U.S. State Court overturns Maine use tax assessmentApril 29, 2011 at 9:08 am | Posted in Aviation Law Current Event | Leave a comment
by Sara M. Langston with the blog faculty
The Supreme Judicial Court of Maine has ordered the state to repay a Massachusetts aircraft owner about $26,000 after overturning a lower court ruling to do with the state’s controversial use tax. As we first reported in 2007, Steve Kahn bought a Cirrus SR22 in 2003 and registered it in his home state. He used it to visit property he owns in Maine and for Angel Flight volunteer missions. After noting his tail number in Maine, state authorities invoked the use tax, which essentially levies sales tax on goods brought from outside the state and used within it. In a split ruling, the majority of court panelists ruled Kahn gets his money back, but that might not be the case for others testing the use tax.
The assenting panelists said the 6 to 7 percent of its time Kahn’s SR22 spent in Maine during 2004 didn’t amount to enough for the use tax to apply. But the panelists refused to put a figure on how much time in and out of the state warrants invocation of the tax and said each airplane owner will have to present his or her own case. “Although the parties seek a more categorical determination from us, we decline to establish any bright line,” the court ruled. “Determining whether the use outside of Maine was substantial will require a careful examination of the unique facts of each case.” The dissenting panelists said such matters are legislative in nature rather than judicial. When Kahn was assessed the taxes, the law did not specify the amount of time an airplane had to be parked or operated in Maine to be subject to the tax. In 2007, the state plugged that loophole by making the time limit 21 days. The state’s aviation industry, led by Kestrel Aircraft, is trying to abolish the law entirely, saying it hurts the state’s effort to attract aviation industries.