Transient Vessel not registered in any state/USCG Documented

[Mikala]

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.

I was with you up until you said “not pay taxes if they are not due”. Scan the entirety of the thread and the underlying theme is to find creative ways to avoid taxes that are due.

BTW, I am not fond of taxes at all.

 

[twistedtree]

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.

This is the crux of the question I posed earlier, either here or in a similar thread. I can’t look it up on my microscope phone.

I would contend that “registered in another” state has to mean that you are in compliance with the other states regulations, whatever they might me. It seems unreasonable that one state should define what is acceptable registration in another state, and that’s what they would be doing if the required a actual registration document.

That said, I completely agree with you wrt how a particular agent might interpret it, and the unrealistic nature of court challenges, etc. I generally favor having simple answers for questions. Like “can I see your state registration?” Preferred answer is “yes, here it is”, not “I don’t have one and let me explain why”.

But at what cost? You are fortunate to live in FL where for a nominal fee you can be registered and tax paid. It’s cheap enough to do voluntarily, even if taxes aren’t due because your boat is still out of state. It’s not so easy when the cost is an uncapped 5% or 10% on a multi million boat. That’s a lot to pay for a simple answer to a question.

 

[dirtdoc1]

Here's one for smarter minds than I.

If my home port is Bellingham WA marked on the transom and on the USCG Documentation but the boat never touches Washington waters. Am I correct that I don't have to pay registration taxes in Washington State.

Also if I don't stay in any other state long enough to be considered a resident (each state is different time wise). Am I correct that I wouldn't have to buy registration at all ever ?

I assume I could travel (not for commercial use) the Great Loop, Canada and the Bahamas without ever registering the boat anywhere as long as the boat traveled as a transient USCG documented vessel in each state or country. I would be interested to hear from a person that has accomplished this feet.

USCG documentation is all I have. Once I stay in one place for over 6 months, (it may be different for each state) I will have to pay property tax. I will eventually end up in California and I'll have to register there and pay their property tax. If you keep moving you will never have to register in any state.

 

[Seevee]

I was with you up until you said “not pay taxes if they are not due”. Scan the entirety of the thread and the underlying theme is to find creative ways to avoid taxes that are due.

BTW, I am not fond of taxes at all.

Mikala,

Why would one pay taxes that are not due? And there is NOTHING in this thread that implies breaking the law and avoiding taxes that ARE due.

 

[BandB]

This is the crux of the question I posed earlier, either here or in a similar thread. I can’t look it up on my microscope phone.

I would contend that “registered in another” state has to mean that you are in compliance with the other states regulations, whatever they might me. It seems unreasonable that one state should define what is acceptable registration in another state, and that’s what they would be doing if the required a actual registration document.

That said, I completely agree with you wrt how a particular agent might interpret it, and the unrealistic nature of court challenges, etc. I generally favor having simple answers for questions. Like “can I see your state registration?” Preferred answer is “yes, here it is”, not “I don’t have one and let me explain why”.

But at what cost? You are fortunate to live in FL where for a nominal fee you can be registered and tax paid. It’s cheap enough to do voluntarily, even if taxes aren’t due because your boat is still out of state. It’s not so easy when the cost is an uncapped 5% or 10% on a multi million boat. That’s a lot to pay for a simple answer to a question.

To me it all comes as part of choosing where to "reside", where to keep your boat, and more. Taxes are an important part of that and it makes sense if there are two or more choices that are otherwise equal to choose the one that saves you money. Certainly the lack of a state income tax in Florida appealed to us. Also, we document US and register FL rather than documenting offshore because FL makes it reasonable to do so.

We have too many states and too many different sets of laws and requirements. It worked great when people didn't travel long distances. Now it's problematic. Just look at sales tax on internet sales. It's not just taxation either. People get arrested daily for things that are legal one mile away. Just look at Marijuana. It's illegal federally but not being enforced. Illegal in some states. Fully legal in others. Legal with medical marijuana cards in others. Arrest means jail in one jurisdiction and in another means just a citation like a traffic ticket. Of course very subject to serious arrest anywhere on a boat.

This thread is a logical question. I think those participating fit in many different groups. Here are the groups I see.

1. It's not an issue as my situation is simple.
2. I want to do anything to avoid a problem so might do more than legally required.
3. I want to do the least I'm legally required to and save money but not cutting corners.
4. I want to do the least I'm legally required to and where there's a question of legality I'll give the benefit to myself even if it might mean a problem one day.
5. I want to pay the least possible and I'll do what I feel I can get by with, whether it's legal or not.

 

[Mikala]

Mikala,



Why would one pay taxes that are not due? And there is NOTHING in this thread that implies breaking the law and avoiding taxes that ARE due.

Reading comprehension is obviously not your strong suit.

 

[Rufus]

Mikala,

Why would one pay taxes that are not due? And there is NOTHING in this thread that implies breaking the law and avoiding taxes that ARE due.

I posted an example in post #43 where a boat was registered under an LLC in Delaware, but spent two decades in Michigan...blatent tax dodge. That boat should have been re-registered in Michigan and paid Michigan tax. A similar LLC example in Oregon was noted in an earlier post. Legal on its face, but actually pretty good examples of the thinking in Groups 4 and 5 in BandB's post above. When I see a Dover, Delaware home port....the first thing that comes to mind is tax dodge.

 

[markpierce]

Mikala,

Why would one pay taxes that are not due? And there is NOTHING in this thread that implies breaking the law and avoiding taxes that ARE due.

Answer: if one believes taxes are not high enough.

 

[ianonhercules]

WA State tax

Just to set the record straight the USE TAX in the state of WA is one half of one percent of the purchase price of the vessel(.05%) and is depreciated annually. The sales tax varies by county and does not exceed 10%(King Co.) as far as I know. I have owned boats in WA state since 1992 and this is my experience.

I am not justifying nor condoning the practice but there have been several numbers bandied about and I just wanted to point out the facts!


Ian Munro

Seattle

 

[Comodave]

This is from the Michigan Secretary of States website.



All watercraft on Michigan waters, including privately owned lakes and waterways, must be registered except:

Watercraft 16 feet or less, propelled by oars or paddles, and not used for rental or commercial purposes;
Non-motorized canoes and kayaks not used for rental or commercial purposes, rafts, surfboards, sailboards, and swim floats, regardless of length;
Watercraft registered in another state and used only temporarily in Michigan.

For most watercraft, the registration fee is based on length. All registrations expire on March 31 in the third year of issuance.



I think they get the boats that are from out of state and are not registered in the first line. They do exempt boats that are in Michigan temporarily and are registered in another state.

 

[ksanders]

Mikala,

Why would one pay taxes that are not due? And there is NOTHING in this thread that implies breaking the law and avoiding taxes that ARE due.

Exactly!

There is no reason not to create or modify your cruising schedule to avoid tax liability. Nothing immoral about that at all.

There is also nothing immoral about using EVERY available loophole in the law to avoid paying tax.

 

[bgillroy]

States want their taxes period so they have various rules and fines to enforce compliance whethet documented or not. Unless you keep moving they'll ticket you and then you'll have a problem. Better to pick your home state and comply than fight it. BTW I'll never live in CA, NY NJ or even my home state of CT due to unfriendly authorities, activist politicians and heavy taxation.

 

[Rufus]

Exactly!

There is no reason not to create or modify your cruising schedule to avoid tax liability. Nothing immoral about that at all.

There is also nothing immoral about using EVERY available loophole in the law to avoid paying tax.

My registration fee and use taxes go toward State boating/marine programs. Transient boaters take advantage of the infrastructure in my state when they pass through. If they pay their share in another state then that's ethical (never mind that the amount differs from state to state). If a boater consciously plans to circumvent state taxes/fees by altering cruising schedules/locations or uses the LLC trick for the purpose of avoiding taxes, that individual is taking advantage of those who do support the overall boating system/infrastructure.

 

[DDW]

Big confusion in this thread between tax avoidance and tax evasion. The former is legal, the latter is not. If you are bothered by the ethics, then perhaps you should consider sending a bonus check to your local government a couple times a year. Most of us don't do that, we pay only what is legally required.

In many states, the sales, use, or reg taxes go into the general fund - they are not used exclusively for boating infrastructure. They are a means to raise revenue, nothing more.

 

[Alaskan Sea-Duction]

Just to set the record straight the USE TAX in the state of WA is one half of one percent of the purchase price of the vessel(.05%) and is depreciated annually. The sales tax varies by county and does not exceed 10%(King Co.) as far as I know. I have owned boats in WA state since 1992 and this is my experience.

I am not justifying nor condoning the practice but there have been several numbers bandied about and I just wanted to point out the facts!


Ian Munro

Seattle

The use tax in Washington was equal to the state sales tax for me, about 8.8%.

 

[RCook]

I think Ian may have meant the WA annual "excise" tax.

 

[Seevee]

My registration fee and use taxes go toward State boating/marine programs. Transient boaters take advantage of the infrastructure in my state when they pass through. If they pay their share in another state then that's ethical (never mind that the amount differs from state to state). If a boater consciously plans to circumvent state taxes/fees by altering cruising schedules/locations or uses the LLC trick for the purpose of avoiding taxes, that individual is taking advantage of those who do support the overall boating system/infrastructure.

Rufus,
You don't say what state is your state....
But states operate different, have different spending, taxing, rules, etc. I don't feel obligated to pay a states fees just because of ethics. When I visit a state, I'll patronize the activities and things that have value to me and some come with a price and that's fine. Most states invite visitors in and promote it. Michigan (one state mentioned) is certainly one. We visit their state, spend our money and everyone is happy. WHO the heck are we taking advantage of? The poor politician? What's the issue?

And a lot of the waters are federal, and federally supported.

And there's some things that states spend money on that folks don't like or want. Very few states do a good job with the money they collect. Illinois is a great example, California is a close second.

I could argue strongly to spend your money in the way you feel prudent. If you want to send it to your state, so be it. I'd bet that most won't do that.

 

[Rufus]

Rufus,
You don't say what state is your state....
But states operate different, have different spending, taxing, rules, etc. I don't feel obligated to pay a states fees just because of ethics. When I visit a state, I'll patronize the activities and things that have value to me and some come with a price and that's fine. Most states invite visitors in and promote it. Michigan (one state mentioned) is certainly one. We visit their state, spend our money and everyone is happy. WHO the heck are we taking advantage of? The poor politician? What's the issue?

And a lot of the waters are federal, and federally supported.

And there's some things that states spend money on that folks don't like or want. Very few states do a good job with the money they collect. Illinois is a great example, California is a close second.

I could argue strongly to spend your money in the way you feel prudent. If you want to send it to your state, so be it. I'd bet that most won't do that.

It's about supporting state marine infrastructure at large...not land side establishments or politicians. My sense is that you are content to let other boaters carry the load for you if you can find ways to do so. I do play by the intent and spirit of the rules, and I don't actively seek out ways to avoid doing my part. That's ethical in my book.

 

[twistedtree]

The use tax in Washington was equal to the state sales tax for me, about 8.8%.

That's right. The Use and Sales tax rates are the same, with Use applying to already-owned boats brought into the state, and Sale applied to purchase transactions in state.


The 0.5% annual tax I think they call a Boat Excise Tax. But on an expensive boat, it's a big annual nut.

 

[twistedtree]

It's about supporting state marine infrastructure at large...not land side establishments or politicians. My sense is that you are content to let other boaters carry the load for you if you can find ways to do so. I do play by the intent and spirit of the rules, and I don't actively seek out ways to avoid doing my part. That's ethical in my book.

OK, but for those of us who follow the rules, and the rules say no tax is due, what are you suggesting we do? Should we make a voluntary contribution? If so, to whom, and how much? Or should we all pay each state's sales or use tax when we visit rather than utilize their visitor rules?


So far I don't think anyone has advocated breaking any rules. Examples have been cited of other people who do, but I think we are talking about legal, by the book operation when moving about on an ongoing basis, as many boats do. Regardless of whether you have paid taxes somewhere else or not, or how much you have paid, we all still need to be cognizant of what additional tax liabilities we might incur along the way in our travels. You can still get hit with a big bill even if you have paid somewhere else. Those costs factor into our plans and impact our decisions. We don't just travel with an open wallet. We ask what marinas cost, and consider that when choosing where to stay. Same for fuel. Why is it wrong to do the same when considering how long to stay somewhere if there will be a sudden large bill if you stay too long?

 

[Nocanvas]

Don't most tax dodgers set up a fake corporation in Delaware and register the boat under the phony business? Home port: Dover, Delaware.

I have heard of that !

 

[Nocanvas]

you are entirely correct in that is you are truly traveling then you do not need to register your boat except possibly your home state if it has registration.

You also do not need to pay any tax in any state, but be careful. As you indicated each state has it’s own definition of when your boat falls under their rules.

Just be cognizant of these rules and timelines and you’ll be good to go.

Ah ! and this brings me to the next curiosity. Is there enough interest out here among us to gather together and publish each states transient rules and regulations all in one spot. All we need is 52 people to pull their state regulation (post the link) and post it on another thread here. Or maybe I'll just do it myself lol.... Could be a useful tool especially for the Loopers which was my reason for bringing up the question.

 

[Nocanvas]

California requires numbers on the bow unless CG documented.

The OP can absolutely do what he says, but perhaps not with WA as the home port. Depends on if WA requires registration for vessels never in the state - it seems like they would have a jurisdictional issue if they did. What you tell the coast guard and paint on the transom for you home port is almost without effect or consequence. I've seen 100' boats which claimed landlocked midwestern cities as home port.

And this is exactly where I was hoping someone would go with this conversation. I was told I don't have to pay for the registration until the vessel touches Washington State waters. My though was follow the transient rules of the other states and travel the Great Loop Bahama, Exuma and Canada. Right now the vessel is in Michigan dry storage.

 

[twistedtree]

Ah ! and this brings me to the next curiosity. Is there enough interest out here among us to gather together and publish each states transient rules and regulations all in one spot. All we need is 52 people to pull their state regulation (post the link) and post it on another thread here. Or maybe I'll just do it myself lol.... Could be a useful tool especially for the Loopers which was my reason for bringing up the question.

I think BoatUS already has such a listing.

 

[Nocanvas]

How many dollars is this saving?

That would depend on the Vessel and the State or states traveled through.

 

[JLD]

"The 0.5% annual tax I think they call a Boat Excise Tax. But on an expensive boat, it's a big annual nut."

Respectfully, I would disagree with this statement.

State and local taxes are revenue collected to give services that constituent want/need. Public needs are based on the thought that folks live in that area. They, unfortunately, don't take into account the very small part of the population that might be transient.

The big sources of revenue are income tax, sales tax, property tax, and personal property tax. If a state doesn't have one of these revenue streams, then the money has to come from another stream. On a $1,000,000 boat, a 0.5% annual tax comes out to $5,000 a year.

The bigger problem is the sales (or use) tax on such a large purchase. Given the large boating industry in the PNW, I am surprised that there is not a cap on the sales tax for boats. Even here in Maryland, beginning last year, there is a cap on taxes paid for the new registration of boats.

Jim

 

[markpierce]

"The 0.5% annual tax I think they call a Boat Excise Tax. But on an expensive boat, it's a big annual nut."

You are fortunate. The annual tax on boats in California is over two to four times that, depending on the boat's location.

 

[Nocanvas]

It sure seems to vary state to state! In NC I think they have assessors that prowl the local marinas and write down the names of the documented boats then look up the owners, then send them a tax bill. Up to the owner to dispute it based on whatever the text is in the law. They found mine (which I built, so had no real paper trail other than USCG doc, transom name and port), but taxes are reasonable so I just pay it.

Since mine arrived without any sale involved, no sales tax, this is just property tax.

The state registered boats I think they look up on their computer databases. They got my old skiff that way.

I have heard of other NC boats making a specific trip to SC and getting dockage and fuel (and a receipt) around Jan 1 and then sending copies of that in as part of a dispute. But I never bothered to flush out the details. Something like if you can prove the boat was not in NC on Jan 1, then you could file a claim to avoid it (???).

My very general understanding is that most states ignore the home port on the documentation and rely more on physical presence. But who knows.

Edit: It is our county that sends the tax bill, not the state, but the county is apparently following state law.

I agree most states ignore the home port on the documentation and rely more on physical presence.

 

[Rufus]

OK, but for those of us who follow the rules, and the rules say no tax is due, what are you suggesting we do? Should we make a voluntary contribution? If so, to whom, and how much? Or should we all pay each state's sales or use tax when we visit rather than utilize their visitor rules?


So far I don't think anyone has advocated breaking any rules. Examples have been cited of other people who do, but I think we are talking about legal, by the book operation when moving about on an ongoing basis, as many boats do. Regardless of whether you have paid taxes somewhere else or not, or how much you have paid, we all still need to be cognizant of what additional tax liabilities we might incur along the way in our travels. You can still get hit with a big bill even if you have paid somewhere else. Those costs factor into our plans and impact our decisions. We don't just travel with an open wallet. We ask what marinas cost, and consider that when choosing where to stay. Same for fuel. Why is it wrong to do the same when considering how long to stay somewhere if there will be a sudden large bill if you stay too long?

Look, it's clear you made a calculated decision to register your boat on the east coast to avoid paying tax on the west coast where it's cruising. I never said it was illegal...it's simply a running tax dodge. Not much different than an LLC...the John Kerry example. I've been speaking in terms of ethical behavior. You're OK with taking advantage of what other boaters pay to support the marine infrastructure. Keep it moving, avoid tax, sell.

 

[Rufus]

And this is exactly where I was hoping someone would go with this conversation. I was told I don't have to pay for the registration until the vessel touches Washington State waters. My though was follow the transient rules of the other states and travel the Great Loop Bahama, Exuma and Canada. Right now the vessel is in Michigan dry storage.

If your boat is not registered in any state, it does not meet Michigan requirements. Wouldn't want the DNR to be there for your Spring launch...