A Maine court upheld the exemption for use tax when a taxpayer purchases and aircraft from another State that has a lower tax rate or none at all and does not use the aircraft in the State for a 12 month period. What was important in this case was the court defining “substantial use”. The taxpayer owned a Cessna Skylane 182 and maintained the aircraft in VT. Periodically the owner would come to Maine to perform routine maintenance and drop his children off in private schools. The total days outside the State of Maine during the audited 12 month period was 75.9%, however the court ruled that this was not “sufficiently substantial to make unjust the imposition of the Mane use tax.
Individuals and companies can breath a slight sigh of relief in knowing that they probably will not incur a use tax liability when their aircraft merely enters the State for routine maintenance or passenger landings. Hopefully other States will recognize the imposition a use tax can have in the aviation world and might take note.
Source: CCH ( Commerce Clearing House), October 3,2012 Mile High, LLC vs. Maine State Tax Assessor ( BCD-AP-09-23 Docket Number)