Sales Tax

I was under the impression that if the vessel was CG documented then the state registration was not needed, but I think I was confusing titling with registration...



So a documented boat doesn't have the state numbering on it but still needs the state sticker?

Can't I just tell the CG that I'm just "passing through"? I seem to have problems following rules...

cardude01 said:

...

So a documented boat doesn't have the state numbering on it but still needs the state sticker?

Click to expand...

In California, documented boats don't need to be state registered/stickered, but many other states do.

cardude01 said:

I was under the impression that if the vessel was CG documented then the state registration was not needed, but I think I was confusing titling with registration...

View attachment 26542

So a documented boat doesn't have the state numbering on it but still needs the state sticker?

Can't I just tell the CG that I'm just "passing through"? I seem to have problems following rules...

Click to expand...

If you have current documentation, I don't think the USCG cares about your state registration. The state does. FL requires documented boats to have a sticker with current decal on the port side window.

Federally documented vessels in the state of SC do not "register", but just pay the state sales tax up to $300.00.

Washington State exempts purchases made by residents of Alaska from sales tax as long as the item is leaving Washington. There is a form that must be filled out at the time of purchase and the retailer has to keep a log of exemptions. Use tax would apply in Alaska in areas where there is a sales tax, but since Anchorage has no sales tax, it amounts to a pretty big deal for us when purchasing items at the Seattle Boat Show.

I have to assume there may other cases where sales tax exemptions occur so I would certainly research that.

Tom

Who`d have thought an Aussie would ever prefer an aspect of our tax system? Our sales type tax, called GST (Goods and Services Tax) is a Federal tax, 10%, not varying between states, no state/state conflicts.
At present there is NO GST on overseas purchases < 1K, an added reason to buy o/s.

cardude01 said:

Ok, speaking of tax, let's say I buy a boat in a state that has no or little sales tax-- like SC, where it is capped at $300. Can I document this vessel with the Coast Guard and avoid titling (and subsequent sales tax) it in my home state?

Click to expand...

Documenting a boat does not relieve you from paying sales tax. In some states it relieves you of the cost of state registration, but that's just a few dollars per year.

Typically, the $300 you paid in taxes to SC is credited towards the sales tax you owe in your home state or the state where you use the boat the most.

Moonstruck said:

........
Federally documented vessels in the state of SC do not "register", but just pay the state sales tax up to $300.00.

Click to expand...

And personal property tax of 10.5% of the boat's value every year!

It's 6% if it qualifies as a second home and you have no other second home.

cardude01 said:

Who will find me and turn me in in my home state?

Click to expand...

Amazon now sends me a listing of everything I've bought from them in the past year and the amount of tax I am supposed to report and pay.

How long will it be before the government gets this list also?

Another thing to be careful with is there are several states that will determine that you are using your boat in their state, typically after 90 consecutive days, but in some cases 30 days. Then they assess a use tax based on the boat's then current value. In almost all cases they will give you credit for any sales tax you have paid elsewhere. The trap comes in if you are from a low tax / or no tax state or your boat has gone up in value since when you purchased it. My Krogen 42 is now worth 250% of its initial sales price and thus if I had paid sales tax I would have to pay on the increase in value.

Generally these states exempt time spent in a repair yard or storage on land for the off season.

Marty

markpierce said:

You pay sales tax to the state you were standing at the time of purchase. If I'm in Phoenix, AZ and purchase a tire for my California-registered, the Phoenix retailer collects the tax on behalf of the State of Arizona. If I ordered the tire remotely for shipping to California, I'd have to pay California use tax instead of Arizona sales tax. ... Your boatyard should be collecting the sales tax, because you took delivery (installed on your boat) at the boatyard. Yes, sales/use tax is due on both new and used items purchased unless you operate a business and will be reselling it and collect sales tax from the purchaser.

Contact the State of Louisiana to confirm. The state's website likely answers your question.

Frequently Asked Questions : Louisiana Department of Revenue

Click to expand...

and no sales tax on labor.

Who will find me and turn me in in my home state?

Click to expand...

We live in California. We purchased our boat in Seattle through a broker in Seattle, documented it with a home port of Seattle, registered in WA, and paid all Washington taxes with the intent the boat would never visit California.

Two to three months later, we received a letter from the state of CA saying we owed significant taxes on the purchase unless the boat was not going to be used within California waters. We signed the document (as requested (upon threat of loss of all personal assets and permanent incarceration should we be untruthful)) stating such and providing proof that we had paid equivalent taxes to the state of Washington.

Another 30 days passed and I was contacted by phone from the CA franchise tax board. They now required that I send them a copy of the Washington state registration, a copy of our moorage lease agreement, and copies of invoices for any work that we had had done showing the work was done in Washington. Additionally, they had verbally contacted our broker (in WA) to verify that we had purchased the boat there with the intent of leaving it there and contacted the marina to verify the boat was indeed in the slip we had leased.

The next phone call from them was to confirm that they had received all documentation requested. They stated that they were satisfied at the time but would leave the "case" open for twelve months should the situation change.

That's my experience trying to do everything on the up and up.

I suspect they have access to the Coast Guard documentation information as that is the only way I can see that they would have discovered that we purchased the boat and have a California address.

Hi,
In Maine, at least, the Coast Guard yearly sends a list of documented vessels and their owners to the town clerk in the town of the owner's home address. The clerk is then on the lookout for yearly use tax (not a big deal) or the sales tax, which is a big deal. In suspect this is done everywhere.
Roger

Yes, Rusty, California is very aggressive in attempting to collect taxes, always presuming you owe them. They do check the USCG documentation listings. If I had documented my boat with a Nevada location rather than a California one, I could have probably delayed paying California use charges (equaling a fourth of my gross annual income) by more than six months.

BruceK said:

Who`d have thought an Aussie would ever prefer an aspect of our tax system?

Click to expand...

I'm thinking there are a few boaters in Mexico who would prefer our tax system too!

Many boat owners say they simply weren't around when authorities came by and slapped liens on the boats barring them from leaving Mexico.

January 7, 2014

MEXICO CITY — When heavily armed marines and government tax agents stormed eight marinas on Mexico's Pacific and Caribbean coasts, boaters thought they were witnessing a major drug takedown.

The mostly American and Canadian retirees found out that the target was actually them — couples spending their golden years sailing warm-weather ports in modest 40-foot boats.

After inspecting more than 1,600 vessels in late November, the Mexican government's Treasury Department announced it had initiated seizure orders against 338 boats it accused of lacking a $70 permit. The office says it has four months to decide whether to release the boards or sell them at auction.

Many owners say they actually have the permit but were never asked to present it. Others say minor numerical errors in paperwork were used as grounds for seizure.

Some say they were away at the time and have never been officially notified at all, learning of the seizure only from local marina operators.

It is all part of a new effort by President Enrique Pena Nieto's administration to increase government revenues in a country with one of the worst tax-collection rates among the world's large economies. The push has drawn howls of protest from Mexicans upset about new sales taxes and levies on home sales. But few of the new measures were as unexpected or toughly enforced as what foreign pleasure boat owners call a heavy-handed crackdown over a minor permit, and they say it threatens a tourism sector Mexico has long sought to promote.

The CG shares its documentation database with every state. States pay little to no attention to the hailing port, they do pay attention to the address of the registered owner. Their only real interest is in the location of the boat. Taxing authorities start with the basic assumption that if the registered owner is in their state, then the boat must be in their state. They leave it up to you to prove otherwise. Some states are more aggressive than others. In general, those states with large boating populations tend to be more aggressive, FL and CA being the most notable examples. In addition, in quite a few states, marinas are required to report their slip holders, if unregistered, at least once a year usually on January 1 each year. If you happen to dock in a municipal marina, you are probably toast.

California is very aggressive in collecting all forms of taxes. The state has been known to go to great lengths to collect income taxes from individuals who were once California residents but had now moved out of state. Usually this involves sending the state copies of credit card bills showing that the former California was not in California for any substantial length of time during the year. In one particularly ridiculous case I had to justify why the credit cards bills had not been timely sent by pointing out that the former California taxpayer had died and was buried in another state.

Marty

Rusty said:

..................... I suspect they have access to the Coast Guard documentation information as that is the only way I can see that they would have discovered that we purchased the boat and have a California address.

Click to expand...

Anyone in the world has access to Coast Guard documentation info:

Coast Guard Vessel Search

Tax people check the marinas in my area on a regular basis.

What I still don't get after reading and rereading this thread: For example, if, as FL says, it's tax is on the seller, for the "privilege" of doing business in FL; why does a boater pay the tax... even when he brings a boat into the state which he has purchased elsewhere? And why would an online, out of state seller or FL buyer owe tax in FL since no "privilege" has been granted?
Since taxation is basically either theft or involuntary servitude (depending on what is being taxed) should not the rules used be crystal clear?

Brooksie said:

What I still don't get after reading and rereading this thread: For example, if, as FL says, it's tax is on the seller, for the "privilege" of doing business in FL; why does a boater pay the tax... even when he brings a boat into the state which he has purchased elsewhere? And why would an online, out of state seller or FL buyer owe tax in FL since no "privilege" has been granted?
Since taxation is basically either theft or involuntary servitude (depending on what is being taxed) should not the rules used be crystal clear?

Click to expand...

Unlike other state, if you purchased a boat outside Florida, showed no intention of using it if Florida, have owned the boat 6 months or more, and then take it into Florida there would be no use tax due. If the boat is in Florida for more that 90 days, the boat should be registered in Florida. Florida is one of the most lenient states in this regard. They value their marine and tourist industries.

A big caveat on this is the fact that you cannot be a Florida resident to take advantage of this.

I'm not sure but I think some of you are getting confused about this sales tax think. I have been through this several times.
I bought a boat in Fl. and was moving it to Ms. and didn't want to pay Fl. Fl. sales tax. When I got to Ms. I then decided that I wanted to move to Texas instead so I didn't pay Ms. sales Tax. When I got to TX, I registered the boat with the Fl. sales receipt and paid my sales tax in Tx.
About 2 years later, I get a letter from Ms. stating that I owe them sales tax on the boat. I told them that I registered and paid sales tax in Tx.
They asked me for my Texas sales tax info, I sent it to them and all was good.
You don't pay sales tax in 2 states, only one. If the sales tax collected in one state was reasonably close to the other states sales tax, they wont bother adjusting and will honor your taxes paid. Then all you do is pay for the registration in the state you are residing in.
Now, if one state charges 8.5% and the other only charges 7% they normally would not make you pay the difference. However, if you only paid $300 and should have paid $5000, THEN, you will have to make up the difference. There is a point of reasonability here.

Tony B said:

I'm not sure but I think some of you are getting confused about this sales tax think. I have been through this several times.
I bought a boat in Fl. and was moving it to Ms. and didn't want to pay Fl. Fl. sales tax. When I got to Ms. I then decided that I wanted to move to Texas instead so I didn't pay Ms. sales Tax. When I got to TX, I registered the boat with the Fl. sales receipt and paid my sales tax in Tx.
About 2 years later, I get a letter from Ms. stating that I owe them sales tax on the boat. I told them that I registered and paid sales tax in Tx.
They asked me for my Texas sales tax info, I sent it to them and all was good.
You don't pay sales tax in 2 states, only one. If the sales tax collected in one state was reasonably close to the other states sales tax, they wont bother adjusting and will honor your taxes paid. Then all you do is pay for the registration in the state you are residing in.
Now, if one state charges 8.5% and the other only charges 7% they normally would not make you pay the difference. However, if you only paid $300 and should have paid $5000, THEN, you will have to make up the difference. There is a point of reasonability here.

Click to expand...

NJ makes you pay the diff...no matter what...it's easy enough to ring up on a cash register even at only $5.

The point is in my last post, FL does not care how much sales tax you paid in another state. SC max is $300, NC max is something like $1,800, and a couple of states on the east coast have no sales tax. If your boat has been registered in another jurisdiction for 6 mos. or more then brought into FL, and you are not a FL resident there will be no tax due.

Here is a copy off the Florida website

To report use tax and surtax due to Florida on the purchase of a boat, the owner should complete an
Ownership Declaration and Sales and Use Tax Report (Form DR-42B). You can find this form on our
Internet site at Welcome to the Florida Department of Revenue web site.
Use tax and surtax are not due on boats brought to Florida if you meet all of the following conditions:
• You own the boat 6 months or longer, and
• You have shown no intent to use the boat in Florida at or before the time of purchase, and
• The boat has been in use 6 months or longer within the taxing jurisdiction of another state, U.S.
territory, or the District of Columbia. Time spent in foreign waters does not count as part of the
6-month period.

Moonstruck said:

If your boat has been registered in another jurisdiction for 6 mos. or more then brought into FL, and you are not a FL resident there will be no tax due.

Click to expand...

True, but a key point that some people miss is that the boat has to be owned AND USED in the other jurisdiction. Some people have bought a boat elsewhere, let it sit for six months and a day, and then brought it to Florida thinking they would not have to pay Florida sales tax. But the state is onto this dodge. You may be required to produce fuel bills, marina bills, pumpout bills, or whatever that will prove that you have actually been USING the boat elsewhere, and not just letting it sit while you wait for the six months to pass.

Brooksie said:

What I still don't get after reading and rereading this thread: For example, if, as FL says, it's tax is on the seller, for the "privilege" of doing business in FL; why does a boater pay the tax... even when he brings a boat into the state which he has purchased elsewhere? And why would an online, out of state seller or FL buyer owe tax in FL since no "privilege" has been granted?
Since taxation is basically either theft or involuntary servitude (depending on what is being taxed) should not the rules used be crystal clear?

Click to expand...

OK, this whole area is one in which it is easy to be confused. What is called the "sales tax" is on the retail seller in the state imposing the tax. The statutes provide that it is a percentage of the sales price and is to be added to the price. Thus it is collected by the seller from the buyer as part of the "price".

The use tax is totally separate, it is on a consumer (the buyer) who has bought an item for which the sales tax would be paid if purchased in that state and then possesses the item in the state. Generally a credit is given for any "sales tax" paid in the consumer's state or elsewhere. Thus if you buy the admiral a bracelet while on vacation in Florida and return to Maryland you are liable to Maryland for the use tax on the value of the bracelet but are entitled to a credit for any sales tax paid in Florida. In reality the use tax is ignored most of the time except for boats, cars and other items requiring a registration or title.

I have deliberately used the word "possesses" rather than uses an item in a state because whether you use the item or not is irrelevant to many taxing authorities. Did you bring it here is the only question.

Marty

even the yardsticks of "number of months" get convoluted with use tax versus registration.

registration requirements don't always align with use tax...I showed a friend an example from NJ State Tax Court where a resident...who did not plan on keeping the boat in NJ, but brought it in for only a few days, and the tax court decided that because he was a resident and used hs boat in NJ...use tax applied.

Moonstruck said:

...Use tax and surtax are not due on boats brought to Florida if you meet all of the following conditions:
• You own the boat 6 months or longer, and
• You have shown no intent to use the boat in Florida at or before the time of purchase, and
• The boat has been in use 6 months or longer within the taxing jurisdiction of another state, U.S.
territory, or the District of Columbia. Time spent in foreign waters does not count as part of the
6-month period.

Click to expand...

Don pretty much nailed it for us. We did have some help researching the laws: Thanks Tucker, YachtBrokerGuy.

We are an Alaskan documented vessel and according to Florida, we were in compliance with Alaska's taxing jurisdiction so it was just a matter of registering Hobo. We submitted copies of our drivers license and vessel documentation to FL and no sales tax was due. The same would also apply for Rhode Island and Delaware vessels which are also no sales tax states from what we were told if they met the above requirements.

denverd0n said:

True, but a key point that some people miss is that the boat has to be owned AND USED in the other jurisdiction. Some people have bought a boat elsewhere, let it sit for six months and a day, and then brought it to Florida thinking they would not have to pay Florida sales tax. But the state is onto this dodge. You may be required to produce fuel bills, marina bills, pumpout bills, or whatever that will prove that you have actually been USING the boat elsewhere, and not just letting it sit while you wait for the six months to pass.

Click to expand...

If you buy a boat in Florida through a dealer or broker, and purchase the 90 day cruise permit, FL will require proof that you left the state in a timely fashion. That can be fuel receipts, marina bill, repair bills, registrations or anything else that ties the boat to another jurisdiction. I have done that twice.