Purchase tax, laws, and state stay time questions

[Kettlewell]

My understanding (from personal experience) is that Massachusetts will send you a bill for 6.25% use tax if you bring a boat into their waters. It doesn't matter how long it's been out of state, and it doesn't matter if you only visit MA for one day. If you use your boat in their waters and they find out (with a sales receipt, for example), they'll send you a bill. Any sales tax already paid in another state will offset the MA use tax.

That may be what happens, but it isn't the law. The law is clear that if you bought and owned it out of state for six months prior to bringing it into Massachusetts there is no sales or use tax due. I went through this and provided documentation as to dates of purchase, registration in another state, etc., and did not have to pay sales or use tax. This is why you can never assume local officials or even state officials know what they are talking about--read the laws yourself and provide documentation to whomever is trying to get the tax from you. There is a grey area in the law about your intent, but I have no idea how they could prove you had an intent to circumvent the law. In my case, the boat had been purchased years earlier and had been registered in another state for years. However, the local excise tax does come due if you keep it in MA, but that is fairly minor.

[cfarrar]

Thanks for clarifying, Kettlewell. I also did not owe anything, since I had already paid tax in another state. But it's good to hear about the 6 month exemption, because if I return to Massachusetts they'll probably try to tax me a little more because of the new 6.25% rate.

[Kettlewell]

This statement is from the Massachusetts tax site:

Sales for out-of-state delivery:
Sales where the purchaser accepts title to and possession of an item outside Massachusetts generally are exempt. Similarly, if a vendor is obligated to deliver to an out-of-state purchaser's address or to an interstate common carrier for such a delivery, the sale is not taxable in Massachusetts. Generally, however, any taxable item brought into the state within six months of purchase for use, storage or consumption in Massachusetts s subject to the use tax.

I can't find the link about boat use tax quickly, but here's a quote from the Massachusetts tax site about cars.

Sales Tax on Automobiles
If you move into Massachusetts within six months of purchasing a new or used car, you must pay either the full sales tax on the car or the difference between the Massachusetts sales tax and that of the state where the car was purchased. More specifically, if Massachusetts:

a. has reciprocity with the state and you have proof that the sales tax was paid in that state, you have only to pay the difference between the tax rates of the two states.

b. does not have reciprocity with the state where the car was purchased, then you must pay the full Massachusetts sales tax. No sales tax has to be paid if the car was purchased out of state more than six months prior to your move.

Department of Revenue
100 Cambridge Street
Boston, MA 02114
Tel: 617-887-MDOR or
Toll Free: 1-800-392-6089
Massachusetts Department of Revenue - Mass.Gov

[Travelnik]

Originally Posted by Kettlewell

I can't find the link about boat use tax quickly, but here's a quote from the Massachusetts tax site about cars.

So, if I paid the 8.5% tax here in TX, and went to Massachusetts, they'll give me a 2.25% refund?

[dandrews]

Originally Posted by dsmastern

So, if I paid the 8.5% tax here in TX, and went to Massachusetts, they'll give me a 2.25% refund?

Hmmm, have ever known a state to give you money because you paid another state tax money? I don't think so. What they will do here in MA is if you paid 5% tax somewhere and have proof, they will give you a credit for the 5% against the 6.25% tax here. You will still have to pay excise taxes to the local community. That will be calculated against the purchase price of a new boat or replacement value of an older boat.

Don

[smj]

Originally Posted by dsmastern

So, if I paid the 8.5% tax here in TX, and went to Massachusetts, they'll give me a 2.25% refund?

The sales tax rate in Texas on boats is not 8.5% but 6.25%

[Travelnik]

Originally Posted by smj

The sales tax rate in Texas on boats is not 8.5% but 6.25%

You're right. I was thinking state and local combined that I had to pay.

[TomM]

I live in Fl and I don't think this tax issue is limited to boats. I once bought a new car and had to attest that I didn't live in a neighboring county. If I had lived in the county next door the dealer had to collect a tax on their behalf. I don't remember if it was a sales or use tax..

[JayCall]

This issue keeps coming up here, I have replied before as have many others-as a tax attoreny, I have represented and/or advised people in several different states on this issue. It is really fairly simple:

In general:

1. If you buy a boat, and regoster it, in a state with a saled tax, you will pay that state's sales tax;

2. If you buy a boat in a state with a sales tax, but move it out of that state within any time period specified by that state, you generally will not will not pay a sales tax in that state, but

3. If you move it to, and register it in, a state with a sales (and use, the two go together), you will pay a use tax (once, not annually as someone earlier stated) in lieu of a sales tax.

Naturally, government being what it is, there are wrinkles from state to state. The most common being a state that collects sales tax whether you are leaving the state or not. In that case, if you are leaving the state, and have to pay use tax in the new state, you will get a credit for the sales tax paid to the first state. Thus, no "double taxation".

Most states have a "grace period", i.e. Fla's 180 days, before they require the boat's registration to be changed to that state thus triggering use tax.

Note that all this is totally independent of USCG documentaion, whether the boat is doccucmented or not does not affect how the state applies its sales/use tax laws.

[Sailorman Ed]

I read the FL notes and they seem clear when you are a FL resident. What happens when the boat is already registered in another state (by a non-FL resident) and has already paid sales tax in that state and years later, is taken and left in FL for more than 90 days? Seems that a use tax is applied (less the sales tax already paid??) and the FL rules seems to state that the boat must then get FL registration. Forcefully supersceeding the prior state's registration?

[hellosailor]

" What happens when the boat is already registered in another state (by a non-FL resident) and has already paid sales tax in that state and years later, is taken and left in FL for more than 90 days? " If you are saying exactly what you have said, that a NON-FL resident is bringing his personal property (the boat) into the state of Florida, there is NO SALES TAX AND NO USE TAX DUE. That was already paid by the resident of the other state, in the other state.

There has been no SALE in Florida, there has been no PURCHASE by a FL resident inside or outside of Florida. There is no jurisdiction for any sales or use tax. Yes, it is that simple, those are the criteria.

Do not confuse taxes with registrations.

It doesn't matter where who lives or when or where they bought and registered their boat. If that boat has an engine and that boat trespasses into Florida waters for 90 days in a row, the state of Florida doesn't care who owns it or how it got there, they want a LOCAL REGISTRATION on the boat.

You have two choices. Throw out your old one and get a FL registration, or take advantage of an odd and almost secret provision of the Florida law that allows you to keep your existing registration (and title) from your home state, and then simply pay Florida extra for an extra Florida registration, which means yes, you will have TWO separate state registrations and pay TWO states but that keeps 'em both happy. The extra Florida papers get tucked in your wallet, no extra numbers need to go on your boat.

Forcibly superceding? Yes, but that's more generous than any other state I've heard of. Normal state laws are that if a motor vehicle (car or boat) is "there" for 90-180 days, you are required to change the registration, period. And if you go back and forth between two homes? Yes, that may mean legally re-registering your car or boat atleast twice every year, and paying to re-title it twice every year as well.

So on this one? Florida is being REAL accomodating, all they want is your money.

[tomfl]

Originally Posted by hellosailor

SNIP

Do not confuse taxes with registrations.

It doesn't matter where who lives or when or where they bought and registered their boat. If that boat has an engine and that boat trespasses into Florida waters for 90 days in a row, the state of Florida doesn't care who owns it or how it got there, they want a LOCAL REGISTRATION on the boat.

SNIP

Mostly right, but if the boat is in a yard being repaired it can stay longer.

FL also gives real breaks (read does not cost much) to register many types of boats.

Even the sales tax is limited so if you buy a really expensive boat you may not have to pay 6% on the full amount. States in the Northeast and CA in particular tend to be much more expensive places tax wise.

[SVNeko]

Originally Posted by JayCall

This issue keeps coming up here, I have replied before as have many others-as a tax attoreny, I have represented and/or advised people in several different states on this issue. It is really fairly simple:

In general:

1. If you buy a boat, and regoster it, in a state with a saled tax, you will pay that state's sales tax;

2. If you buy a boat in a state with a sales tax, but move it out of that state within any time period specified by that state, you generally will not will not pay a sales tax in that state, but

3. If you move it to, and register it in, a state with a sales (and use, the two go together), you will pay a use tax (once, not annually as someone earlier stated) in lieu of a sales tax.

Naturally, government being what it is, there are wrinkles from state to state. The most common being a state that collects sales tax whether you are leaving the state or not. In that case, if you are leaving the state, and have to pay use tax in the new state, you will get a credit for the sales tax paid to the first state. Thus, no "double taxation".

Most states have a "grace period", i.e. Fla's 180 days, before they require the boat's registration to be changed to that state thus triggering use tax.

Note that all this is totally independent of USCG documentaion, whether the boat is doccucmented or not does not affect how the state applies its sales/use tax laws.

This is helpful, but it does not clarify what happens for a Fla resident who has a documented boat does NOT take it into Fla for any appreciable length of time. Does that person pay use tax b/c they are technically a resident even if the boat is not present in the state? This is for a boat that was not subject to sales tax in any state when purchased. Do you know the answer?

[JayCall]

S/V Neko-the answer is: it depends. If you register the boat in Florida, you will pay the use tax at the time of registratiion regardless of where the boat is. If you are a Fla resident who keeps his boat in the Bahamas and does not register it in Fla, you will not pay the Fla use tax. The use tax will only be due when the boat is physically moved the Fla and at the earlier of (1) registering the boat in Fla, or (2) the expiraiton fo the 90 day period.

I don't think that Hellosailor is correct on the "dual registration"-there is nothing in Fla law that I can find that allows such a regstratiion, epecially as a means of avoiding paying the use tax. However, the 90 day period can be avoided by paying for an "Extended Cruising permit". This is a little known provision, but it allows you to pay for the permit, an relatively nominal amount, and remain in Fla for, I believe, up to 18 monts. I think there was a discussion here a few weeks ago or somebody linked to a discussion on it.

[hellosailor]

No, tom, not just mostly right, totally right.

I said IN THE WATERS and that's the rule. In a yard means on dry land, and that's OUT of the waters. AFAIK every state has different rules for boats that are in versus out of the water. Now in Florida, the law says "in the waters". In New York, the law says "in the navigable waters" so keeping your yacht in your reservoir or duck point gets a free pass. But in Florida if the boat is in one of the ubiquous recharge basins aka drainage sumps that get called "lakes", it is still in the waters. (And the odds are your condo association or HOA will fine you, too.<G>)

A yard is a yard, unless someone sold you swampland underwater (common enough in Florida, to be true!) but even if it is in a yard, if that yard is in the water...like the engineers say, it is time to drain the swamp. Or are there so many graving docks in Florida that the issue could get confused?

Coupla good pumps, some landfill, a nice dome over the state, and Florida could be a good place to live. Never did see so many folks that complain about flooding, and at the same time legislate AGAINST landfill and raising the street level. Unlike Chicago, Seattle, and Chatanooga, where folks got tired of the flooding and just raised "downtown" ten feet higher. All of it, honest. With no federal funding.