PORTLAND, MAINE — When Steve Kahn got a $26,000 tax bill on his airplane, he thought Maine Revenue Services had made a mistake. Kahn lives, works and keeps his plane in Massachusetts.
It turns out the bill was no error. It was part of the agency's efforts to collect taxes on aircraft owned by out-of-staters even though they bought their planes elsewhere and brought them to Maine only to visit.
A number of other states, stretching from Florida to Washington, are doing the same as they grapple with budget shortfalls. The Internet makes it easier for state officials to track the comings and goings of aircraft.
Many pilots are outraged.
"At best what Maine is doing is underhanded and devious. At worst it is illegal," Kahn said. "Either way, it's wrong."
Maine officials say they are simply enforcing the state's tax laws when they send bills -- into six figures -- to out-of-state plane owners.
At issue in Maine is the state's use tax, which applies to many goods and services bought out of state that are not subject to sales tax. In the case of airplanes, tax officials say the law allows them to collect a 5% use tax from people who didn't pay sales taxes on their planes if they brought their plane to Maine for more than 20 days, excluding time for maintenance and alterations, in the first year of ownership.
"We're charged with administering the law," said David Bauer, a tax policy analyst with Maine Revenue Services. "We didn't write it."
Use taxes have been on the books for decades, but the first time tax attorney Jon Block saw the state go after somebody who lives and keeps their plane out of state was three years ago.
Block, of law firm Pierce Atwood in Portland, represents seven people from Massachusetts, Connecticut, Maryland and Florida who received bills this year ranging from about $16,000 to $175,000. His clients for the most part fly to Maine on business or to visit vacation homes.
"These people are dumbfounded," Block said. "They feel like they've been taken to the cleaners."
He contends that in addition to being unfair, the precise wording of Maine's use-tax law makes his clients exempt from the tax.
Other states are also stepping up efforts to collect use, lease and property taxes from out-of-state plane owners, said Louis Meiners, president of Advocate Aircraft Taxation Co. of Naples, Fla., a consulting firm for aircraft owners with 1,600 clients nationwide.
