Maine Supreme Court Ruled He Was Not Subject To "Use Tax"

The state of Maine had sent Steve Kahn of Bedford, MA a bill for $26,000 in taxes they said he owed on an airplane he flew in the state in 2002 and 2003. This week, the Maine Supreme Court ruled that he should not have been sent that bill, and ordered the Maine Revenue Service to refund the money.

Maine charges a five percent "use tax" to non-residents who bring an airplane to the state within the first year of ownership. But in a 7-2 decision, the state's high court said that the "6-7 percent of the time" the plane was in Maine did not justify charging Kahn the tax. The ruling means other aircraft owners may seek refunds on taxes they were charged when they brought their aircraft to Maine for business or personal travel. When Kahn was in Maine, the law did not stipulate how long an aircraft had to be in the state for it to be assessed the tax, according to a report in the Portland Press Herald. The law is an attempt to capture revenue from aircraft owners who do not pay state sales tax on their airplanes, and can apply to other goods and services. The law has since been changed to allow visits to the state of up to 20 days before the tax is levied.

Kahn had been in Maine at his vacation home, and participating in the Angel Flight program transporting patients from rural Maine to hospitals in Boston. He called the refund a "moral victory," saying he didn't think he would ever see the money again. Kahn's attorney said the court was drawing a line by ruling in favor of Kahn, but not saying where that line is.

That's because a Florida businessman also represented by the attorney, who was assessed a $117,000 tax bill for keeping his airplane in Maine for 156 days was not so lucky. The court ruled that owner would not be receiving a refund on the use tax.

FMI: www.state.me.us/revenue/