Bill would protect balloon operators from ‘amusement tax’

March 16, 2011

Balloons

Two Maryland balloon operators who faced down the state comptroller over a local “amusement tax” joined AOPA in testifying March 4 for a bill that would exempt hot air balloons from the tax.

AOPA Eastern Regional Representative Greg Winton provided testimony before the Maryland House Ways and Means Committee in Annapolis in support of House Bill 499, which would exempt hot air balloons from local amusement taxes. Existing federal law exempts air commerce from local taxes such as this one, but that didn’t keep Ron Broderick, owner of Friendship Hot Air Balloon Co., and Matt Lidinsky of Up Up Away Hot Air Balloon Co. from getting thousands of dollars in tax bills.

Balloonist turns tax bill into campaign, support site

When he was hit with a bill for more than $8,000 in back taxes for his ballooning business, Ron Broderick didn’t take the news lying down. In addition to taking the comptroller to court over the assessment, Broderick tracked precedents, arguments, and his case online. He found balloon operators in other states who had been hit with the tax and offered resources and advice. “I’m letting them know about my case and saying, ‘Look, here’s what we did,’” he said.

As AOPA reported in 2009, the balloonists and AOPA argued that because balloon flights are federally regulated, they are not subject to local amusement taxes. After years in court, Broderick received a check in October 2010 for the more than $8,000 he had been charged in back taxes and penalties—plus the interest on what had been collected. The state dropped its assessment on Lidinsky, too, but the ordeal left balloonists vulnerable to possible future attempts to collect the tax. Maryland Delegate Kathy Szeliga introduced the bill to keep that from happening.

“Imposing this tax on an air transportation or air commerce business—which includes balloon operators--is a violation of federal statute and can impose a financial burden on general aviation within the state,” Winton explained. “This bill would prohibit Maryland from violating the Anti-Head Tax Act, which explicitly states that a state may not levy or collect a tax, fee, or head charge, or other charge on the gross receipts from air commerce or air transportation.”

Broderick and Lidinsky fought a prolonged legal battle to keep from paying the amusement tax. And Broderick said that without the state law on the books, auditors might try to assess the tax on other air operators, arguing—as they did with him—that the federal law does not apply. And other operators might not be able to keep up the fight.

“I know some people just pay it,” he said. “They fear comptrollers, and they don’t know that there’s a federal law” protecting them from the tax.