Tax Law Blog | IRS Tax Attorneys

It takes Sgt. Charles Denault barely two minutes to spot a dozen cars with out-of-state license plates parked in driveways and outside houses and apartments.

Driving his cruiser along this streets of coastal Kittery, Denault is on the lookout for vehicles registered in other states — especially New Hampshire — but owned by people who live in Maine.

“They’re everywhere,” Denault said as he points out car after car with New Hampshire plates. “It’s like dandelions that keep popping up.”

By professing to live in New Hampshire, Mainers can avoid paying a 5 percent sales tax when they buy a vehicle. They also don’t have to buy car insurance, which is required in Maine but not in New Hampshire. And people who work in New Hampshire can also avoid paying Maine’s income taxes if they claim a New Hampshire residence.

A side effect is that they may end up paying slightly more to register their car in New Hampshire — a negligible worry for Mainers already skipping out on paying other taxes but potentially devastating to towns like Kittery, which hurt as tax collections and state aid to the town go down.

Police say some people simply aren’t aware that they’re required by law to have Maine plates after 30 days of becoming a resident. But all too often, said Kittery Police Chief Ed Strong, money is the motivator.

Strong said offenders use all sorts of tricks to get around the law: Some claim to live at a relative’s New Hampshire home or use the address of a rental or seasonal property.

“We have found people that have dummy addresses in New Hampshire to register their vehicles,” Strong said.

Nobody knows for sure how many excise tax evaders there are in Maine or how much money the state and local towns are losing because of them.

In Maine, it would cost $305 in excise taxes and fees to register a 3-year-old midsize car with a retail price of $20,000; the same vehicle would cost $313.20 to register in New Hampshire.

Kittery police typically write 150 to 200 summonses a year for excise tax evasion, although the pace has accelerated over the past year.

But other towns aren’t so vigilant.

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A conservative public policy group said Wednesday that Maine’s new tax law is unconstitutional and that it’s prepared to file a lawsuit to overturn it.

People moving into or out of the state, as well as out-of-staters who work in Maine, could end up paying thousands of dollars more in income taxes than full-time residents under the tax code overhaul passed by state lawmakers this year, said Tarren Bragdon, chief executive of the Maine Heritage Policy Center. Some 55,000 families would pay the higher taxes if the law goes into effect as scheduled Jan. 1, he said.

“This (tax) is not just mean. It’s wrong,” Bragdon said at a news conference. “And guess what? It’s unconstitutional.”

It will be interesting to see how this turns out. In my opinion the group is right on target. Read this full story on Boston.com.

The first training seminar regarding the new sales tax law for businesses will be held Monday at the Augusta Civic Center.

Recent legislation has made a number of changes to the sales, use, and service provider tax laws.

The Maine Revenue Service is holding a number of seminars for business owners to explain the changes.

Monday’s sessions will be first at 1pm and then again at 6pm.

Maine tax litigation is a complex process only to be handled by an expert Maine Tax Attorney.

A people’s veto effort to overturn Maine’s newly enacted tax code changes is struggling financially. Reports show it’s just raised $50.

The Republican-led effort targets changes in sales and income tax policy. Opponents are trying to collect more than 55,000 signatures to put the repeal question before voters in November.

Maine Public Radio reports GOP leaders say that unlike other people’s veto campaigns with paid circulators, theirs is a true grass roots initiative.

Tax law supporters say they’re not surprised the repeal effort is struggling.

The law at the center of the people’s veto campaign extends the state’s sales tax to a number of currently untaxed services and raises the food and lodging tax. It also lowers the state’s top income tax rate from 8.5 to 6.5 percent for most Mainers.
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