Unable to get a waiver from two Carroll County municipalities, officials from the EnterTRAINment rail line are hoping to find relief from more than $300,000 in back admission and amusement taxes through legislation submitted in Annapolis by Sen. Larry E. Haines.
The bill, which will be heard in the Senate Budget and Taxation Committee, would exempt railroad tickets and any services provided on a train from the amusement tax even if entertainment is provided during the ride.
If passed, the regulations would apply to future amusement taxes and any cases pending in Maryland Tax Court concerning the tax, which is collected by the state for municipalities and counties.
But after hearing complaints from Westminster Mayor Kenneth Yowan and Union Bridge Mayor Perry Jones -- leaders of the two towns owed the tax -- Senator Haines has agreed to work for a compromise during a meeting next week.
"I think the towns have to work with the EnterTRAINment line to keep the rail service going," said Senator Haines, a Republican from Westminster, noting that the rail line brings many tourists to Carroll County.
"I agree that a percentage of their receipts could be considered amusements and could be subject to the tax," he said. "But that's the problem. The tax is being charged on their entire receipts."
Maryland tax law includes "merchandise, refreshments, or a service sold or served in connection with entertainment at a nightclub or room in a hotel, restaurant, hall, or other place where dancing privileges, music or other entertainment is provided" within the definition of an amusement charge.
EnterTRAINment rides often include dancing and music on adult rides, as well as storytellers and other entertainers during holiday trips for children.
Senator Haines said the company has given him figures that about 10.5 percent of each ticket price goes toward entertainment. The remainder is spent on transportation and food, he said.
"I think this is going to bring the debate to the table," said Senator Haines, who added that he and co-sponsor Sen. Timothy Ferguson of Taylorsville do not intend to withdraw the bill.
"This is a classic, single-taxpayer kind of bill," said Marvin Bond, spokesman for the state comptroller's office. "To my knowledge, the EnterTRAINment line is the only [train] in this category."
The company -- which also runs murder mystery train trips out of Westminster and Union Bridge -- is fighting a ruling from the Maryland comptroller's office that it owes $329,056.93 in sales and amusement taxes, penalties and interest that accrued from Aug. 1, 1989, to Sept. 30, 1991.
The current owners -- a group of five investors from Michigan who bought the company in April 1993 -- have argued that they were unaware of the tax when they purchased the business. In addition, they have said the tax violates regulations passed by the Interstate Commerce Commission prohibiting discriminatory taxation of railroads.
In an informal hearing last spring, Maryland tax officials said the company's arguments don't hold up. An appeal on the case, which EnterTRAINment filed in April, is scheduled to be heard March 16.
"The fact that the bill has been introduced probably indicates that relief can't be gotten any other way," Mr. Bond said, noting that the municipalities could waive the tax.
But both municipalities have not changed their position since they denied the EnterTRAINment line's appeal for relief last year.
"The EnterTRAINment line is obviously an asset for both cities and we're willing to work with them on their past obligations," Mr. Yowan said.
"But we're certainly not in favor of forgiving that or excluding them from the amusement tax in the future," he said, noting that the city feels it is unfair to exempt only rail excursions from the tax.
"We have many other businesses in our city that pay the amusement tax year in and year out," Mr. Yowan said. "I'm disappointed that Westminster was not contacted before this bill was introduced."
The amount owed Westminster continues to grow, said Stephen Dutterer, the city's finance director. While EnterTRAINment line President Don Golec has said the company has paid the tax since buying the company in 1993, both municipalities have yet to see the money.
"The state office told me that they also owe us about $4,200 per month since September 1993," Mr. Dutterer said. "We're technically talking about 1 percent of the city's budget."
Union Bridge Mayor Jones declined to discuss the bill until he and Mr. Yowan meet with Senator Haines next week.
"I don't think it's a revenue that Westminster and Union Bridge are dependent on," Senator Haines said. "I don't think they've budgeted for this money."
Mr. Golec insisted that the bill merely puts the EnterTRAINment line on even footing with other excursion trains across the state.
In particular, he maintains it is unfair that Western Maryland Scenic Railroad, which operates out of Cumberland, and Maryland Rail Commuter Service (MARC) trains do not pay amusement taxes.
Nevertheless, both trains are significantly different from the EnterTRAINment line. For example, the Western Maryland railroad is a not-for-profit organization, said Dan McMullen, Allegheny County's county administrator.
"It's a public-private entity that's more public than private," Mr. McMullen said. "The county is a very large contributor to the [Scenic Railroad Development Corp. that runs the rail], so it would be rather foolish to collect taxes just to give them back to the county."
MARC trains, on the other hand, are considered transportation, said Stephen Corbi, deputy comptroller for the state.
"MARC trains are public transportation," he said. "They take people from point to point."