Transient Vessel not registered in any state/USCG Documented

[Seevee]

Respectfully, there is no tax avoidance with an IRA. With a traditional IRA, one "defers" the taxes on the savings. Pre-tax money goes into the account, the account grows, one then pays taxes on the withdrawl. As I plan on buying our retirement house with my traditional IRA (I've been contributing into for the past 35 years), I WISH it wasn't federally taxed as this would be enough to buy my boat!

With the Roth IRA, one saves into the account with 'after-tax' monies.

Either way, Uncle Sam gets his share!

Jim

Jim,

Well, don't believe that's the whole story.... the Roth IRA give one a fairly substantial tax savings, and is especially handy for retirement, when you want non taxable income.

There may be some other IRAs that give that advantage, too.

There are other forms of creating income that is totally non taxable. Yes, you can legally keep it all yourself..... (maybe)

 

[Seevee]

If your IRA/401k earned any capital gains or dividends, you'll be subject to ordinary tax rates rather than the lower capital gains and dividends rate when you or any beneficiaries cash out.

Mark,

Can you explain how an IRA earns capital gains? That's a new one for me. As for dividends, they're taxable as ordinary income.

 

[BandB]

Mark,

Can you explain how an IRA earns capital gains? That's a new one for me. As for dividends, they're taxable as ordinary income.

Dividends received in an IRA may be partially capital gains, especially mutual fund dividends. Inside an IRA, it doesn't matter as they'll all be taxed the same when withdrawn. So, by deferring the tax, one might also be increasing it in some cases.

 

[Mikala]

How did we go from State registrations & Documentation to arguments about 401K’s and IRA’s?

 

[BandB]

How did we go from State registrations & Documentation to arguments about 401K’s and IRA’s?

Lunacy.

 

[Seevee]

How did we go from State registrations & Documentation to arguments about 401K’s and IRA’s?

Easy... we all do it. Called thread drift.

However, saving money for boating thru registration and taxes has similarities to saving tax money elsewhere for boating...... but, it's still drift.

 

[Nocanvas]

Image result for dagger in heart pic, end of this thread !

 

[Wxx3]

Image result for dagger in heart pic, end of this thread !

Gott sei Dank!

 

[JLD]

Image result for dagger in heart pic, end of this thread !

It's like reading a book, only to find the last chapter is missing!

What did you decide was the best possible outcome in this potential scenario?
- no state registration was necessary/required?
- to register the boat in X state?

I'm kinda invested in the thread and would like to know the potential ending

Jim

 

[Bkay]

I'm kinda invested in the thread and would like to know the potential ending

Jim

Here’s my take away from this interesting thread:

-If your vessel is documented, you may or may not have to register your boat in your home state. Check your laws.

-There is a difference between registering a boat in a state and having to pay state’s personal property tax. Check your laws.

-If you operate your vessel on the waters of some states, they require you to be registered in that state UNLESS YOU ARE REGISTERED IN ANOTHER STATE. Check their laws.

-You may be at the discretion of the law enforcement officer’s experience and knowledge of other state’s laws if you operate on their waters and are not registered in any other state.

-Tax avoidance is not the same as tax evasion – but there may be a fine line between the two and the state you are in (or its courts) may be the arbiter.

-401K’s are a great investment.

I probably missed a point or two...sorry.

 

[Fish53]

I love this, people with big pleasure boats complaining about taxes, who wouldn't love it?

 

[boater3]

I started reading this thread. All I can say is there is a TON of incorrect information. I would HIGHLY suggest reading each individual state's laws/regs for BOTH registration requirements AND taxation (they are usually handled by different departments within the state, regs can be separate, don't assume registration requirements match tax requirements).

I traveled through a dozen states last year. I studied each state's regs. Some were very intricate and open to interpretation but you could do some research and get a sense as to how the state would interpret. There is even case law in some states! Easy to do one thing wrong and mess up, owing a huge tax liability. For example, some states have rules specifically about entering their state with a boat in the first six months of ownership shows intent and you will owe tax immediately EVEN if you only stay a short-time, even under the registration exempted days. In some states, in order to be able to take advantage of a registration or taxation exemption period, your boat may have to be registered in another STATE with a current/valid registration, and for a certain period of time!

As some other posters have mentioned there are not only sales and use tax concerns but property tax concerns in some jurisdictions as well. Some get you if you are in a certain location on a certain date. Some marinas submit a list of all boats that have been to their marina even for a day. Some harbormasters/revenue enforcers will drive around on a boat looking at boats on moorings, at anchor, etc, and keep track. There are horror stories about cruisers getting multiple tax bills while cruising adding up to tens of thousands of dollars. That is why it pays to do your homework and keep a written log, some times even evidence of where your boat was when. Where you take delivery can also have an impact as some states will be owed tax even if the boat is immediately moved out the same day as the closing.

 

[CaptTom]

There's been a lot of theory here. It would be interesting to hear a first-hand report of anyone innocently "just passing through" a state for a few days, and getting hassled to pay a tax or registration fee.

I have no doubt there are some who test the boundaries, and get caught stepping over the line. But it seems it would be big news if someone was doing everything above-board, was properly paid up in their home state, not trying to skirt any law, and was dinged for normal cruising activities by some other state.

 

[Bkay]

There's been a lot of theory here. It would be interesting to hear a first-hand report of anyone innocently "just passing through" a state for a few days, and getting hassled to pay a tax or registration fee.

This is not exactly the case you described, but...I purchased a boat in MD and took it to my home in VA where I paid VA's modest sales tax and registered the boat. There was virtually no personal property tax in the city I lived in. The military relocated me a couple months later to FL. The state of FL allows active duty military to defer registering with the state until their current registration expires (I think mine was a 3 year VA registration). Once my VA registration expired, I was required to get FL registration AND PAY A HEFTY SALES TAX TO FL (with credit given for the taxes paid to VA). It still came to a big slug of money to FL and I wanted to avoid paying that if possible.

My final year of VA registration I hauled the boat and was deployed to Iraq for 12 months and the local tax assessor said he wouldn't assess tax unless I relaunched the boat in FL. He said as soon as the boat touched FL water then both tax and registration would be required.

I retired from the military after returning from Iraq and had the boat trucked back to VA. If I had launched it in FL I would have been responsible for paying taxes and registering the boat. If I just cruised quietly out of state I would likely have gotten away with it, but I would have been in violation of FL laws as my boat was not currently registered in any other state. It's not that I'm a boy scout - but I don't play fast and loose with tax laws.

Oh, by the way. I didn't take tax advice off the internet - I just called the tax dudes and asked them. They were easy to talk to and didn't try to hose me. But just in case, I called from an untraceable phone and didn't give them my name...

 

[boater3]

This is not exactly the case you described, but...I purchased a boat in MD and took it to my home in VA where I paid VA's modest sales tax and registered the boat. There was virtually no personal property tax in the city I lived in. The military relocated me a couple months later to FL. The state of FL allows active duty military to defer registering with the state until their current registration expires (I think mine was a 3 year VA registration). Once my VA registration expired, I was required to get FL registration AND PAY A HEFTY SALES TAX TO FL (with credit given for the taxes paid to VA). It still came to a big slug of money to FL and I wanted to avoid paying that if possible.

My final year of VA registration I hauled the boat and was deployed to Iraq for 12 months and the local tax assessor said he wouldn't assess tax unless I relaunched the boat in FL. He said as soon as the boat touched FL water then both tax and registration would be required.

I retired from the military after returning from Iraq and had the boat trucked back to VA. If I had launched it in FL I would have been responsible for paying taxes and registering the boat. If I just cruised quietly out of state I would likely have gotten away with it, but I would have been in violation of FL laws as my boat was not currently registered in any other state. It's not that I'm a boy scout - but I don't play fast and loose with tax laws.

Oh, by the way. I didn't take tax advice off the internet - I just called the tax dudes and asked them. They were easy to talk to and didn't try to hose me. But just in case, I called from an untraceable phone and didn't give them my name...

I think the mistake you made was letting the registration expire. If you 'transferred' to FL, I dont think you would've owed sales/use tax if the boat was legit bought/stored/used in your state of residence and you were only in FL because you just moved there. FL would've taken your valid/active out of state registration from you. Kind of like when you move and turn in your old state's drivers license to get a new one in your new state. I could be wrong though that is how it works in most states...

 

[Bkay]

I think the mistake you made was letting the registration expire. If you 'transferred' to FL, I dont think you would've owed sales/use tax if the boat was legit bought/stored/used in your state of residence and you were only in FL because you just moved there.

With all due respect, that's not true and a good reason to reach out to tax experts. For example, I didn't "let" it expire, it was good for 36 months and at the end of 36 months I could renew in in VA if I moved back (which I did), or I could register it in FL if I remained.

Florida was rather generous to exempt military from the requirement to immediately register when they move. But if at the end of 36 months, had I renewed VA registration but stayed in FL, then I'd be violating their rule of operating the vessel in FL waters over the prescribed number of days, and I would no longer be protected by the military exemption that allows you to keep your current registration until expiration.

The idea that you can pick a state to register a vessel in without some legal nexus is questionable.

 

[boater3]

With all due respect, that's not true and a good reason to reach out to tax experts. For example, I didn't "let" it expire, it was good for 36 months and at the end of 36 months I could renew in in VA if I moved back (which I did), or I could register it in FL if I remained.

Florida was rather generous to exempt military from the requirement to immediately register when they move. But if at the end of 36 months, had I renewed VA registration but stayed in FL, then I'd be violating their rule of operating the vessel in FL waters over the prescribed number of days, and I would no longer be protected by the military exemption that allows you to keep your current registration until expiration.

The idea that you can pick a state to register a vessel in without some legal nexus is questionable.

I just re-checked the regs. Very quick review but I think that I am right. If the boat is purchased, stored, registered, and used outside of Florida for >6 months, and you subsequently move into Florida, no sales/use tax is due. Same for vehicles. No one would want to move to Florida from other states if they had to pay sales/use tax on boats and vehicles they already own...

 

[Bkay]

Thank you for confirming that and if you checked it in the law/reg then I'm sure you are correct. However, I only owned the boat in VA for a few months before being reassigned to FL; well below 6 months, which is why I had most of my 36 months of registration still available after moving.

 

[boater3]

Thank you for confirming that and if you checked it in the law/reg then I'm sure you are correct. However, I only owned the boat in VA for a few months before being reassigned to FL; well below 6 months, which is why I had most of my 36 months of registration still available after moving.

ah i see. bummer. if you just waited a couple more months you would've been good to go.

 

[Bkay]

bummer.

Yep! But I was a Special Forces officer and we kept a pretty hot OPTEMPO. We'd try to game the system where appropriate, but at a certain point you just pay your tax and spend your down time enjoying the boat!

In my case I got lucky because I never had to pay the FL tax. But I wasn't going to make any Herculean efforts to avoid it if it didn't work out.

 

[slowbathtub]

You are correct. Absolutely nothing at all wrong with arranging your affairs, and moving your boat, to avoid the need to pay taxes or fees. So long as you follow the law.


And in that regard, this is where "each state is different" can become an issue. As psneeld observed, in Florida the law says that you have 90 days IF -- and only if -- your boat is registered in some other US state or territory. If you have no state registration then the law requires you to register your boat with Florida immediately upon entering the state. You get no grace period.


I suspect that Florida is not unique in that regard. You have to check the laws in every state you will visit, and I would not be surprised if there are others that offer no grace period for boats that are not already registered elsewhere.


If you pass quickly are you likely to get caught? No. You are almost certain to get away with it. And, really, a lot of people would see nothing morally wrong with avoiding the registration fees in this way. But only you can decide what you are comfortable with. Regardless, it is the difference between "tax avoidance" and "tax evasion."


Good luck, whatever you do.

You can get a cruising permit (temporary registration) in Florida.

 

[SeaDogAK]

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.

This used to be true but Alaska now requires state registration, though it doesn’t cost much.

EDIT: I just realized I’m replying to a 6 year old thread.

 

[Benthic2]

That's better than replying to a 6 year old intellect.

 

[ProMaritime]

This used to be true but Alaska now requires state registration, though it doesn’t cost much.

EDIT: I just realized I’m replying to a 6 year old thread.

A US flagged vessel never has to state register. In fact, USCG Documentations are nullified if a vessel is also state registered. A documented vessel moored for a certain period in a state with tax requirement for boats still has to report to the taxing authorities and receive a little sticker which notifies the marina and anchorage tax prowlers that the owner is on record and has paid the taxes.

 

[Portage_Bay]

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.

I haven't read the entire thread. Here's my take on it. If you home port a boat in Washington State you are required to register the boat and pay the taxes USCG documentation or not. To do what you're trying to do home port the boat in a state that does not require state registration for USCG documented boats. Then as others have said follow visiting time limits and the possible need for cruising permits.

 

[SeaDogAK]

A US flagged vessel never has to state register. In fact, USCG Documentations are nullified if a vessel is also state registered. A documented vessel moored for a certain period in a state with tax requirement for boats still has to report to the taxing authorities and receive a little sticker which notifies the marina and anchorage tax prowlers that the owner is on record and has paid the taxes.

The State of Alaska disagrees with you on this:

USCG documented vessels must be registered but not titled

 

[Portage_Bay]

A US flagged vessel never has to state register. In fact, USCG Documentations are nullified if a vessel is also state registered. A documented vessel moored for a certain period in a state with tax requirement for boats still has to report to the taxing authorities and receive a little sticker which notifies the marina and anchorage tax prowlers that the owner is on record and has paid the taxes.

I think you're wrong about that. Many states require USCG documented boats to be state registered. The conflict between the USCG and states is title. A boat can only be USCG documented OR state titled. Not both.

My boat is USCG documented AND Washington State registered. It is legal, required and we carry the papers for both.

What I don't have to do is display bow numbers.

 

[psneeld]

Absolutely have to register a documented boat in many states. As posted, just the state title is invalid/illegal.... registered with no numbers on the boat but they usually give a sticker to prove registration/sales tax paid.

....well NJ gave me one anyhow but maybe the VERY fine print did say it's not valid if the boat is documented. NJ and their paperwork.

The one thing most people don't understand is that state tax laws and registration laws are/can be deceptively different. In many states, if you pay sales tax during the registration of a boat, it's just the state using that agency to collect it on top of the registration fee. The clerks may or may not even understand the intricacies of the tax code.

A man from NJ documented his multi-million dollar yacht in Delaware IIRC and planned to never bring it into NJ so never paid sales tax or registration on it. Many years later he or his captain anchored the yacht off his yacht in front of his house to show it off for just one night as it was headed to New England. Can't remember how NJ Div of Taxation caught him, but sent him a sales tax bill and the agency won in tax court...with interest/penalties if I remember. I know the USCG used to fly NJ taxation guys around looking for situations like this and illegal marinas. So buyer beware and take the time to read your state tax laws or at least pay a tax attorney before you believe stuff off the net.

 

[CaptTom]

I'm breaking my own rule about posting to ancient threads, since this one seems to have come back alive, with more misinformation...

I think a lot of the confusion about registration vs. documentation comes from the fact that state registration numbers aren't allowed on the outside of a documented boat. The state most certainly can still require you pay a registration fee, and post a sticker. Most do. They can even assign you registration numbers, just to keep things simple in their system. You just can't display them on the forward half of the boat like would be required if you only had state registration.

While we're on the subject of common misconceptions, the hailing port for a documented vessel can be any legitimate place name. It doesn't have to be your home port, or even in your home state. In fact it could be a totally land-locked location with no port at all. But some states use this data to go after taxes from anything with a hailing port in their state, at which point the owner would have to prove the boat wasn't in the state long enough to trigger taxation.

 

[ProMaritime]

The State of Alaska disagrees with you on this:

USCG documented vessels must be registered but not titled

Check with the NVDC if you think you have a valid USCG Documentation, if you tell them that you also have a state registration in any state on that same vessel, they will invalidate your USCG Doc. which also invalidates your First Preferred Ship Mortgage filed with the NVDC if you have one. This will piss off your lender if you have one. And if you insured your boat as being US Flagged vessel i.e. USCG Doc. your insurance may be invalid as well. You can probably coast for years like this but have one injury accident and/or one significant damage claim you may be dead meat.

As I've said previously, private boats and yachts permanently moored in a state with a "personal property tax" (like Washington) requires all owners whose boats are USCG Documented to go to their state's' tax office and sign up and pay the tax. (Oregon had no "personal property tax when I lived there) Most state tax office employees know nothing about NVDC rules. Do not let them talk you into a state registration!!! Don't argue with them!!! Just ask for a supervisor.

When I was a flight instructor at Boeing Field where I parked my little Piper when not giving lessons. The friendly Washington tax cops tried to tax my business property (the little Piper). Too bad, they lost the argument. I was already paying them rent for the tie-down.