A group of nonresident aircraft owners, represented by Pierce Atwood's State and Local Tax Group, has successfully challenged Maine’s 5% use tax on aircraft that land in the State. The Maine Supreme Court ruled that certain aircraft owned by non-residents could not be taxed if they were “substantially used” outside of Maine. As a result of this case, a number of taxpayers, though not all, saw their tax assessments cancelled. Blue Yonder LLC v. State Tax Assessor, 2011 ME 49.
Second, the recently enacted state budget has taken further important steps to improve Maine’s position in the aviation field. Effective July 1, 2011 and continuing until June 30, 2015, Maine will exempt from sales and use tax the “sales, use or leases of aircraft and sales of repair and replacement parts exclusively for use in aircraft or in the significant overhauling or rebuilding of aircraft or aircraft parts or components.” P.L. 2011, Ch. 380, Part GGGG. This law will not only exempt all aircraft from Maine’s sales and use tax effective July 1st, it will also allow Maine’s aviation businesses to compete on a level playing field for repair and overhaul work that currently goes to states that do not tax aircraft repair parts. From that perspective, this new law is likely to create jobs and spur economic activity in and around Maine’s airports and at the former Brunswick Naval Air Station. Pierce Atwood is proud to have worked in conjunction with several of its aviation clients, associations and other interested parties to help make this legislation a reality. To learn more about this new law and its positive implications for the State, see Maine does away with aircraft sales taxes from the June 22nd edition of the Bangor Daily News.
If you have questions about the applicability of the Maine Supreme Court decisions or the new legislation to your particular aircraft or aviation business, please contact Jon Block.