Transient Vessel not registered in any state/USCG Documented

[Group9]

There are states that don't require state registration if the boat is documented. Alaska is one such place. As such no registration numbers on the bow.

Mississippi is another.

 

[psneeld]

You'll have to continually move to avoid ticket once ticketed ignore it and problems multiply . Upon purchase of our fed doc boat USCG said that documented boats are not to be state registered period, however home state tax payment is required. Since we winter in FL we paid FL state tax. All states have their own particular tax statutes ....good luck

This is totally false in my experience.

Documented vessels are not titled but states can still require registration.
Numbers need not be displayed but if required, stickers must.


From NVDC.... Is a DOCUMENTED VESSEL EXEMPT FROM STATE JURISDICTION?

No, all documented vessels must comply with the laws of the state in which they are operated. The vessel's document must be shown to state law enforcement personnel upon their demand. States may require documented vessels to be registered (but not numbered) and to display state decals showing that they have complied with state requirements."

 

[Group9]

You'll have to continually move to avoid ticket once ticketed ignore it and problems multiply . Upon purchase of our fed doc boat USCG said that documented boats are not to be state registered period, however home state tax payment is required. Since we winter in FL we paid FL state tax. All states have their own particular tax statutes ....good luck

Actually, it state titling that is prohibited for federally documented vessels. Registration is fine. This is because federal documentation is titling, and titling it in the state, too, would result in two titles for one vessel.

And, federal law also prohibits state registration numbers from being displayed on a federally documented vessel. The registration sticker alone displayed is fine.

 

[Mikala]

Maybe I’m missing something here. Considering the cost of purchase and total ownership cost, why bother with finding ways to beat the system? Is it really worth the effort and potential problems?

 

[DDW]

Well, yes. Washington for example wants about 10% of the boat's value initially, and 1% or so each year after that. I'd like to store and work on my boat in Washington, but I don't use it much there. On an expensive boat (say $1M) the initial bill for the privilege of the 61st day in Washington would be $100,000. That's a lot for a day or a month or even a year.

As a consequence, when the marina and boat repair industry was slow, the marinas and yards in BC were packed while the ones in WA were half or 2/3 empty. So did WA win on this policy? WA is particularly screwed up, because the language of the law is somewhat ambiguous, and the enforcement by two different agencies which apparently interpret it differently.

 

[CaptTom]

One thing to remember is that most states scour the USCG documentation database (it's on line) for hailing ports in their state, and just send out tax/registration bills. At that point, it's up to you to prove that your boat doesn't meet the requirements for being registered or taxed by that state.

I'd like to see the Florida statute which requires registration if your home state doesn't. For example, I paid my state sales tax, and annually pay excise tax, but no "registration" fee for my documented boat. So would I have to register in Florida on day one if I visited there? That doesn't seem to make much sense.

 

[Shrew]

USCG documentation really only has two purposes.

1) The federal government (USCG) issues the Title.

-> It is frequently the requirement that a lien holder be listed on a title. This process is used by those who are required to list a lien holder and are from a non-title state.

-> A boat titled in a state almost always must also be registered in that state.

2) The vessel can travel internationally.


If you register in a state that requires sales or use taxes, they will collect those taxes. Absence doesn't absolve you of that responsibility.

You can document the boat with the USCG and travel in any state you want, provided you don't stay longer than their laws allow. Note that some states are total time for the year, so you can't simply leave for a few days a month.

New Hampshire and Rhode Island are two non-tax states.

 

[markpierce]

...

Property taxes are another story. Even here in Alaska if you have a permenant slip (vs paying transient rates) the local jurisdictions can and do assess property taxes. I pay about 0.75% per year in Seward Alaska. I have heard that California is around 1% but cannot verify that. ...

Property taxes in California average 1.25% of assessed value, but are as high as 1.5%. Boat values depreciate, so the basis declines over time. Assessment increases on real property are limited to 2% a year unless it has been sold. So property taxes on my boat decline over time but the taxes on the rented city-owned berth increase.

 

[twistedtree]

This is totally false in my experience.

Documented vessels are not titled but states can still require registration.
Numbers need not be displayed but if required, stickers must.


From NVDC.... Is a DOCUMENTED VESSEL EXEMPT FROM STATE JURISDICTION?

No, all documented vessels must comply with the laws of the state in which they are operated. The vessel's document must be shown to state law enforcement personnel upon their demand. States may require documented vessels to be registered (but not numbered) and to display state decals showing that they have complied with state requirements."

Right, and it's a bit stronger, I believe. The federal law allows states to register and display stickers, but prohibits the display of numbers.

 

[twistedtree]

Well, yes. Washington for example wants about 10% of the boat's value initially, and 1% or so each year after that. I'd like to store and work on my boat in Washington, but I don't use it much there. On an expensive boat (say $1M) the initial bill for the privilege of the 61st day in Washington would be $100,000. That's a lot for a day or a month or even a year.

Exactly. And don't forget that 1% annual excise tax. That's $10,000 per year on that $1m boat on which you already paid $100,000 in use tax. The annual excise tax alone makes slip fees seem trivial. So lots of motivation to not base a boat in WA.

 

[BandB]

We're talking many different matters here, all with different laws and rules, each varying by all 50 states.

First, to registration. Most states require documented vessels to register if kept there. Now, all states allow boats registered in other states some time before registration is required in them, typically 60 or 90 days. Some state that if the principal state doesn't require registration of a documented vessel it still meets this requirement. Others do not state that and whether allowed or not seems to be very much up to the individual officer. However, seldom are unregistered documented vessels ticketed if under that number of days. Some states and some locales are more aggressive than others.

Registration initially triggers sales or use tax. Again each state has different laws. Most have some period of time after which use tax isn't any longer required. Almost all give credit for sales tax paid in other states.

Then come property taxes. Some states are absolutely based on January 1 presence. Others, such as California, are based on principal state of use, but are checked on January 1 so of present on that date, you must present a sound argument that you're not obligated to pay.

Each person has to choose within their risk tolerance. My personal recommendation is to register in primary state of use and then watch time elsewhere. As to sales tax, it is to comply in initial state of use and registration.

We've purchased new boats in FL and WA. We've immediately registered all in FL (even those documented) and paid FL sales tax. They are not subject to property tax in FL. The only other state we've had a boat in on January 1 was California and we met with the San Diego Tax Collector prior to January 1 and showed clear evidence we were passing through and California wouldn't be our principal location for use. We were not required to pay property tax. A collector did visit the marina and check but saw a notice to him from the office that the boat was not subject to property tax, assuming it left the state as planned. It left on January 11.

There can be no generalized advice that can fit all situations. You must look at your personal situation and research it, obtaining advice from experts in your area perhaps. I see people saying they've never registered in any state and had no issues, but I've seen similar people ticketed and/or told to go register. I was told the situation but can't know if I was given all the details. In most states, registration is not a large amount and they're not aggressively after boats documented or registered in other states. Sales tax though is a large amount and some states are really focusing on it's collection. Then there is property tax which is not as much as sales tax but usually more than registration. However, property tax is managed by local tax collectors not state law enforcement or wildlife. In many states people are sent out to check businesses and residences and boats. In some states, they've gotten extremely diligent in checking marinas and in a couple of states even require the marinas to report to them.

 

[twistedtree]

USCG documentation really only has two purposes.

Kinda, sorta, mostly, but worth some clarification...

1) The federal government (USCG) issues the Title.

-> It is frequently the requirement that a lien holder be listed on a title. This process is used by those who are required to list a lien holder and are from a non-title state.

-> A boat titled in a state almost always must also be registered in that state.

Agreed.

2) The vessel can travel internationally.

This implies a restriction on international travel for non-documented boats, and that's not the case. Boats that are state registered can travel internationally just fine. Many do on a regular basis to Canada, Mexico, the Bahamas, etc.

If you register in a state that requires sales or use taxes, they will collect those taxes.

Agreed. Registering in a State and the triggers for incurring a tax liability are really different things. Buying something in a state, or binging something into a state are examples of tax triggers. It's really just a convenience to use registration as a check point and collections mechanism for those taxes. Here's an example. When I bought my Grand Banks, it was a CT purchase and I paid no CT sales tax because I was a non-resident and was going to be taking the boat our of CT. As soon as I entered MA state waters, I was liable for use tax on the boat since I am a MA resident. There is no state registration for documented boats, so that collection mechanism didn't happen, but it didn't absolve me of the tax liability. I went on line, and paid the tax that way, getting a receipt, etc. to show it was paid.

Absence doesn't absolve you of that responsibility.

I think it's true that if you register, you will be asked to pay taxes, or show you have paid, or are exempt. But keep in mind that the requirement to register is always (I think) triggered by presence in the state, as is tax liability. So if your boat is absent, it is neither required to be registered, nor liable for any taxes. That doesn't stop you from voluntarily registering and voluntarily paying taxes, but I'm not sure why you would do that.

You can document the boat with the USCG and travel in any state you want, provided you don't stay longer than their laws allow.

Agreed, but this is equally true for a state registered boat.

Note that some states are total time for the year, so you can't simply leave for a few days a month.

New Hampshire and Rhode Island are two non-tax states.

Other benefits are for a wide range of commercial uses, but that's not really applicable to all of us.

 

[Rufus]

I know a couple who had a documented boat that was registered in Delaware under an LLC. They maintained residency in Georgia, stored the boat over the winter (8 months) in Wisconsin, and had a seasonal summer slip (4 months) in Michigan. Never an issue for them in 20 years, but then nobody asked...

 

[BandB]

This implies a restriction on international travel for non-documented boats, and that's not the case. Boats that are state registered can travel internationally just fine. Many do on a regular basis to Canada, Mexico, the Bahamas, etc.

Etc......that's the biggie....Etc. The three countries you listed are no problem. However, in other places, some agents may not understand the US state registrations and may balk at accepting them.

 

[BandB]

I know a couple who had a documented boat that was registered in Delaware under an LLC. They maintained residency in Georgia, stored the boat over the winter (8 months) in Wisconsin, and had a seasonal summer slip (4 months) in Michigan. Never an issue for them in 20 years, but then nobody asked...

And betting on that kind of luck is a risky proposition. If someone else tries the same, they may be checked their first summer in Michigan.

 

[Alaskan Sea-Duction]

Federal Documentation may also be required if you carry a loan on the boat. That way the bank can repossess it, if needed.

 

[Sabre602]

I'm a Washington resident myself. The WAC is silent on vessels not located in nor visiting waters of the state. It clearly describes the requirements to register federally documented vessels and gives a long list of exemptions from the registration requirement, but all of it is in the context of a vessel that is actually in Washington.

Of course, the burden would be upon you to prove that the boat had never been imported into Washington should you be contacted by the state, but I suspect that greater problems might occur in those waters in which the boat actually operates.

 

[Sabre602]

Federal Documentation may also be required if you carry a loan on the boat. That way the bank can repossess it, if needed.

Not a loan per se, but specifically a "preferred marine mortgage."

 

[twistedtree]

And betting on that kind of luck is a risky proposition. If someone else tries the same, they may be checked their first summer in Michigan.

What would the problem have been in Michigan?

 

[Rufus]

If either Wisconsin or Michigan have a "time spent in State" requirement to register in their State, then the Delaware registration might have been invalidated. A Michigan (or Wisconsin) registration would have likely raised a sales tax question since I believe the primary reason for setting up the LLC and registering the boat in Delaware was for a tax dodge. I suspect that Wisconsin might have the better case because the boat was in their jurisdiction for a longer period each year. But I don't really know the particulars of the laws in either state, so this is all hypothetical.

 

[twistedtree]

If either Wisconsin or Michigan have a "time spent in State" requirement to register in their State, then the Delaware registration might have been invalidated. A Michigan (or Wisconsin) registration would have likely raised a sales tax question since I believe the primary reason for setting up the LLC and registering the boat in Delaware was for a tax dodge. I suspect that Wisconsin might have the better case because the boat was in their jurisdiction for a longer period each year. But I don't really know the particulars of the laws in either state, so this is all hypothetical.

OK, if they over stayed their visitor privileges, I completely understand. I was mostly wondering if Michigan wouldn't accept the DE registered boat in the same way they would accept some other state registered boat.


And just for the record, I'm not advocating any tax dodging. But I also have no interest in volunteering to pay some tax that isn't due. Taxes aren't due (typically) until you keep your boat somewhere for a certain amount of time, or you bring your boat into your state of residency. And even then, they aren't necessarily due. So I don't understand why anyone would volunteer to pay a tax that isn't owed.

 

[Rufus]

Depends on how you look at it I suppose. To me the intent of individuals who register in non-tax states like Delaware or Alaska and rarely, if ever, visit the state with the boat do so for the purpose of dodging taxes. Might be technically legal, but it's a loophole and they're cruisin' for a bruisin' if they get caught. The contention that boats constantly stay in a cruising mode for years at a time is a little unrealistic.

 

[Stillwater]

Exactly.

 

[Ski in NC]

You can try to finagle this all you want, but at least in my state (NC) the tax man does some sniffing around. Sat photos off google, walking docks and marinas, walking through boatyards, researching databases, marina tours in a skiff, etc, etc.

They found my boat in a marina boatshed while I was BUILDING it. Got a tax bill before I splashed!! I could have documented it in Timbuktu and would have mattered the least to him. Boat is in NC. I live in NC. Pay the tax. So I do.

 

[twistedtree]

Depends on how you look at it I suppose. To me the intent of individuals who register in non-tax states like Delaware or Alaska and rarely, if ever, visit the state with the boat do so for the purpose of dodging taxes. Might be technically legal, but it's a loophole and they're cruisin' for a bruisin' if they get caught. The contention that boats constantly stay in a cruising mode for years at a time is a little unrealistic.

If you are dodging, then I agree. But there are definitely boats that continuously move around and have no long term berth anywhere, and don't stay anywhere for more than weeks, or maybe a month or two before moving on. Many Nordhavn's, perhaps even most, operate this way. It's how the boat is used, and not done to avoid taxes.


My boat was an example. I was properly registered in my state of residency, fondly known as Taxachessets. But taxes were'd due until/unless I brought the boat into the state, which never happened. We cruised our cruising plan moving around the west coast of NA, complying with all the local regs as visitors. Only once were our movements influenced by taxes, and that was when it became clear that it was unclear whether I was about to owe $200,000 to WA. So I cleared that up by moving to Vancouver.


Should I have paid WA $200,000 to keep my boat there for another 3 months? And for those who feel people should pay someone, somewhere, who should I pay, how much, and why them vs someone else? There was just as strong an argument for me to make a voluntary contribution to MA, WA, BC, AK, CA, or La Paz, since no tax was due to any of them.



And for those who buy and then operate boats outside of FL or CA for some period of time, and then return with no taxes due, should they pay them anyway?


Now let's look at a counter example that I would agree is intentional dodging. WA resident buys a boat in OR where no tax is due. They place ownership of the boat in an OR LLC, so it's technically owned by an OR entity. Then they bring the boat into WA, but say they are visiting from OR. Normally when a WA resident brings a boat into the state, tax is immediately due. But because the boat was owned by an OR entity, they claimed to be subject to visitor rules, not resident rules. To me that's dodging, or at least sleazy, and WA actually plugged that hole. An entity-owned boat has to show that none of the LLC owners are residents in order to qualify for the visitor rules.


A few years ago John Kerry got slammed for a similar stunt. He had a yacht registered in RI and presumably owned by an RI LLC, but regularly brought to yacht to Nantucket which is in his residency state of MA. Like WA, if an MA resident brings a boat into MA, tax is due, give or take some rules like FL and CA about time owned and intent to bring the boat into the state. So he would have owed taxes as soon as he crossed the state line, save for the RI LLC ownership trick. He just paid the tax and it all went away.

 

[Alaskan Sea-Duction]

Depends on how you look at it I suppose. To me the intent of individuals who register in non-tax states like Delaware or Alaska and rarely, if ever, visit the state with the boat do so for the purpose of dodging taxes. Might be technically legal, but it's a loophole and they're cruisin' for a bruisin' if they get caught. The contention that boats constantly stay in a cruising mode for years at a time is a little unrealistic.

Its not unrealistic. We are retired and we cruise for most of the year with exception of dry dock or bad weather. We are snowbirds. Because I have winter dock on the Washington side of the Columbia and I have spent more than 180 days in the golden waters of Washington, I had to pay the State one time user fee.

But I could have just easily kept cruising the PNW without being subject to the taxes. We have several friends that live on their boats and travel all over the PNW in the summer and winter. Some actually work from their boat.

 

[FF]

CT is so desperate for cash they force the marinas to report boats at the dock or even if on a trailer in their yard, every month.

 

[BandB]

What would the problem have been in Michigan?

Some Michigan agents have taken very seriously and literally the exemptions in the state for traveling vessels. One of those is: "Watercraft registered in another state and used only temporarily in Michigan." That does not technically exempt a boat that isn't registered in another state. So the person trying to register nowhere or even the one in a state that doesn't require it for a documented vessel can find themselves in a jam.

Now for those who say they think you'd win in court, seriously are you going to delay your entire trip, go to court, and fight it to avoid a registration? Now, if they go after you for use tax, you may have to.

The interesting part in Michigan is "Used only temporarily in Michigan". What is "temporarily" defined as?

I have personally witnessed a looper being checked and confronted in Michigan. I do not know the outcome. I do know it was unpleasant and a higher ranking official had been called. Oh, and it was Sunday and the state office they needed to reach was closed.

Michigan marinas are mostly state owned and a lot of DNR officers around.

The inconsistency of application is one of the problems in many states. People bounce between FL and GA for years with no problems. Then one time in GA they're asked to prove they haven't been there too long. Meanwhile I've never personally observed anyone in FL with a documented boat or another state registration given any problem. Seems to be way down on the list of what FWC is interested in.

It's much like traveling aboard with just a state registration. No problem in Mexico, Canada, or Bahamas. But, as you venture further, you hit the new agent who is totally unimpressed by that little slip of paper that doesn't even look real. They like official looking documents and boat registrations sure are not. $26 a year to avoid that seems like very little.

 

[Comodave]

My membership in the Looper Assn expired and I did not renew it, but when I was on it there were many people that complained about Michigan stopping non registered boats. I don’t know how it turned out.

 

[Seevee]

Maybe I’m missing something here. Considering the cost of purchase and total ownership cost, why bother with finding ways to beat the system? Is it really worth the effort and potential problems?

There's NOTHING wrong with being a prudent boat owner and using every available avenue to not pay taxes if they are not due. I'm sure no one here is promoting breaking the law, but good tax planning is prudent.

And YES, it's expensive. Many of us would rather use those dollars to buy beer to reward ourselves after a nice day of cruising.