GOP leaders urge suspension of retirement homes tax audit

Posted June 11, 2010, at 10:24 p.m.

MACHIAS, Maine — GOP leaders on Friday formally urged Gov. John Baldacci to immediately suspend the state’s audits of retirement facilities for uncollected meals tax.

Senate Republican leader Kevin Raye of Washington County and state Sen. David Trahan, R-Waldoboro, asked the governor Friday to halt Maine State Revenue Services’ audits, which they claim could result in millions of dollars being sought from retirement homes to the detriment of residents.

Raye said by telephone Friday that the law has been in effect for years but that Maine Revenue Services only recently has begun enforcing it.

“Should Maine Revenue Services proceed with their audits, the back taxes and the resulting penalties and interest will be in the millions of dollars and undoubtedly will be borne by our elderly residents in these facilities,” Raye and Trahan said in a prepared statement.

“At a time when pensions and retirement funds are hard hit by the economic downturn, it would be unconscionable to require residents to pay more for a service they received in the past.”

David Farmer, the governor’s deputy chief of staff, said that the audits must proceed as state law requires but that no assessments will be made until the full scope of the issue is known.

“We cannot ignore the law,” Farmer said.

In this year’s session of the Legislature, a bill that would have repealed the tax was defeated.

“The governor takes this issue very seriously,” Farmer said. “He is working with Maine Revenue Services to continue the audits to determine the size and scope of this issue.”

No assessments will be made this year, Farmer said.

“We hope that the information we gather will be helpful to the next governor and Legislature,” he said.

Maine Revenue Services has estimated that between 75 and 80 facilities may be subject to this tax and that, in the past seven years, they have audited 19 of those facilities.

Raye said Friday that the issue is how the law is interpreted.

“I don’t believe the law was ever intended to tax these meals,” he said. “It would be an abomination, terrible for these people to be forced to pay taxes on services they received years ago.”

In a related issue, Raye and Trahan also pointed out that Maine Revenue Services officials attempted retroactively to collect a tax on meals served at summer camps. However, Sen. David Hastings, R-Fryeburg, successfully sponsored a law to overturn those efforts because meals are a part of the overall camp experience — not the reason for attending.

“The same argument applies to meals at retirement facilities,” Raye said.

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