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BLUE YONDER, LLC v. STATE TAX ASSESSOR
17 A.3d 667 (2011)
2011 ME 49
BLUE YONDER, LLC
v.
STATE TAX ASSESSOR.
Docket: BCD-10-3.
Supreme Judicial Court of Maine.
Argued: September 14, 2010.
Decided: April 26, 2011.
Janet T. Mills, Attorney General, Pamela W. Waite, Asst. Atty. Gen., Scott W. Boak, Asst. Atty. Gen., (orally), Office of the Attorney General, Augusta, ME, for the State Tax Assessor.
Panel: SAUFLEY, C.J., and ALEXANDER, LEVY, SILVER, MEAD, and GORMAN, JJ.
Majority: SAUFLEY, C.J., and ALEXANDER, SILVER, and GORMAN, JJ.
Dissent: LEVY, and MEAD, JJ.
SAUFLEY, C.J. [¶ 1] This appeal requires us to address the purposes of Maine's use tax as a complement to the sales tax. Based on the statutes in effect at the time of taxation, we conclude that an aircraft that was used briefly in Maine was exempt from the use tax when the aircraft was purchased and delivered outside of Maine, was owned by an out-of-state entity, had never been registered in Maine, and was in Maine for approximately twenty-one full days during its first year of use. Because we conclude that an exemption applied, we vacate the judgment entered on the Business and Consumer Docket (Humphrey, C.J.), in which the court concluded that a use tax was properly imposed on the aircraft. [¶ 2] The aircraft's owner, Blue Yonder, LLC, appeals from the summary judgment entered by the court upon de novo determination whether the use tax was properly imposed. See 36 M.R.S. § 151 (2010). Blue Yonder argues that the use tax should not have been imposed because three use tax exemptions apply, 36 M.R.S.A. § 1760(23-C)(C), (45)(B), (82)
(Supp.2002),1 and because the imposition of the tax violates the Commerce Clause. Blue Yonder also challenges the imposition of interest pursuant to 36 M.R.S.A. § 186 (Supp.2002).2 We agree with Blue Yonder that the tax was assessed improperly, and we vacate the judgment. I. BACKGROUND[¶ 3] The following facts are undisputed. Blue Yonder is a limited liability company that was organized in 2002 in Massachusetts. The company is owned jointly by Stephen Kahn and his wife, Janet Pendleton. Blue Yonder purchased an aircraft from Cirrus Design Corporation on November 4, 2002, in Minnesota. Kahn flew the aircraft from Minnesota to Massachusetts, where it was registered. The aircraft has never been registered in Maine. No sales or use tax has been paid on the aircraft in any jurisdiction.
[¶ 4] Kahn rented the aircraft from Blue Yonder for his personal and business use as well as for the humanitarian purpose of delivering ill or injured patients to Massachusetts through the Angel Flight Program; he was the only person to operate the aircraft in 2002 and 2003. During those years, Kahn owned properties in Maine, which he visited using the aircraft. The aircraft was not used exclusively outside of Maine during the first twelve months of ownership; it was present in Maine for at least twenty-one full days during that twelve-month period.3[¶ 5] Maine Revenue Service assessed a use tax of $17,313.06 and interest of $8,005.77, for a total assessment of $25,318.83, on or about June 29, 2007, and the State Tax Assessor upheld the imposition of the tax and interest upon reconsideration on December 21, 2007. Blue Yonder appealed from the Assessor's decision to the Superior Court and sought a de novo determination. See 36 M.R.S. § 151; M.R. Civ. P. 80C. Upon Blue Yonder's motion, the court entered summary judgment for the Assessor. Blue Yonder appealed.
1. Section 1760 enumerated the three exemptions addressed by the parties here:
Subject to the provisions of section 1760-C, no tax on sales, storage or use may be collected upon or in connection with:
. . . .
23-C Certain vehicles purchased by nonresidents. Sales of the following vehicles purchased by a nonresident and intended to be driven or transported outside the State immediately upon delivery by the seller:
A. Motor vehicles, except all-terrain vehicles as defined in Title 12, section 7851 and snowmobiles as defined in title 12, section 7821;
B. Semitrailers;
C. Aircraft;
D. Truck bodies and trailers manufactured in the State; and
E. Camper trailers, including truck campers.
If the vehicles are registered for use in the State within 12 months of the date of purchase, the person seeking registration is liable for use tax on the basis of the original purchase price.
Notwithstanding section 1752-A, for purposes of this subsection, the term "nonresident" may include an individual, an association, a society, a club, a general partnership, a limited partnership, a domestic or foreign limited liability company, a trust, an estate, a domestic or foreign corporation and any other legal entity.
. . . .
45. Certain property purchased outside the State. Sales of property purchased and used by the present owner outside the State:
A. If the property is an automobile, as defined in Title 29-A, section 101, subsection 7, and if the owner was, at the time of purchase, a resident of the other state and either employed or registered to vote there;
A-1. If the property is a watercraft or all-terrain vehicle that is registered outside the State by an owner who at the time of purchase was a resident of another state and the watercraft or all-terrain vehicle is present in the State not more than 30 days during the 12 months following its purchase for a purpose other than temporary storage; or
B. For more than 12 months in all other cases.
For purposes of this subsection, "use" does not include storage, but means actual utilization of the property for a purpose consistent with its design. Property, other than automobiles, watercraft and all-terrain vehicles, that is required to be registered for use in this State does not qualify for exemption unless it was registered by its present owner outside this State more than 12 months prior to its registration in this State.
. . . .
82. Sales of property delivered outside this State. Sales of tangible personal property when the seller delivers the property to a location outside this State or to the United States Postal Service, a common carrier or a contract carrier hired by the seller for delivery to a location outside this State, regardless of whether the property is purchased F.O.B. shipping point or other point in this State and regardless of whether passage of title occurs in this State.
36 M.R.S.A. § 1760 (Supp.2002) (emphasis added).
2. Section 186 has since been amended. See P.L.2009, ch. 625, § 3 (effective July 12, 2010) (codified at 36 M.R.S. § 186 (2010)).
3. The Assessor listed twenty-five dates on which the aircraft was in Maine. Blue Yonder, however, accurately responded that the Assessor's list contained twenty-one occasions on which the aircraft was "present for at least one day" in Maine. Because the court concluded that the exemption set forth in 36 M.R.S.A. § 1760(45) (Supp.2002) required "exclusive" use outside of Maine for the first twelve months, neither the potential factual dispute nor the distinction between "dates" and "days" was resolved. We use the twenty-one day figure because neither party disputes that the aircraft was in Maine for "more than 20 days," and the discrepancy does not affect our analysis.
4. The Legislature has since amended the statute such that it exempts an aircraft purchased by a nonresident from taxation when
the aircraft is present in this State not more than 20 days during the 12 months following its purchase, exclusive of days during which the aircraft is in this State for the purpose of undergoing "major alterations," "major repairs" or "preventive maintenance" as those terms are described in 14 Code of Federal Regulations, Appendix A to Part 43, as in effect on January 1, 2005. . . . For the purposes of this paragraph, the location of an aircraft on the ground in the State at any time during a day is considered presence in the State for that entire day, and a day must be disregarded if at any time during that day the aircraft is used to provide free emergency or compassionate air transportation arranged by an incorporated nonprofit organization providing free air transportation in private aircraft by volunteer pilots so children and adults may access life-saving medical care.
36 M.R.S. § 1760(45)(A-3) (2010) (emphasis added). This provision is inapplicable here because it was not yet in effect, was not a mere clarification of the prior version of the statute, and was not made retroactive. Cf. Me. Sch. Admin. Dist. No. 27 v. Me. Pub. Emps. Ret. Sys., 2009 ME 108, ¶ 25, 983 A.2d 391, 399 (stating that a statute does not apply retroactively even if it clarifies existing law). We therefore express no opinion on the relationship between the twenty-day limitation now set forth by statute and the purpose of use taxation in Maine. Further, because this record demonstrates only that the Blue Yonder aircraft was in Maine for twenty-one to twenty-five days or dates, with two or more of those dates being for participation in the Angel Flight Program, it is unclear whether recent amendments would have altered the outcome if they had been in place at the time.
5. That the Legislature is fully capable of making such judgments is shown by the companion exemption in 36 M.R.S. § 760(45)(A-1) (2010) for watercraft registered outside of the State by an individual who is a resident of another state at the time of the purchase. Such a purchase is exempt from the Maine use tax if "the watercraft is operated in the State not more than 30 days during the 12 months following its purchase for a purpose other than temporary storage." Id.
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