Flyers Respond By Taking Their Business Elsewhere

You may not see it if you look in the mirror... but if you fly your small general aviation aircraft into the state of Maine, you have a target on your back.

Lots of people vacation in Maine, and there are some beautiful places to fly there but, as ANN reported, a law that took effect on January 1, 2007 allows the state to collect a five percent "use tax," equivalent to a sales tax, on any plane which spends 20 days or more in the state in a year. The Aircraft Owners and Pilots Association last year urged its members in other states to leave their aircraft at home when they visit Maine, or just stay away from the state entirely.

The expressed intent of the use tax was to raise $2 million in revenue from visitors to offset a slight reduction in taxes for state residents of the state. State tax collection officials get the brunt of the angry responses to the tax bills, but are quick to pass the blame to lawmakers. As David Bauer, a tax policy analyst with Maine Revenue Services, told the Associated Press, "We're charged with administering the law. We didn't write it."

In theory, your tax bill will be five percent of the aircraft's value, less whatever amount you paid in sales tax in your home state, and the use tax only applies if you fly into Maine during the first year of ownership.

If mistakes are made, though, forget any presumption of "innocent until proven guilty." You'll have to document your reason for claiming an exemption in a state where you don't live, and where you didn't buy your aircraft.

In an attempt to avoid a negative impact on aircraft service facilities in the Maine, lawmakers exempted visits by out-of-state pilots for maintenance and repairs. To avoid clogging the courts, the law also exempts aircraft over 6,000 pounds... which conveniently focuses the tax burden on small aircraft owners, who would presumably have more difficulty affording court costs.

The AP cites the example of Steve Kahn, who lives in Massachusetts. That state exempts aircraft purchases from its own sales tax to provide an incentive to support the industry.

Kahn often flies his plane to visit his vacation home in Rockland, Maine. He also serves as a pilot in the national Angel Flight program, picking up patients in rural Maine and bringing them to Boston-area hospitals free of charge. For his support of Maine's economy and service to its residents, Kahn was rewarded with a surprise, $26,000 tax bill on his airplane.

He tells the AP, "At best what Maine is doing is underhanded and devious. At worst it is illegal. Either way, it's wrong."

Maine joins a growing list of states targeting pilots who visit in small aircraft purchased elsewhere. Florida assesses a use tax of six percent, less any tax paid in your home state, if you fly into Florida even once within six months of the purchase date. The state monitors airport ramps for transient N-numbers, and you could receive a bill even if you stop in Florida just long enough to refuel.

Washington state will hit you for up to 8.9 percent if your plane is in Washington for more than 90 days in any continuous 12-month period. Illinois also taxes out-of-state plane owners.

Encouraged by the relatively large potential return for a small investment of time, states are using the internet, FAA records and random ramp checks to spot aircraft which might be targets for use taxes. Some privacy advocates are concerned that the coming requirement for aircraft to be equipped with ADS-B will create something analogous to a gigantic supermarket barcode scanner, allowing automated flight tracking for use-tax billing. FAA records of IFR flight plans are already used in this manner by states.

Louis Meiners is the president of Advocate Aircraft Taxation Company of Naples, FL. The consulting firm for aircraft owners has grown to 1,600 clients nationwide. Meiners points out that a pilot could conceivably get a separate bill from every state visited on a cross-country flight. "What we have is a real potential for double taxation and triple taxation and endless taxation in the way the states try to enforce it."

As the AOPA protest suggests, it may take pilots boycotting use tax states to bring enough pressure to resolve the problem. Some aircraft owners are already taking action on a personal level.

Brian Cleary of Longboat Key, FL flies to Maine to tend to his timber and property management business. He got a surprise use tax bill for more than $175,000. He's so angry that he tells AP he has stopped buying land and timber in Maine and will move his holdings to New Hampshire.

FMI: www.aopa.org, www.maine.gov/revenue/