Derailing Carroll Tourism?

April 15, 1994

The dispute between the EnterTRAINment Line and the state comptroller's office over $329,000 in back amusement and sales taxes has implications far beyond the excursion train company based in Union Bridge.

The venture's financial health also affects Carroll County's nascent tourist industry; next to the Carroll County Farm Museum, the train, which conducts fall sightseeing tours to Blue Ridge Summit, Pa., evening murder mystery trips and transports Santa himself to Westminster, is believed to be the county's second largest tourist draw.

A year ago, a new group of five investors purchased the company. Apparently, it received assurances -- from whom it is not clear -- that its operation would not owe local entertainment and state sales taxes.

The state comptroller's office has now decided to collect that money. Unfortunately, the new owners have not set aside reserves for this disputed charge, and the company now faces a potential tax bill that represents about a third of its annual income, the company's president says.

The owners of the EnterTRAINment line have only themselves to blame for tettering on the edge of this financial abyss. When the line was a division of Maryland Midland Railway, the local amusement and state sales taxes were paid. While the railroad felt it should not pay the amusement tax, its management decided it was less bother to pay the tax than to fight it. Sometime after the amusement subsidiary was sold to Gus Novotny in the late 1980s, the EnterTRAINment line stopped paying the taxes, and the company didn't set aside reserves to cover its tax liability, either.

Whether the current owners are liable for the back taxes, penalties and interest is up to the tax collectors (and legions of lawyers) to resolve. With appeals to the tax court a certainty, that could take time. But there is a lesson here. Far too many companies cavalierly ignore the tax man. When companies run into financial difficulties, they sustain their cash flow by not remitting the payroll, sales and other taxes they withhold from employees and customers. But governments are relentless in their efforts to collect taxes, as many small businesses can attest.

Carroll residents can only hope that the comptroller collects the tax in a way that does not derail this growing business that attracts more than 30,000 visitors to the Union Bridge-Westminster area each year.

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