Help me pick State of Registration

[Island Time O25]

Originally Posted by fryewe

State registration is required for USCG documented boats. Not required to display state registration numbers, and none will be assigned, but display of the yearly registration decal is required.

Not so. MA doesn't require registering documented boats. Just the sales tax to be paid.

+1 for RI registration. Cheapskate John F. Kerry can't be wrong on that. ))

[jharding]

I USCG documented my boat in Delaware, no sales tax, did it on line. I have never registered boat, some states like SC want you to pay sales tax on it. I've never been questioned on it. If you go to another country you need USCG documentation.

[friz]

Please excuse the ignorance. I have only given this casual thought but it was my impression that registering a boat in a particular state one is declaring residency in that state? Thereby making one liable for income taxes etc. But apparently not as
RI has an income tax rate of 5.99% and folks are recommending RI to register a boat.

[denverd0n]

Originally Posted by friz

Please excuse the ignorance. I have only given this casual thought but it was my impression that registering a boat in a particular state one is declaring residency in that state?

Not necessarily.


If you WANT to establish residency in a particular state, then registering your boat there might help with that. But there are many, many boats registered here in Florida to people who have legal residency in other states. Just as there are legal residents of Florida who have boats registered in other states.

[CaptTom]

USCG Documentation requires that NO state registration numbers may be displayed.

USCG Documentation does not prevent a state from imposing a sales tax or annual excise tax. The state may require a sticker be displayed. They may even assign a number. You just can't display it.

The "state of principal use" would be where sales tax, excise tax and/or registration fee (basically, just another tax) are paid.

Other states may require you to pay if the boat is in state waters for 30, 60, or 90 days (it differs by state.) That may not affect your primary registration or documentation. They just want the money.

With a documented boat, you can list any hailing port that's a legitimate place name, even another state or a location far from the ocean. This has no impact on the "state of principal use."

However, states WILL scan the documentation database looking for hailing ports in their state. They'll send the owners a tax bill, hoping to get lucky. It'll be up to the owners to prove the boat is not in that state. But once provided such proof, they can't legally do anything to you.

[FlyingScot]

Related to the topic that has gone cold.

Any advice for my situation?
Ohio USA resident. I have a physical residence here in Ohio and plan to have it for a few more years. I have a rental property in NC within a NC LLC. $200 year filing fee. I have an Ohio LLC for my work. Reporting but no fees after setup (assuming you don't miss a deadline).

Buying a boat in Aruba. Currently USCG Federally documented. I will be doing the same.
Boat will be kept out of the USA for a year or more.
Pleasure use only.

I want to form an LLC for the sole purpose of owning this boat.

Seems Rhode Island, Delaware and now New Mexico come up as possibilities.
Delaware being the most popular for decades now.

Purpose is to legally avoid paying sales tax. Looking for effective and lower cost/hassle.

Initial plan was Delaware LLC and Delaware registration along with the aforementioned USCG documentation.

What state is the best LLC place for my purpose? Does it even make sense to also carry a Delaware registration or just wait to do that when it comes to the USA?

-Chris

[denverd0n]

When you return the boat to the United States, you may have to pay sales tax (actually "use" tax, but they are essentially the same thing) regardless of the LLC. The only way to avoid that, that I know of, would be to take the boat directly to a state that has no sales tax, and keep it there for some period of time (which varies, depending on where else you want to eventually take it). In this case, I don't see the LLC providing any benefit at all.

For example, if you buy a boat outside of the United States, and then -- lets say -- five years later bring it to Florida and keep it here, the state will assess you a use tax on the boat. It does not matter how the boat is owned, the use tax is still due.

On the other hand, if you have owned and used the boat for more than six months in some other state -- even one that does not charge a sales/use tax -- before bringing it to Florida, then you are exempt from any use tax. Many states have similar provisions.

So, bottom line is that it is not as simple as buying the boat with an LLC. It depends on the laws in the state that you eventually bring it to, which, of course, vary dramatically from state to state.

[FlyingScot]

Originally Posted by denverd0n

When you return the boat to the United States, you may have to pay sales tax (actually "use" tax, but they are essentially the same thing) regardless of the LLC. The only way to avoid that, that I know of, would be to take the boat directly to a state that has no sales tax, and keep it there for some period of time (which varies, depending on where else you want to eventually take it). In this case, I don't see the LLC providing any benefit at all.

For example, if you buy a boat outside of the United States, and then -- lets say -- five years later bring it to Florida and keep it here, the state will assess you a use tax on the boat. It does not matter how the boat is owned, the use tax is still due.

On the other hand, if you have owned and used the boat for more than six months in some other state -- even one that does not charge a sales/use tax -- before bringing it to Florida, then you are exempt from any use tax. Many states have similar provisions.

So, bottom line is that it is not as simple as buying the boat with an LLC. It depends on the laws in the state that you eventually bring it to, which, of course, vary dramatically from state to state.

All good points. I am likely to have the boat spend 6 months in the VI before it goes to FL.

-Chris