State of Maine Use Taxes

By John Quarterman

COPA is aware some U.S. aircraft owners have been charged large tax bills by the State of Maine on their recently purchased aircraft – this Use Tax has even been applied to those who simply visit the state.

Until now COPA has not received any member’s report they have been charged this Use Tax, but nevertheless, COPA has taken steps to determine if COPA members are at risk.

Initially COPA contacted the State of Maine Revenue Services (MRS) regarding this issue but only received a vague explanation from them. We followed up with the MRS and pointed out the explanation does not address foreign citizens or aircraft in general or Canadian visitors or Canadian registered aircraft specifically. We then requested that Canadian aircraft should be exempt from the tax.

The MRS then indicated to us they are considering our request to exempt Canadian aircraft from the Use Tax and they will issue a formal decision and clarification letter to COPA in the near future. This has not happened to date.

COPA is continuing a dialog with the State of MRS, as their position on Canadian aircraft is developed. We also pointed out to them this tax when applied to us, contravenes the ICAO resolution on aircraft tax policy. Both Canada and the USA are signatories and members of ICAO that adopted this position on taxes between different states (countries) regarding the sale of aircraft.

COPA took liberty of extracting and underlining the following provisions from the ICAO document we believe applicable, for the State of Maine Revenue Services to review.

With respect to taxes on the sale and use of international air transport: each Contracting State shall reduce to the fullest practicable extent and make plans to eliminate as soon as its economic conditions permit all forms of taxation on the sale or use of international transport by air, including taxes on gross receipts of operators and taxes levied directly on passengers or shippers;…

It is clear ICAO was concerned with precisely the issues raised by such taxes as the Maine Use Tax. The ICAO website containing the entire document can be seen:

http://www.icao.int/icaonet/dcs/8632.html.

In the spirit of this policy document, and in order to avoid essential contravention of the principles embodied by this adopted ICAO policy, COPA suggests that the Maine Use tax application policy be amended so that foreign aircraft are not subject to the tax.

Furthermore COPA has contacted the Canadian government on this issue.

Upon learning of the tax and after being assured by Government of Maine Representatives that it does indeed apply to Canadians, and further that the Maine government does not consider the HST, GST, QST and PST Canadian taxes as a valid sales tax, (according to a MRS former ruling), I contacted the Canadian Federal Government Dept. of Foreign Affairs and International Trade (DFAIT).

The DFAIT reaction initially to the Maine Use Tax was one of surprise, as the tax was new to the representatives of both the U.S. Relations Division and the U.S. Travel Information Office.

DFAIT asked for COPA’s help in providing them with as much information as we had available on International Aviation Agreements and law. COPA was glad to oblige, and provided the same ICAO agreements and documents to DFAIT as we had supplied the Maine government.

No further action from the Canadian government is known to us at this time, as calls to both the Canadian Government departments were unanswered by our print deadline.

The MRS had assured me before Christmas they could give COPA written confirmation of the status of Canadians and the Application of the Maine Use Tax within 10 days. No such letter has been forthcoming.

At this point we can only assume that the information COPA has supplied the MRS has given them pause for thought and that they perhaps realize the morass of international law, bilateral agreements and U.S. Federal Government Treaties which the Maine Use Tax likely contravenes.

In the mean time, COPA members should be aware of this issue as we continue to await written confirmation from the State of Maine. COPA suggests members contact the State of Maine to establish their tax status before any travel to the State of Maine by personal aircraft.

Maine Revenue Service contact information is as follows:

Sales, Fuel & Special Tax Division; Tel: 207-624-9693; Fax: 207-287-6628 or mail:

PO Box 1065 Augusta, ME 04332-1065; Email: sales.tax@maine.gov.