A Maryland Tax Court judge ruled yesterday that The EnterTRAINment Line must pay at least $300,000 in overdue taxes, interest and penalties to Union Bridge and Westminster because it did not pay admissions and amusement taxes for a four-year period.
The decision could close the business, the company president said after the all-day hearing in Tax Court in Baltimore.
"It could cause our demise, but not immediately," President Donald S. Golec said. "We're going to be here a while."
He said he did not know if the company, Gus Novotny Associates Inc. of Union Bridge, will appeal yesterday's decision to Carroll County Circuit Court.
Tax Court Judge William Calvert said after reviewing the evidence that he had no difficulty determining that the admissions and amusement tax applied to The EnterTRAINment Line. Mr. Golec argued that the company was a rail carrier and protected from the tax by federal law.
"This is not a taxation scheme that discriminates against railroads," the judge said. The company "is without question subject to the admissions and amusement tax."
The Maryland comptroller of the treasury's office audited The EnterTRAINment Line in late 1993 and determined the company owed $207,388 to Westminster and $13,674 to Union Bridge in admissions and amusement taxes, plus interest and penalties for the period Aug. 1, 1989, to Sept. 30, 1993.
The tax on gross receipts is levied by municipalities and collected by the state. The auditor also determined the company owed $5,110 in sales tax.
The town of Union Bridge disagreed with the auditor's figures and argued yesterday that The EnterTRAINment Line owes it more tax than Westminster because all train tickets are sold in Union Bridge.
"The EnterTRAINment Line is basically a citizen of the town of Union Bridge," Town Attorney John T. Maguire II said.
Auditor Karen Scheerer testified that Westminster should receive more money because 89 percent of train passengers boarded there during the audit period. The comptroller's policy is to tax at the place of admission, she said.
Mr. Maguire said the tax should be collected where the tickets are sold. Mr. Golec testified that almost all tickets are sold through the office in Union Bridge. "When you have an amusement that moves, to which jurisdiction do you assess the tax?" asked Assistant Attorney General Sheldon H. Laskin, who represented the comptroller's office. Judge Calvert said the issue of how the tax should be divided troubled him, but he concluded the evidence supported the current system.