USCG Documentation vs. State Registration

After more than a year searching and researching, I think I'm finally close to making an offer an negotiating to purchase a 40 trawler -- one step closer to starting my Great Loop adventure ;-)

My three previous boats -- all trailerable 17' - 24.5' -- were all registered in whatever state I happened to reside in at the time (IN, WI, MO, or IL) -- not only because I lived in and file state income tax returns in that state, but also because I kept the boat on the trailer and used the boat primarily in that state (excluding "vacation" trips with the boat in tow to NC, MI, TN/KY, etc.).

Can anyone tell me the pros and cons of documenting my new 40' trawler through the US Coast Guard versus registering it in IL where I live or in WI or IN where I'm more likely to keep the boat and call "home port?" What's the advantage(s) and/or disadvantage(s) of having the boat federally USCG-documented versus state-registered?

WI, IL, and IN all have state sales/use tax rates within 1% - 1.5% of each other, so my question has little or nothing to do with trying to avoid sales/use tax. However, I DO have a state sales/use tax question: If I purchase the boat from an individual (through their yachtworld.com listing agent/broker) in GA as an out-of-state buyer, will I be expected to pay the 7% state/local sales tax there or not until I finally bring the boat back to either WI, IL, or IN (and then pay that state's 5.5%, or 6.5% or 7% sales/use tax, respectively)?

Thank you all in advance for sharing your knowledge and experience on this matter.

If you are going to have a loan on the boat the mortgage company will most likely require you to document the boat. It gives them a stronger position if you don’t make the payments. If you are planning on going out of the country with the boat documentation is probably better. As to the tax implications everyone will tell you something different. Our boat is documented but we still have to register it here in Michigan primarily because the state wants the sales tax and the registration fees.

I can't be sure about those states but will say in general, my experience buying out of state no sales tax collected until the boat or vehicle returned to my home state (NY) and was regustered.
Above is exactly what happened w Documented boat bought in TX via private sale. I applied for Doc name & owner change and had to register in NY to get the reg decal but they do not issue NY Reg #s... they do collect sales tax.
I had to have a Bill of Sale and Title (signed over Fed Doc form)
Advantage... already mentioned- more secure, may be reqd for loan. No need to display state reg #s on hull
Disadvantage... takes time and more paperwork + more $, need to add Doc # placard if not already documented and in place... usually in Eng Rm.

There is no sales tax on used boats in GA.

Being documented brings the protection of being a US flagged vessel, and is inexpensive. You’re doing the loop, and will be in foreign waters...and may decide to head to the Bahamas during the southern part of the loop.

Get it documented.

This most likely doesn’t apply to you but I bring it up so others check before they buy. California May be the only state in the union that does this but they do it. If you buy a California registered boat you will pay Sales Tax, even if you are an out of state buyer who is taking possession of the boat out of state. There are some strange exemptions and there are many transactions the state hasn’t pursued but the bigger the $’s the more aggressive the state is.

It’s about $92.00 to document your boat. Money well spent. You must check with the tax laws of the state you are buying the boat in. Some want it, some don’t

Thanks to all of you who responded. I have one additional question:
If I put the boat in a marina in WI or in IN (rather than in IL), will I pay WI (or IN) sales/use tax, or, because I am an IL resident, IL sales/use tax? The difference between the three states is only 1% +/- .5%...

one additional thought: be careful whom you invite aboard if you document. My understanding is that if a guest happens to bring a federal illegal drug, like marijuana, and it is found during a Coast Guard search, your vessel can be confiscated but you still owe the bank. My boat is documented but I don't allow anything illegal aboard.

Starting in January this year ALASKA requires state registration whether you are documented or not. Sales taxes weren’t the reason. The State thinks it will help track down owners of abandoned boats.

Tom

Tom

Boilermaker75 said:

If I put the boat in a marina in WI or in IN (rather than in IL), will I pay WI (or IN) sales/use tax, or, because I am an IL resident, IL sales/use tax?

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Sales tax, and requirements to register, very rarely have anything to do with YOUR state of residence. They have to do with where the boat is bought/sold, and/or where the boat is kept.

I do not know the specific laws in WI or IN, but even if I did I would suggest that you should verify them for yourself. If they are similar to most of the states that I am familiar with then keeping the boat in (for example) WI would mean that you must register the boat in WI. And when you register it there, if you have not paid sales tax elsewhere, then you will have to pay sales (use) tax to WI.

Generally speaking, this sort of thing has nothing to do with whether or not you document the boat with the CG. There are exceptions, but most states will require you to register your boat with them if you keep it there, regardless of CG documentation. If it is documented, however, you will NOT display state registration numbers on the boat.

They will each independently wantvtheir sales tax- register where it will live. I bought my boat in WI - registered and paid the sales taxes in Illinois as I knew I would bring her down here the next season. For these states- (others may be different) you have to register even if you are documented. It’s not big of a deal money wise either

Once again, a hearty and grateful THANK YOU to all who replied and shared their knowledge, experience, and advice with me on this matter -- I greatly appreciate you all.

Being documented serves two purposes:

1) The USCG titles the vessel. The requirement for documentation for a vessel with a boat loan, largely applies to boats registered in states which do not issue titles for boats (not all states issue titles).

2) Travelling internationally.

NOTE: Canada, Bahamas may not require a US vessel be documented, but most other countries do.

If you don't plan on international travel, and are NOT required to title the vessel, there is little need to document it.

Registration requirements are by state and has nothing to do with the state you reside in. Each state varies. Unlike an Auotmobile, you may find you will need to register in multiple states if you remain in that state beyond the time limit. Some states limit time by the year, others by the amount of time spent in a single visit.

Taxes is another discussion completely and has to do with the state the vessel is registered in.

Dawdler said:

one additional thought: be careful whom you invite aboard if you document. My understanding is that if a guest happens to bring a federal illegal drug, like marijuana, and it is found during a Coast Guard search, your vessel can be confiscated but you still owe the bank. My boat is documented but I don't allow anything illegal aboard.

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Extremely unlikely to happen in the US for personal use amount. Plus, there is an innocent owner defense to all drug related seizures (retired DEA agent). And, being federally documented or not, has no operational difference as far as drug violations go.

In another country besides the US? It depends.

tons of information online

if you have a lender they will likely require it be documented

read and understand each state's laws where the transaction will take place, where it will be stored, and where it will spend any time, even passing through. there is not only sales tax, but use tax, and property tax considerations, depending on the state.

you will have to follow each state's guidelines even if its documented. you may have to get a decal/register in multiple states.

be very careful

Congrats on your new boat. You might want to check the archives on this subject for more information. It has been written about lots, and lots.



Bottom line: the protection of the U.S government if documented is a myth. We no longer send the Marines to rescue you. Also states will still require that you register your vessel. In Florida at least, the only benefit is that you needn't mar the bow of your vessel with state numbers if documented, juts have to post the sticker. For international travel, some countries require documentation (which is just federal registration) some are happy with your state registration. Check with the consul of the countries you plan to visit. Happy travels.

As many have said here before, there are no disadvantages to USCG Documentation and a few advantages. There are restrictions. For one you must be a US citizen, not a green carder or in the US on a work visa. You essentially can't get financing on an undocumented boat in the traditional marine finance industry. They want documentation so that they can record a Preferred Ship Mortgage on the boat with the National Maritime Center. This protects the lender and you against spurious claims by every Tom, Dick and Harry that might think he has a beef with you.

Once documented with the USCG you may still be required for some sort of of state registration and payment of taxes. Also, if you only cruise to Canada or maybe Mexico you may be ok with a state only registration but anywhere else in the world you my not be welcome. Also the resale value of a undocumented vessel could be effected. I've bought four boats, all documented, I wouldn't think of buying anything large that a dinghy that's not USCG documented or documentable.

This seems is a recurrent subject that never seems to get resolved.

1. Documentation provides a federal.title.to your boat. Good idea if you are going to take it out of country.

2. State registration requirements are defined by state laws and regulations. Read them before taking someone's opinion because many people who.profess to know are simply wrong.

3. IN GENERAL state registration is required not where you live but where you store and or mainly use your boat.
Further, states recognize boats move between states and have provisions requiring registration depending upon how many days your boat is in their waters (period can be 30 to 90 days and if exceeded within a year's period you can be required to register your boat). Again READ the state law. It's easy to find online through Google.

4. Registration is only part of the issue. The other is annual personal property tax. Hopefully your boat will reside in a county that exempts boats from this annual tax. For example, many counties along the Potomac River.

Good Luck and read the applicable laws, rules and regulations to be in the know.

A number of people have suggested that international travel is more difficult, or not allowed for an un-documented, a state-registered-only vessel.


Has anyone actually experienced this? Has anyone been turned away, or told not to come unless their boat is documented?

twistedtree said:

A number of people have suggested that international travel is more difficult, or not allowed for an un-documented, a state-registered-only vessel.


Has anyone actually experienced this? Has anyone been turned away, or told not to come unless their boat is documented?

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depends where

i believe certain foreign parts will be fine and others wont

garychurch said:

This seems is a recurrent subject that never seems to get resolved.

1. Documentation provides a federal.title.to your boat. Good idea if you are going to take it out of country.

2. State registration requirements are defined by state laws and regulations. Read them before taking someone's opinion because many people who.profess to know are simply wrong.

3. IN GENERAL state registration is required not where you live but where you store and or mainly use your boat.
Further, states recognize boats move between states and have provisions requiring registration depending upon how many days your boat is in their waters (period can be 30 to 90 days and if exceeded within a year's period you can be required to register your boat). Again READ the state law. It's easy to find online through Google.

4. Registration is only part of the issue. The other is annual personal property tax. Hopefully your boat will reside in a county that exempts boats from this annual tax. For example, many counties along the Potomac River.

Good Luck and read the applicable laws, rules and regulations to be in the know.

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well said but in addition to personal property tax there are also sales AND use tax considerations

and in some cases, water way permits

mystery said:

depends where

i believe certain foreign parts will be fine and others wont

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That's the rumor, but I'm wondering if it's true. Personally I've never heard of a state registration being a problem, but that's just my experience.

twistedtree said:

That's the rumor, but I'm wondering if it's true. Personally I've never heard of a state registration being a problem, but that's just my experience.

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There is some good info online for entering certain ports, i.e. Bahamas

twistedtree said:

That's the rumor, but I'm wondering if it's true. Personally I've never heard of a state registration being a problem, but that's just my experience.

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Hi Peter,
Julie and I have visited 13 countries so far, and have NEVER been interrogated about INFINITY's documentation specifics. Of course, when checking into a foreign marina, we are always asked for our "registration papers", but in most cases, the kind folk asking do not even have a clue what they are looking at. The procedure seems more about 'checking-a-box' than actual concern about whether the vessel is state or federally registered/documented.

To answer your question; No, state registration is not a problem in our experience.

mystery said:

There is some good info online for entering certain ports, i.e. Bahamas

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I’ll bet a few hundred Florida boats clear rhe Bahamas with nothing but state registration every year.

BEWARE of a SCAM... A company in MT is sending out renewal notices that is NOT the USCG Documentation Center.

Basically if you look it is offering to renew your documentation for a year for 75 dollars, rather then the official rate of 26 dollars. In effect you are paying 49 dollars for their service which the USCG will do.

azandca said:

BEWARE of a SCAM... A company in MT is sending out renewal notices that is NOT the USCG Documentation Center.

Basically if you look it is offering to renew your documentation for a year for 75 dollars, rather then the official rate of 26 dollars. In effect you are paying 49 dollars for their service which the USCG will do.

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there are several companies that do this and have done it for years

its like domain renewal mailings

or property transfer/deed mailings when you buy/sell property

as with anything, always read and understand whats in front of you and dont be afraid to verify.

Here's bit of news concerning the Documentation. When I sent my renewal form in, I forgot to fill out the charge card authorization. Well, I called and ask if we could handle it over the phone and he said "yes". He took all the card information and asked if I wanted 1 year or a 5 year certificate. Hmmm, being suspicious .... I asked if I was talking with the real documentation center. After being assured it was the official documentation center, I said 5 years. Then asked if the certificate they will send, will be for 5 years. Congress authorize the USCG/Documentation Center and Homeland Security, to once again offer a 5 year license to recreational boater. Commercial boat/ships must still reapply once a year.
The man I talked with, you could actually his voice change when I asked if I was talking to the official office. LOL I guess he was getting REAL tired of hearing that question over and over. LOL
If course if I live to 81 years old, I suspect I will be duct tape into a wheel chair and wearing drool bib too. SHRUG
Must be the real Doc Center cause the charge me $130 for 5 years.
Near as I can figure out, the CG did a cost analysis and showed Congress just how much money the CG was losing.

OldDan1943 said:

Here's bit of news concerning the Documentation. When I sent my renewal form in, I forgot to fill out the charge card authorization. Well, I called and ask if we could handle it over the phone and he said "yes". He took all the card information and asked if I wanted 1 year or a 5 year certificate. Hmmm, being suspicious .... I asked if I was talking with the real documentation center. After being assured it was the official documentation center, I said 5 years. Then asked if the certificate they will send, will be for 5 years. Congress authorize the USCG/Documentation Center and Homeland Security, to once again offer a 5 year license to recreational boater. Commercial boat/ships must still reapply once a year.
The man I talked with, you could actually his voice change when I asked if I was talking to the official office. LOL I guess he was getting REAL tired of hearing that question over and over. LOL
If course if I live to 81 years old, I suspect I will be duct tape into a wheel chair and wearing drool bib too. SHRUG
Must be the real Doc Center cause the charge me $130 for 5 years.
Near as I can figure out, the CG did a cost analysis and showed Congress just how much money the CG was losing.

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Well you sent the form in and placed the call so you tell us where you send the form and who you were talking to?