Beating the Tax Man - East Coast

[Pblais]

In terms of a title (proof of ownership) it can be US documented or state registered but never both nor can it be registered in more than one state or more than one country. Taxes have nothing what so ever to do with title registration. There are no US federal taxes with the possible exception of Import duties when bringing a bioat into the country.

Taxes are always state by state. There may a a Use Tax (same thing as a sales tax). It can be due even if the biat was purchased in another state or country. There may also be a sticker tax of some sort that is often confused as being a state registration. There also may be a personsal property tax assessed on a semi annual or annual basis. These taxes are based on the boats location and may have nothing to do at all with where the or how the title is registered. They can vary state by state and even county by county in the issue of personal property tax.

If you keep in mind that all these things are not just lumped togther as one pot of money it is easier to sort them out. Just so you know tax evasion is the one crime where you don't have to be proven guilty before they come after you. Once accused it is your burden to prove yourself innocent.

[Hud3]

Originally Posted by Pblais

...Just so you know tax evasion is the one crime where you don't have to be proven guilty before they come after you. Once accused it is your burden to prove yourself innocent.

That's why it's important to keep a ship's log detailing where you have been and when, and receipts for marina slips, fuel, haulouts, or whatever.

[Tempest245]

In your NJ example

I Could be mistaken, But I believe that the dealer is obligated to collect sales tax at the time of purchase, or you have to produce a document exempting you.

In either case, you would have to produce proof that you paid sales tax on the vessel before you are allowed to register the Vessel in NJ

I purchased my boat in Maryland Paid NJ Tax to the dealer in Maryland, ( they ask which state I would be registering the vessel in )and sailed it to NJ. Two weeks after the NJ division of Taxation called me seeking verification, which I was able to produce. When I went to register the Vessel in NJ they also checked my sales tax receipt.

I purchased a car in delaware and the exact same thing happened.

I purchased a Dinghy in NJ in a town that had a reduced 3% sales tax ( they call it an enterprise zone) when I went to register the dinghy, Motor Vehicle said that I owed them another 3% sales tax because Boats and motor vehicles are not qualified for the 3% rate.

I think your obatacles to avoiding sales tax in NJ will be the dealer and the division of motor vehicles.

Tempest..

[imagine2frolic]

Scott,

Did you get my P.M.?

[AnchorageGuy]

Originally Posted by Catamount

I think you will still have to have the boat registered, somewhere. Documenting the boat with the USCG alone will likely not satisfy most of the states through which you transit -- they will expect registration in some state, if not their state. But just because you register the boat in some state like Rhode Island doesn't necessarily mean that you ever have to take the boat to that State's waters (so long as you abide by the 60 to 90 limit for transitting the waters of other states).

Not true, as long as you do not exceed the states time period and you are Documented there is no requirement and no state you are traveling through can require a state registration in addition to your documentation. If you exceed a states time period they will most certainly want you to register there. We are aware of many boats that are only Documented and have never registered with any state and have been traveling for years.

[Catamount]

Originally Posted by Pblais

In terms of a title (proof of ownership) it can be US documented or state registered but never both nor can it be registered in more than one state ....

USCG documentation and state registration are separate and independent. In my limited experience, the state (e.g. Maryland, Maine, New Hampshire, Massachusetts) still requires that you register the boat regardless of whether or not the boat is documented with the USCG. And if my boat is registered in one state, but it stays in another state long enough, that other state is going to require me to register it in that state, too.

Originally Posted by Chuck Baier

Not true, as long as you do not exceed the states time period and you are Documented there is no requirement and no state you are traveling through can require a state registration in addition to your documentation. If you exceed a states time period they will most certainly want you to register there. We are aware of many boats that are only Documented and have never registered with any state and have been traveling for years.

This may be a function of the particular state's rules, and their level of enforcement.

[bene505]

Originally Posted by Catamount

I think you will still have to have the boat registered, somewhere. Documenting the boat with the USCG alone will likely not satisfy most of the states through which you transit -- they will expect registration in some state, if not their state. But just because you register the boat in some state like Rhode Island doesn't necessarily mean that you ever have to take the boat to that State's waters (so long as you abide by the 60 to 90 limit for transitting the waters of other states).

Agreed. Delaware is also a good state to register in. And you can inexpensively create a small corporation to protect your privacy too.

[CarlF]

At least in Massachusetts registration of documented boats is not required. From the state web site:

Boats exempt from registration requirements include those that do not use motors, and documented vessels (large boats that are issued a marine document and registration through the U.S. Coast Guard).

Of course you can state register a documented boat to meet other states' requirements.

This doesn't avoid the tax. I have paid sales tax and an annual town property tax on my boat. Fortunately the property tax is only a few hundred dollars. Nonpayment would cause the town to revoke my mooring permit. The waiting list for a new mooring is many years.

Carl

[Pblais]

That's why it's important to keep a ship's log detailing where you have been and when, and receipts for marina slips, fuel, haulouts, or whatever.

Log records can convict you more than help you. You could fake a log entry in your favor but it has been admitted in court that if you declare anything in a log that can be used to assert guilt it can be held against you. The idea is you wouldn't be stupid enough to fake something to convict yourself. A ships log as an official record is pretty much ancient history. Even in the days of old ships masters that screwed up the profit got the boot no matter what was in the log. Log books alone are pretty much worthless when you get in trouble with the law. They do however add a bit of history you may find usefully for your own purposes so keeping them is a good idea but tossing them over board wouldn't be a bad idea at the first sign of legal trouble.

Things like receipts are commonly used to assert where you were on specific dates to avoid any calendar clocks that might trigger you owing taxes. They would be far more valuable than a log book and are worth keeping. They will repel the tax collector in every case I ever heard about.

It helps to consider that the term, "registration" means title registration and not anything else. Many states do require a tax stamp or use stamp for all boats even those documented. The name of it often varies. No state requires duplicate title registration within the state for US documented vessels. Doing so is actually a federal crime for the boat owner.

It's the same with an automobile. You can't have it "titled" in more than one place.

State registration usually expires periodically while US Documentation never has to be paid for again but does require a US based land address and recertification of your address annually. The address can be any place you choose to receive mail but it must be in the US and you can not renew for more than one year at a time. the original document is the only version considered legal. Don't bring a copy and keep the original in a safe some place on land.

[forsailbyowner]

When I brought my documentation papers into floridas tax collectors they didnt even ask me the selling price, I paid only registration which for my antique vessel was $4.?since documentation is a federal transfer of ownership ?no state taxes?

[Pblais]

I paid only registration which for my antique vessel was $4.?since documentation is a federal transfer of ownership ?no state taxes?

Title Registration is in no way linked to taxes. All things being equal US documented boats avoid no taxes but do avoid all state title registration fees since you never need to re register the title ever again nor pay to do so.

Tax rules are up to the state. You are presumed to know the tax rules too. Not all states tax boats the same way. This is where it all gets complicated.

Use tax (also called sales tax) is the one area that is the most confusing. It's called sales tax when you pay it at the moment of sale to the merchant. If it is included in the sale price then you pay before you get the boat then it's sales tax. If you owe it any way and pay it later they call it use tax. If they charge some fee for a sticker that is not related to anything else either it's called what ever the heck they say it is.

MD is a good example where you need a sticker. Where you are a resident has nothing to do with Use tax only where you keep the boat matters. Being a DE resident and keeping the boat in DE you owe no taxes. Too bad the sailing sucks there. Keeping the boat in MD and being a resident of DE you now owe the MD use tax and require the MD sticker fee too. Many people from DE do this because the sailing is better.

Attempting to rig the game so you avoid taxes has it's problems. Mostly because if you come up short the penalties can be large and you the owe all the money anyway. If unsure just ask the tax people that might come after you. Moving between states is where the issues also get the most complicated. where you already paid something and don't want to repay again. Most of the time you can pay the difference and be OK. Most of the time is not all the time. If you move from a high tax state to a low tax state you can't get a refund.

[imagine2frolic]

US Documentation does avoid taxes if you bought the boat out of the country. They will want 1.5% at your first port of call flying the US Flag.

In Florida even if the boat is documented. They will require a state sticker if you are here longer than 90 days without going offshore........i2f

[Catamount]

Originally Posted by Pblais

...It helps to consider that the term, "registration" means title registration and not anything else.

I disagree. Registration means registration, titling means titling.

It's the same with an automobile.

Yes, the same as with an automobile -- There are two separate documents: the title, and the registration. Although not every state issues titles for boats.

[forsailbyowner]

If I were to transfer a florida title to my name I would have to had paid sales tax. Since the title (documentation) was handled at a federal level it wasnt in states jurisdiction, the title transfer papers have a column listing sales price, the documentation nor the registration paperwork doesn't. The transfer of title actually took place in Virginia.

[Pblais]

The transfer of title actually took place in Virginia.

Your name and address is on the US Documentation papers. The state will download the list and perhaps inquire to you. It does not matter where the transaction takes place. It's the same idea as selling a boat offshore in International Waters. There is no taxes due until you go some place. Use tax applies where ever you end up and no matter where the transaction takes place. Many state harvest the US Customs forms and look for values exceeding the maximum value and go after the use tax. They generally don't go back more than 7 years. So if you bought something expensive and brought through customs and didn't lie about it it can come back to cost you later. Governments talk to each other more than they used to.