Summer vacation season is still a month off but the NY Sun deliver some bad news for the wealthy who are planning to travel by private plane or yacht. A number of states are looking to tax private planes and yachts that come to their states and stay for a short time. Currently New York does not tax nonresidents who bring aircraft or boats into the state but Maine charges pilots who have their plane in the state more than 20 days a "use tax." A use tax is a form of excise tax levied on personal property. The NY Sun article reports that a Massachusetts pilot got a bill for more than $25,000 for keeping his plane in the state in 2003.

The Maine state government website has addressed the use tax controversy clarifying their policies by saying that "in most situations, nonresidents flying into Maine do not owe the tax and are not at risk of being assessed." They also stress that the Maine use tax is not a possibility unless an aircraft comes into Maine within the first 12 months after its purchase by a nonresident and that if the aircraft is present in Maine within the first 12 months for purposes other than repair and maintenance, no Maine use tax is due if a sales or use tax of 5% or more was paid in another state. In the case of the pilot in the NY Sun article he had not paid sales tax when he bought the plane in Massachusetts because Massachusetts does not charge sales tax on planes. Pilots are also wary of traveling in Florida, Illinois, and Washington which have all toughened enforcement of sales and use taxes on aircraft. Each state has its own policies on use tax so it's a good idea to check the state website if you are planning to keep your yacht or plane in a state other than your home state for longer than a couple of weeks especially if your plane or boat is a new purchase and you did not pay sales tax.

And there was more bad news from the Senate recently. The U.S. Senate voted in favor of legislation to raise taxes on gasoline for private jets. The tax hike will help pay for updating the FAA air traffic control system. The bill will have private jet owners paying 36 cents per gallon in tax up from 21.8 cents.