Service is tracking IFR flight plans, collecting the N numbers, searching the FAA's aircraft registry database, and billing owners for five percent of the aircraft's value if they purchased the aircraft in a state without sales tax. It is intended as a deterrent for Maine residents who might buy their aircraft in another state, but it is adversely affecting pilots from many areas.

Under a new state law, effective January 1, 2007, certain aircraft are exempt from the tax. But the law still imposes the use tax on smaller private piston aircraft that weigh less than 6,000 pounds and spend relatively little time in Maine. AOPA believes this unfairly singles out light GA operators who like to frequent the state.

"Maine's law and tax collection policies are unreasonably penalizing nonresident owners of aircraft purchased for visiting your state," Boyer wrote. "This not only transgresses on the spirit of the new law, but we believe is inimical to the Commerce Clause of the U.S. Constitution, and federal protection of interstate air travel.... As governor, we call upon you to check the excesses of your state's tax collectors, and cease their discriminatory enforcement efforts."


Here's another AOPA article from May '07

http://www.aopa.org/members/files/pilot ... pilot.html

STATE TAX COLLECTORS GO TOO FAR, AOPA SAYS
Planning trips to Florida for some sun or to Maine to escape the sweltering summer heat? If you plan to fly there in your own aircraft, beware. In Maine, the state's revenue service is collecting a use tax on out-of-state aircraft owners who did not have to pay a sales tax when they purchased their aircraft. The intent is to collect a 5-percent tax on an item (like an aircraft) that would have been taxed if sold in Maine so that people won't try to skirt the tax by purchasing it in another state. However, AOPA believes the revenue service is taking this measure too far. "Aircraft owners who legitimately live and register their aircraft in another state should not have to pay this tax simply because they frequent Maine," said Greg Pecoraro, AOPA vice president of regional affairs. AOPA is investigating similar reports coming in about Florida. "This tax enforcement is too broad, and AOPA will work with state officials in Maine, Florida, and any other state where our members are being unfairly slammed with this kind of tax."

[GAHorn]

How are they going to enforce it?
Do they also apply similar taxes to folks who drive their autos to/thru Maine?

[doug8082a]

As I understand it, they have been running the N#s from IFR flight plans and then sending bills to the address on the registration. It's idiotic. Maine depends heavily on tourism. No one is going to fly there if they are going to get hit with a tax bill.

Just another example of the myopic view government takes. They seem oblivious to the fact the people who live in other states fly INTO Maine FREQUENTLY. It's called TOURISM!

Here's the part from the official notice. Note that state residency is not part of the equation.

http://www.maine.gov/revenue/salesuse/GIB96.pdf

AIRCRAFT
Two pieces of legislation were enacted affecting the taxation of aircraft in Maine.
• The sale or lease of turbojet aircraft weighing more than 6,000 pounds will be exempt from sales tax beginning January 1, 2007. (Chapter 519, Part EE)
• Also effective on January 1, 2007, an aircraft purchased and used outside of Maine but subsequently used in Maine will be exempt from use tax provided the aircraft is not present in Maine for more than 20 days during the 12 months following its purchase. Any time during which the aircraft is present in Maine for major alterations, major repairs or preventive maintenance is not counted against those 20 days. (Chapter 519, Part EE)

[GAHorn]

At the bottom of this msg is an AOPA overview of the tax situation regarding aircraft in most states.
An owner may find that simply retireing to another state may suddenly subject his aircraft to taxes, even tho' no sale or change of ownership occurs.
(Some of the generalized statements are incomplete views, however. Example: It is stated that Texas is one of the states which impose personal property taxes on aircraft. A more accurate statement is: Texas allows it's counties to assess personal property taxes on aircraft, but not all counties do so. (My boat and airplane were assessed taxes when Travis county thought I kept them there, but when I pointed out my boat was kept in Matagorda County and my plane was based in Coke County, the assessments were dropped. I now live in Burnet County which does not assess such taxes at all.... It's a largely agricultural county and farmers/ranchers would not take kindly to taxing ever-thang they own.)
Also, just because Maine taxes aircraft... it's likely that aircraft that have documented bases in other locales are exempt. I recall flying a corporate aircraft all the way to Delaware to sign the final papers at a Notary there to avoid sales taxes. The $53,000 saved in taxes made the flight well worthwhile. (Although this likely was convincing only because both seller and buyer were both registered Delaware corporations.) Had the county of the jet's new base taxed aircraft, a property tax might have been imposed. The aircraft's FAA registration showed the aircraft based at corporate offices in Utah, and therefore no use taxes were paid... but as chief pilot I was surprised to learn that we even had any offices in Utah. (A tiny one-room office existed there for the purpose of forwarding mail to the actual locations of various company property. I rec'd my aircraft's FAA AD notices, etc. about ten days later than usual because of the delay and re-mailing scheme.) These days many taxing authorities are more sophisticated and able to detect such tax-avoidance schemes, but typically they pursue only commercial property. If you can show your airplane is only for personal use then it rarely recieves notice.
Also, here in Texas, a sale or title-change between private individuals is exempt under a "casual sale" clause which recognizes any transfer of ownership between individuals as exempt so long as not more than two such exchanges are excersized in less than 12 months.

To learn more about such matters that might affect you: http://www.aopa.org/members/files/pilot ... x9603.html

Call your taxing authority to determine your particular situation. Tell them your name is Ol Gar.

[doug8082a]

I think what they are trying to do is not only nail the people who live in ME but live near the border and base their aircraft out of state, but also nail the tourists who summer up there as well. Any way to make a buck.

[GAHorn]

If a part-time resident of Maine has his airplane registered in his summer-time state of Florida (or some other state) where he pays taxes, then I would bet a cup of coffee that would exempt an assessment by Maine.
I'm curious how many taxpayer dollars Maine steers towards aviation, if any? (At least Texas has a very active and well-funded airport improvement and aviation activities improvement agency, the TDOT's Dept. of Aviation, directed by David Fulton, who has been extremely active in promoting local airports and saving dilapidated airports from extinction and preventing their closures by developer-interests.)
Even so, most personal airplanes are not taxed in many counties in Texas.)

[N4281V]

There is a lot of background info as to how Maine got to this piece of legislation.

Excise tax on aircraft (collected yearly by the state on ME registered aircraft) go to the town where the aircraft is based. Border airport managers were complaining that many aircraft tied down or hangared at their airport were registered in NH and they were losing out on money.

Business aircraft association was moaning about losing jobs and income because (1) companies were not buying aircraft and bringing them to the state because of the sales tax (2) they were losing money to other maintenance shops because of those state's tax free status (primarily NH and Mass) - so they got the sales tax repealed on the sale/lease of aircraft over 6,000 pounds. They tried to exempt all sales of aircraft and parts as other states have done, but since the state is out of money, the legislature wasn't going to allow all that, so they compromised. AOPA's position was "all or none." The state has to make the money up someplace....so they enacted this other piece of legislation and then cracked down on the other taxation laws that have remained on the books that weren't aggressively followed in the past.

Of course it's not fair as they are tracking IFR aircraft using Flight Aware or Flight Explorer - so they don't "see" VFR folks, or can't track those who arrive IFR but leave VFR. It's opened a big can of worms.....didn't have this problem until the new legislation came out.....the folks who wanted their tax break didn't look at the whole picture.

There is a bond issue voted on by residents every two years - the amount is just to match the FAA Airport Improvement Project funds. DOT's operational budget comes from the state's general fund.

All sales tax goes into the state's general fund.

The state has a "combustion engine gasoline tax" - I think it's something like 26 or 27 cents per gallon now, which is on all gas, including aviation gas - that goes into the general fund. Portions of that come out for boating and snowmobiling for instance, but nothing aviation specific.

There is no state aviation fund like other states have set up. That was one of our goals when I was running the airport mangers group, but it's hard to get stuff changed from the status quo. You have to be able to replace the money you take it seems....

The DOT has two folks who's job is aviation - and that's just dealing with airports (a planner and a grant administrator). We've tried several things in the past, but it just doesn't get anywhere......no money, no people....even tried the tourism folks to put together a state aeronautical chart like other states.....no money, no one has time to put it together....


Ann
Co-owner Wicked Good Aviation - Wiscasset, ME (closing Jan 31, 2008)
Former President, Maine Airport Managers Assn

Now got a flying job in upstate NY......

[doug8082a]

Co-owner Wicked Good Aviation - Wiscasset, ME (closing Jan 31, 2008)

WHAT??!!
No more Wicked Good Aviation? No more winter time soup & chili flyin?!

Ann, Tell us it ain't so!

[blueldr]

Unless you're going to spend a lot of time in Maine, I'd simply ignore them.
They have no authority outside of the state.

Actually, I sort of suspect there may be more to this story than has been covered here. I can't immagine that they would attempt to tax transient aircraft. I've never had that trouble there, though, admittedly, I've only transited the state a few times when en route to, or returning from,a visit to an old friend in New Brunswick, Canada, just to the north.

[doug8082a]

The caveat seems to be 20 days flown in Maine in a 12 month period... less than that and you're ok... more than that and they tax you.

[jrenwick]

Yes, but it sounds like they don't have a reliable way of figuring out if you've actually spent 20 days there or not.

Ann, I think I may have been your guest in Wiscasset, July 2005. We stayed at John Rhinehart's (sp?) B&B. Enjoyed his company a lot, because we're both musical, and we've both spent time flying in Hawaii. Had a great lobster dinner down by the bridge, too! Sorry to hear you're closing -- I'll never forget Wiscasset!

Best Regards,

John

[N4281V]

Yes, John, you stayed with us. Every time I see one of your posts, I remember your visit. Glad you enjoyed it.

We are closing the FBO as I now have a professional pilot job in Elmira, NY and Mike's body is showing wear after 30 years of being an aircraft mechanic. He's going to retire from the FBO and go do some other stuff - stuff that's taken a back seat to the FBO biz. (build a garage, work on the house, work on the 170...)

We'll see who the new operators are and encourage them to continue the annual chili cookoff and safety seminar.

Also effective on January 1, 2007, an aircraft purchased and used outside of Maine but subsequently used in Maine will be exempt from use tax provided the aircraft is not present in Maine for more than 20 days during the 12 months following its purchase.

If you read carefully, this only affects aircraft that spend more than 20 days in the first calendar year following purchase. So if you bought your airplane out of state and it's in Maine for more than 20 days that first year, they will send a bill. Looks like they are trying to catch the folks that register out of state and keep it in Maine - probably the NH registered, Maine based aircraft are the primary target.