Question about California Sales Tax

[rmesfo]

Originally Posted by Calif.Ted

Yes you should contact and pay use tax to Board of Equalization, they will eventually send you a bill but it may take them over a year and they may add interest and penalties at that time. A documented vessel does not have to be registered with the state at DMV, California is either documented or registered, not both. This happened to me a couple decades ago, I bought documented vessel thru broker, 2 years later tax bill arrived with interest. You are responsible to pay the tax, they are not responsible for sending a timely bill.
Tax Guide for Purchasers of Vehicles, Vessels, & Aircraft

They will get you sooner or later. It's up to you and the equalization board really doesn't care if you wait past the year mark as they will charge fees and a penalty. It happened to me on an airplane purchase when they sent the bill to the wrong address. Took me 2 years to get the penalties reversed. Like the old Fram oil filter, pay me now or pay me later. Good luck!

[cuthbert]

Originally Posted by iliohale

We purchased a used boat in California and the boat was a documented vessel. What was surprising is the California Broker was not required to collect the sales tax in escrow. They are only required to collect the tax for California registered boats. We understood from the Broker that we had 12 months to pay the sales tax or it would be subject to interest and penalties. So we proactively paid the sales tax.

Gary

This is correct or it certainly was last time I purchased in CA and left boat in CA with USCG documentation. You get 12 months unless they (CA tax authorities called "Equalization Board " ) write to you with an invoice which gives you 30 days. My own experience was that I bought a boat and at the 10 month point called the board up and requested the sum I should pay. Young girl on phone said "Oh we wrote to you 8 months back and now you owe interest X and penalty Y" - a significant amount. After I picked myself up from the floor I asked what address they had been given/had for me and it was somewhere in downtown SF, a city I have never lived in. I asked for a supervisor who just said "sorry we have a lot of new people, just send us the correct (original) amount" which I did and received no receipt or acknowledgement. Some time later I did check and was in the records as having paid. Every time I read threads about taxes and offshore transfers etc to avoid the steely eyed gaze of the tax man I remember those conversations.

[bsurvey]

taxes were paid by the previous owner for 2017 already.


you will receive a tax bill from the county the boat is in


don worry they will find YOU

[Stu Jackson]

Originally Posted by bsurvey

taxes were paid by the previous owner for 2017 already.


you will receive a tax bill from the county the boat is in


don worry they will find YOU

The recurring lack of understanding between a one time sales tax and a yearly (county) property tax in California is astonishing.

[bumblevi]

Hi everyone, thank you for all the helpful responses. Yes, I am asking about the one time sales tax and not the yearly property tax. I was able to find the address of a local field office for the CA board of equalization and will proactively go in and pay it as some others did. Thanks for the help!

[davev1954]

Originally Posted by bumblevi

Hi everyone, thank you for all the helpful responses. Yes, I am asking about the one time sales tax and not the yearly property tax. I was able to find the address of a local field office for the CA board of equalization and will proactively go in and pay it as some others did. Thanks for the help!

That is the way to do it. I was surprised many years after I sold my CA boat with a bill from the Board of Eq for many thousands of dollars of taxes-plus interest and penalty fees of over $5k. It was preventing me from refinancing a house in another state. Took months of work on my part to resolve.

The broker who sold me that boat said not to worry about sales tax as the vessel was documented. Big mistake on my part not to check.

[Moontide]

Two nuances here.

If you are not going to keep the boat in California you can avoid sales tax. If CA resident basically have to keep (and use )boat out of state for first 12 months of ownership. If a non-CA res it is 6 of 12 months. State will require records of use, etc. , not just storage. Note that a non-CA Corp owned by a CA resident is a non-resident for this purpose.

Other issue is property tax. Some county tax collectors will try to collect annual property taxes if the mailing address on CG document, even if the boat is not in CA. Pain to fight, but can be done sucessfully.

Other issue is that counties continue to try and tax even if you leave for a multi-year cruise. They will claim that you intend to bring it back.

Bill

[markpierce]

Believe you're talking about use tax (buyer pays taxes directly to state) rather than sales tax (seller sends payment to state). If you federally document your boat with a California home port, the state will catch you quickly.

[lancelot9898]

Considering states that put a personnel property tax on boats, does anyone know if that tax can be avoided if one uses the boat as your only home?

[CaptainJohn49]

What a great state California is. The process of buying and keeping a used boat in California is a real mess for out of state residents. I brought a used Islander 36 in Alameda back in 2014. I did document the boat with the USCG but didn't register it in CA. I kept the boat in a marina where the broker had his office. I like in Montana. I used the boat a two times before deciding there were too many repairs that need to be made to the boat. The yard and marina bills were eating me alive and it was just too hard to go back and forth from my home. Within 45 days of purchase I told the broker to put it back on the market. I gave him the keys and he had full control of the boat. Because I gave the broker the boat to put up for sale and didn't have use of it I thought that this was not use for pleasure. The broker never told me I had to pay sales tax nor did he report the original $25,000 sale to Board of EQUALIZATION. I finally received an offer 4 1/2 months after putting the boat up for sale. We finally closed and I netted $20,500 after brokers fees. End of story - right?

No in February 2015 I received a tax bill based not on my purchase price of $25,000 but $250,000. The total bill for sales tax was about $24,000 plus P & I. I contacted the Board of Equalization and they told me they had no sales information from the broker and any boat kept in the state 6 months or longer must pay the sales tax. It was in fact about 7 months from my purchase the until I received to check from the boat sale from the broker. Problem was the tax due (with penalties and interest) on my purchase of the Islander 36 was greater than the check from the sale.

Fast forward to 2017. I gave the Board of Equalization copies of Bills of Sale, checks, emails and invoices. It took almost 2 years and finally I got a reduced bill based on the original purchase price $25,000 but with penalties and interest based on a $250,000 purchase price. I paid the sales tax only based on $25,000 and requested a reduction of the other penalties and interest. Seems the penalties and interest calculated on the original $250,000 sales price were't going away. To date no luck! They still say I owe several thousand in P & E.

So what's the point? The broker should be required to collect the sales tax at the point of purchase and give out of state buyers a form to request a rebate should they remove the boat from California waters within 6 months. It doesn't matter if you register your boat out of state, or as I did, register it with the USCG as long as it resides continuously in the state of California. This point is not well understood and most brokers just mention it little or not at all. Buy a car and this point is clear, but a boat and you may be misled.

You can blame me for all the confusion or you can blame the state of California, your choice.

Hope this helps
John

[MarkSF]

Originally Posted by Stu Jackson

The recurring lack of understanding between a one time sales tax and a yearly (county) property tax in California is astonishing.

I know. Amazing isn't it.

Anyway, property tax is payable by the owner of record on the 1st of Jan, to the city where the boat us kept, so the original poster will not owe any until Aug 2018, assuming they bought the boat after Jan 1st.

[davev1954]

Originally Posted by bumblevi

Hello! My husband and I purchased a used boat in California earlier this year in March. We plan on keeping it in California. Our broker had stated that we should be receiving a bill for California sales tax. Our boat is documented with the USCG. We haven't received this bill yet and my question is for those of you that have purchased a used boat in California - do you receive this bill from the state of California? If so, when did you receive it after your purchase? I have also read that you can "self report" and pay the sales tax to the California Board of Equalization, has anyone ever done this? Thanks for your help in advance!

Originally Posted by bumblevi

Hi everyone, thank you for all the helpful responses. Yes, I am asking about the one time sales tax and not the yearly property tax. I was able to find the address of a local field office for the CA board of equalization and will proactively go in and pay it as some others did. Thanks for the help!

The OP was clearly asking about Sales tax- one time tax - due to the state- based upon the purchase price. Bottom line to take away- if you buy the boat in CA- whether a resident of CA or not - and the state gets wind of it (brokers have to report, private parties may be a loophole) - you will have a tax bill.

[markpierce]

Originally Posted by lancelot9898

Considering states that put a personnel property tax on boats, does anyone know if that tax can be avoided if one uses the boat as your only home?

Just because a boat is used as a home does not exempt it from property taxes. Homes aren't exempt from property taxes..

[Calif.Ted]

I sold a documented vessel for $30,000, buyer asked if 2 checks for $15,000 would be acceptable. I said "Yes, but I don't lie to anyone, ever, and especially not to the BOE."
Yes, the BOE did contact me later, several times.

[markpierce]

Originally Posted by markpierce

Just because a boat is used as a home does not exempt it from property taxes. Homes aren't exempt from property taxes..

There is a provision for up to a $70 reduction under homeowner's exemption, including a boat if primary residence.

Homeowners' Exemptions Frequently Asked Questions