Chickadee Checkoff In - RV Tax Not Entirely Out
The legislature’s Taxation Committee has acted on two issues that were the subjects of my recent blog posts: the chickadee checkoff on Maine’s income tax form, and a newly-enforced sales tax on RVs. The bill under consideration would have removed all checkoffs from the income tax form.
The amended bill keeps most of the checkoffs. Specifically it does the following: eliminates checkoffs for political parties and a cancer charity, adds a checkoff for the Maine State Library (for its grant program to libraries across the states), and keeps the other checkoffs, including the chickadee checkoff.
A threshold was established for the amount of money each checkoff would have to raise annually in order to remain on the form, starting at $10,000 and increasing to $25,000 over the next few years. All current checkoffs would have to pay $2500 to the Maine Revenue Service to remain on the form, and new checkoffs would have to pay $11,000 to get on the form in the future.
The only complaint I’ve heard so far about the amended version of the bill came from the Green Party, which had a checkoff along with the Democratic and Republican parties. But the Greens only received $2900 last year from their checkoff, so it’s hard to justify keeping them on the form.
The news on the RV tax is not quite as a good. Rep. Amy Volk’s original bill resulted from a decision by the Maine Revenue Service (MRS) that the business owner of an RV that is rented to a customer who spends more than 24 hours in Maine with that RV owes the state sales tax on the original price of the RV.
MRS is now auditing a Vermont company, Travel-Rite, in order to collect that sales tax on all of the company’s RVs that have been rented by customers for travel in Maine.
“Imagine this scenario,” testified Chad Shepard, Travel Rite’s owner, at the public hearing on this bill. “My company purchases a $100,000 RV and rents it to customers who use the RV in many different states. Let’s say the RV spends two days in Maine. Let’s say the rent for those two days equals $200. Under Maine’s current tax system, Maine would impose a $5,000 use tax, which is 5% of the original purchase price of $100,00, even though we only earned $200 of rent from the time the RV was in Maine,” he said.
Shepard was worried that his liability will run “well into the six figures” after renting RVs that traveled to Maine for many years. After 17 years in business, he said a bill of this magnitude from the Maine Revenue Service would “put us out of business.” He also reported that many other companies will be vulnerable, although right now the MRS seems to have targeted his company.
Unfortunately for Shepard, the amended bill stops this assessment in the future, but provides no retroactivity, so MRS can continue its audit of his company, and assess the tax that may put him out of business.
No other company is currently being audited, but in the name of fairness, you would expect MRS to apply this tax to all other RV rental businesses – including those in Maine – for past rentals, even though they won’t be able to do this in the future if the amended bill is enacted.