A West Friendship man's battle with the state over hot air balloon taxes has led to some narrowly focused County Council legislation.

Very narrowly focused.

Council members voted unanimously Feb. 2 to exempt hot air balloon activities from the state's admissions and amusement tax.

The reason for the legislation: Ron Broderick and his Friendship Hot Air Balloon Co., believed to be the only such business in Howard County.

Broderick, 67, started the company in West Friendship in 1992 after seeing hot air balloons at the Preakness Balloon Festival.

"I just had this fascination with ballooning. I've never flown anything else," he said.

Ballooning is regulated by the Federal Aviation Administration and before being granted the licenses needed to operate a balloon, Broderick had to go through a series of classes, pass a three-hour written test and log in hours of flight time.

Since he got his license, Broderick has ferried couples on romantic balloon rides across the countryside and been an event coordinator at the Preakness Balloon Festival, now held at Turf Valley Resort in Ellicott City.

His business was going well until one day last May when a field auditor with the Maryland Comptroller's Office paid him a visit. The auditor told Broderick he should be paying a 7-1/2 percent amusement and admissions tax on his flights.

Broderick disagreed, saying a federal law exempted aircraft -- including hot air balloons -- from state amusement taxes.

Broderick said no other state in the country applies the amusement tax to hot air balloons, and several court cases in other states seem to back up his position.

But his arguments failed to sway the state, which did a four-year audit on his business and decided to seek more than $8,000 in back taxes, Broderick said, as well as collect future taxes. Those future taxes could cost him an extra $1,500 per year, Broderick estimated.

Caron Brace, a spokeswoman with the state comptroller's office, said she could not discuss specifics of the case. However, she said the office generally audits businesses to make sure companies within the same industry are being assessed on an equal basis.

County steps in

Meanwhile, a frustrated Broderick contacted county lawmakers about his plight.

County Council member Gregory Fox, a Republican who represents western Howard County, expressed sympathy but wanted to make sure Broderick had a legitimate complaint. When county staffers determined he did, Fox introduced the exemption legislation.

"Why put (Broderick and his company) through additional legal expense and cost (of fighting it) when we're sitting here saying it doesn't make sense ourselves?" Fox said.

At a council hearing on the resolution last month, Broderick got support from Mark Kimberling, who oversees state legislative affairs for the Frederick-based Aircraft Owners and Pilots Association.

"A hot air balloon is a regulated aircraft, and we hope it'd be treated as such," Kimberling told council members.

The council resolution states that hot air ballooning is regulated by federal law and should not be subject to local amusement taxes. It exempts ballooning from the tax, so long as the balloons are not tethered to the ground, which Broderick said is only a small portion of his business.

As far as he is aware, Broderick said, his business is the only one of its kind in Howard County, making him the only beneficiary of the resolution.

Broderick said he was pleased with the resolution, but his battle with the state is not over yet.

Brace said the comptroller's office agrees that the resolution will exempt future ballooning activities in Howard County from the tax. However, any taxes owed prior to the resolution's passage are still owed, she said.

Broderick has a hearing later this month with the comptroller's office to appeal that decision.

If that fails, he has the option of appealing the issue to Maryland Tax Court, Brace said.

His dealings with the state have left him frustrated, Broderick said.

"From almost the beginning I had the U.S. code showing clearly what it says, that this is a no-no," he said. "If the FAA puts me in that category (as an aircraft), then they should, too."

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user comments (1)

user americaone says...

Expect this kind of shakedown to continue to happen with our governments as the economy worsens. The State govvernments are tetering on bankruptcy from years of spending every dime and now the money isn't there to carry all the programs. I am proud that the County Council is staffed with members that have an understanding and are not willing to just "go with the flow". We need more people such as them in other parts of our government. I certainly hope Mr Broderick fights the alleged tax due arguement and prevails. His operation is not a Merry-go-Round or Ferris wheel which is clearly what the intent of the law is. Watch this situation carefully. If the State wins this one, be prepared for the auditors to reach into the archives for old and vague laws that will be in YOUR pocket!

Posted 10:01 AM, 02.07.09 | Permalink