Coast Guard Documentation / State Registration

As a US resident intending to cruise the East Coast, if I elect to Coast Guard document my boat, am I required to register it in a state (if I spend less than 90 days in one at a time)?

Basically I'm asking if it's possible to not register a boat in any state, and move around for a year, as a legal way to avoid paying sales tax on a purchase?

ERTF said:

As a US resident intending to cruise the East Coast, if I elect to Coast Guard document my boat, am I required to register it in a state (if I spend less than 90 days in one at a time)?

Basically I'm asking if it's possible to not register a boat in any state, and move around for a year, as a legal way to avoid paying sales tax on a purchase?

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The short answer is yes, with some caveats. I did just that for the five years I owned my boat. I purchased it in Florida which does have a sales tax, moved it out of state within three months and never spent more than 90 days in one state, except states that have no sales tax on boats. I believe that this is perfectly legal.

But be aware of property tax. Many states assess property tax based on where the boat is docked on January 1. Marinas are required to report boats in their facility to the state on January 1 and it is easy for the state to get your address from the CG and send you a bill, even though you may have left the marina on Jan 15.

David

djmarchand said:

I did just that for the five years I owned my boat. I purchased it in Florida which does have a sales tax, moved it out of state within three months and never spent more than 90 days in one state, except states that have no sales tax on boats.
David

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Did you need to keep moving for the entire 5 years? In Florida it seems like you only need to be gone for 6 months after the sale. After that, I can even register the boat in Florida without owing tax, correct?

If you’re a Florida resident, I believe you can’t avoid it.

http://floridarevenue.com/Forms_library/current/gt800005.pdf

Larry M said:

If you’re a Florida resident, I believe you can’t avoid it.

http://floridarevenue.com/Forms_library/current/gt800005.pdf

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Yeah I'm aware. But I'm gonna need to get a new address anyway once moving onto the boat. So I figure I can just change residency to my mother's address in Minnesota right before buying. Which would make sense to send my mail there anyway.

ERTF said:

Did you need to keep moving for the entire 5 years? In Florida it seems like you only need to be gone for 6 months after the sale. After that, I can even register the boat in Florida without owing tax, correct?

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No, after two years of cruising the east coast I moved it to NC (no sales tax state, but kept it at a private dock where it never was reported for property tax purposes) then moved it to RI (no sales tax, not sure about property tax) where I sold it a few years later.


My understanding is that the PP is correct. Florida will get you for sales/use tax no matter how long it has been since purchased if you move there.



David

If you change your residence to Minnesota, buy the boat, bring it Florida, when you register the boat, you’ll have to pay the sales tax delta between Minnesota and Florida if it’s less. If you haven’t paid sales tax in Minnesota, you owe the full 7%, up to $18,000 in FL. That’s how I was told it worked.

Larry M said:

If you change your residence to Minnesota, buy the boat, bring it Florida, when you register the boat, you’ll have to pay the sales tax delta between Minnesota and Florida if it’s less. If you haven’t paid sales tax in Minnesota, you owe the full 7%, up to $18,000 in FL. That’s how I was told it worked.

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This is basically the crux of what I'm trying to figure out. On one hand the written language suggests it only needs to be out of Florida for 6 months. But then I talked to somebody that made it sound like your statement is correct.

This is from the link I posted earlier. Yikes!

A purchaser who attempts to evade tax by submitting a fraudulent affidavit is subject to the tax due, interest, and a mandatory 200 percent penalty (according to section 213.29, Florida Statutes). The purchaser is also subject to a fine of up to $5,000 and up to 5 years in prison.

Larry M said:

This is from the link I posted earlier. Yikes!

A purchaser who attempts to evade tax by submitting a fraudulent affidavit is subject to the tax due, interest, and a mandatory 200 percent penalty (according to section 213.29, Florida Statutes). The purchaser is also subject to a fine of up to $5,000 and up to 5 years in prison.

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I never said anything about fraudulent though. If there's legal loopholes in the law, nothing illegal about utilizing them.

FWIW I called the FL Tax # on that document. They gave me a number of their specialized expert on boat sales tax. And the lady that answered that number had essentially no idea.

ERTF said:

As a US resident intending to cruise the East Coast, if I elect to Coast Guard document my boat, am I required to register it in a state (if I spend less than 90 days in one at a time)?

Basically I'm asking if it's possible to not register a boat in any state, and move around for a year, as a legal way to avoid paying sales tax on a purchase?

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If you're going to travel through multiple states, you need to know each one's rules, and they may be all different. May not be all that easy to read with confidence you understand. WA, for instance, where my boat sits for the winter, is a bit of a puzzle to figure out.

Don't rely on anyone's verbal answer - I talked with at least 6 different state government people, and got a variety of opinions. Better find the relevant laws (including definition of residency) and read, with the help of an attorney if necessary.

ERTF said:

As a US resident intending to cruise the East Coast, if I elect to Coast Guard document my boat, am I required to register it in a state (if I spend less than 90 days in one at a time)?

Basically I'm asking if it's possible to not register a boat in any state, and move around for a year, as a legal way to avoid paying sales tax on a purchase?

Click to expand...

You need to research each state for sales/use tax, as each state is different. Some counties/cities/towns also have their own rules as it relates to excise tax. Not all states offer 90 day exemptions, some offer less, some more. You have to be careful where you buy the boat, where the sale closes, and whether you have to leave with the boat in a certain period of time. For instance, in Florida, if you purchase a used boat from a dealer/broker, you can purchase a decal to stay 90 days as a non-resident and extend it once another 90 days. If its a private party sale, you have 10 or 20 days (I can't remember which). You cannot return for 6 months or that shows your intent to have been in FL all along. Mass has a similar rule.

Some states only let you visit with that 60/90/whatever # of days exemption if your boat is registered elsewhere. I.e you cannot just show up with an unregistered boat. I believe some states do reference state registration. If you plan to spend time in RI (or can buy a boat in RI) it may be worth getting a RI state registration once your boat is documented if you plan to spend a significant amount of time there.

There is tons of info on the internet. You just need to do your homework. You should not rely on anyone's verbal word unless you can document it (i.e. correspond via email or legally record conversation). In the end if they are wrong, you will still have to pay up but perhaps the penalties/interest will be removed.

Your sale takes place in a particular State . Sales tax is due per that states tax law. Documenting a boat is not intended nor does it remove ST obligation.

bgillroy said:

Your sale takes place in a particular State . Sales tax is due per that states tax law. Documenting a boat is not intended nor does it remove ST obligation.

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Sales definitely can take place outside of states such as off-shore but yes you are right that documenting does not magically avoid sales/use/excise taxes.

mystery said:

You cannot return for 6 months or that shows your intent to have been in FL all along. Mass has a similar rule.

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Note that the Florida law says you must own AND USE the boat in another U.S. jurisdiction for at least 6 months in order to qualify for the use tax exemption. The "and use" part is important. There have been court cases where the state collected use tax from people who thought they could get around the law by taking their boat outside of Florida and letting it just sit for 6 months before they returned. You need to not just take it outside of Florida, but you also need to have some evidence that you have been using it during that 6 months.

denverd0n said:

Note that the Florida law says you must own AND USE the boat in another U.S. jurisdiction for at least 6 months in order to qualify for the use tax exemption. The "and use" part is important. There have been court cases where the state collected use tax from people who thought they could get around the law by taking their boat outside of Florida and letting it just sit for 6 months before they returned. You need to not just take it outside of Florida, but you also need to have some evidence that you have been using it during that 6 months.

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Good point...many posters think DMV rules and not sales tax rules.

The sales, use, excise tax rules can bite you unless you do REALLY good homework.Then there is personal property tax next.

I read a case where NJ hit a guy up because the boat stopped in NJ for one night. A boat load of legalise for someone trying to beat the system. Know the pitfalls before adopting a plan.

RCook said:

Don't rely on anyone's verbal answer - I talked with at least 6 different state government people, and got a variety of opinions. Better find the relevant laws (including definition of residency) and read, with the help of an attorney if necessary.

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Read the law, but also find out how the state has chosen to interpret it. In the Washington example, two agencies are involved and they have chosen to interpret it differently. You can always go back to the letter of the law in court, but life is too short to spend it in court.

psneeld said:

I read a case where NJ hit a guy up because the boat stopped in NJ for one night. A boat load of legalise for someone trying to beat the system. Know the pitfalls before adopting a plan.

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Can you please share the case? NJ allows up to 90 days exception IIRC. Thanks.

mystery said:

Can you please sharea the case? NJ allows up to 90 days exception IIRC. Thanks.

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You in my mind are confusing registration with tax laws as far as I know and NJ registration timeline is 180 days.....one of the longest but no grace of days out of state.

I dont have that tax case referenced anymore, so any NJ resident, thinking of buying a boat should clarify the difference.

Out of staters wherever they are have to apply their particularv circumstances.

If my boat is registered in one state and the sales taxes were paid, I fail to see any reason to be concerned about where the boat is currently moored, anchored or slipped.
Just another way for a state to get more money out of boaters. In Hawaii you can see boats that are home ported in Germany or some other country. I doubt that the state of Hawaii knows or cares where they are currently registered. They are bringing money in by just being there. The same with many other states. Things like states being sticky about where a boat is currently registered, are a reason not to become a boater. Just by being in a given state the businesses of the state are making money and ultimately bringing money to that state.

Oldsarge said:

If my boat is registered in one state and the sales taxes were paid, I fail to see any reason to be concerned about where the boat is currently moored, anchored or slipped.
Just another way for a state to get more money out of boaters. In Hawaii you can see boats that are home ported in Germany or some other country. I doubt that the state of Hawaii knows or cares where they are currently registered. They are bringing money in by just being there. The same with many other states. Things like states being sticky about where a boat is currently registered, are a reason not to become a boater. Just by being in a given state the businesses of the state are making money and ultimately bringing money to that state.

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Well, you can certainly ignore the various state laws and just follow your own view of how it should work.....

Oldsarge said:

If my boat is registered in one state and the sales taxes were paid, I fail to see any reason to be concerned about where the boat is currently moored, anchored or slipped.
Just another way for a state to get more money out of boaters. In Hawaii you can see boats that are home ported in Germany or some other country. I doubt that the state of Hawaii knows or cares where they are currently registered. They are bringing money in by just being there. The same with many other states. Things like states being sticky about where a boat is currently registered, are a reason not to become a boater. Just by being in a given state the businesses of the state are making money and ultimately bringing money to that state.

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I traveled most of last year on my boat. I was very concerned about each state I passed through and spent any amount of time in. It was time consuming researching the laws but I am glad I did. I have heard horror stories of people overstaying and owing tax monies to states they dont plan to keep their boats in permanently. Always do your homework!!

ERTF said:

As a US resident intending to cruise the East Coast, if I elect to Coast Guard document my boat, am I required to register it in a state (if I spend less than 90 days in one at a time)?

Basically I'm asking if it's possible to not register a boat in any state, and move around for a year, as a legal way to avoid paying sales tax on a purchase?

Click to expand...

Where are you purchasing the boat and where do you intend to use it first and then most? All that plays a role in what is required. If you purchase it in FL, you have to meet several very specific requirements not to pay sales tax. Also, what state are you a resident of? If you're a resident of FL and purchase in FL, then there is no exemption.