Sales / Use Tax Enforcement on East Coast

[Pblais]

Indeed it's the only state I could find where that's the case.

VA does not and most other states don't either, but it does not matter. "Registration" in your definition is taxation. Once the title is indeed registered some place, there is no other registration of title. Taxation is only a state issue and the rules for that are on a state by state basis. How they choose to word it is up to them.

[hellosailor]

Sales tax applies to a SALE that is made between one or both parties WITHIN A VENUE.

So, if neither the buyer nor the seller reside nor conduct business within a venue, there can be no sales tax applied to the sale. Obviously if the sale takes place within that venue--someone is conducting business there and sales tax may or may not be due.

If you move to twelve different states after a sale--there has still only been one sale and only one sales tax may be due.

OTOH there is "USE TAX" which is assessed for the USE of a good that has been purchased elsewhere and is used within or relocated within a venue. That's something else again, but something that only applies to residents of a state. Residents? Well, if you are within a state for as little as 30 days, you may be deemed to be a resident, that varies in each state.

Folks just don't seem to get it. You can't ask about "laws" you need to ask about specific laws in specific venues in the US, there are NO UNIFORM LAWS FOR TAXATION except for the federal ones.

[Chief Engineer]

It shouldn't have to pay any state fees.....but if you "linger too long" in any one state....watch out fo da taxman...the revenooers

Originally Posted by cdennyb

Pblais;
not to get off-topic (which I don't think it is...) what if the vessel is Delaware reg to a corporation and operated in the Caribbean. Is it exempt from the 50 state fees and taxes you're referring to in this thread? Also being used as a liveaboard.
Just curious.
db

[Pblais]

Sales tax applies to a SALE that is made between one or both parties WITHIN A VENUE.

That is only true until it becomes "Use tax". In that case it isn't about where the transaction took place but where the purchase was delivered or who concluded the sale.

Bringing something purchase into another venue can constitute use taxes owed in the way of Use Tax.. Sometimes the closing of the loophole is confused with the original intent. He who buys may be requested to pay tax when the opportunity presents itself. Stay in Florida too long and you pay. Tax collection is often effected by having paid off one tax collector first before the second one comes along. There is some honor among tax collectors. They will agree to split the difference in most all states that I know of.

This brings up the popular myth that if you sold a boat out in International Waters there would be no sales tax. This would be true but the problem remains that there can still be use tax.

[hellosailor]

Paul, "That is only true until it becomes "Use tax"." sales tax never becomes use tax.

Use tax is levied in situations where sales tax has not been able to be applied. The purpose is to ensure that in situations where sales tax can be legally avoided (as opposed to illegally evaded), Caeser stills get his piece of your pie.

But sales tax never becomes use tax. The latter is simply a way to ensure you can't perform certain transactions without giving a piece to the tax man, a "belt AND suspenders" approach. In some states, use tax may be waived after a vehicle has been owned for a set time. In others, it is never waived. Elsewhere, someone got hit by a tax bill (with penalty and interest) for a boat that he "brought home" literally 20 years after he bought it!

Easier to start a religion, let it own boat, and keep it legally tax exempt. The mast makes a perfect bell tower. (G)

[Strygaldwir]

We elect our representatives to make our laws, tax included. Now, for better or worse they are EXTREMELY complicated. Whether they are fair, equitable, or make sense is another philosophical discussion. The fact is these tax laws are applicable under specific sets of conditions. You meet those conditions, you are legally responsible for paying that tax. Indeed I would argue you should pay the tax, or get your representative to change the law (but this is philosophical once again).

Having said that, if you don't meet those conditions you are legally obligated NOT to pay the tax. The interesting thing about a boat and taxes is that it does not fit nicely into a system that was largely predicated upon fixed locations and jurisdictional boundaries. Sales tax is not based on residency but location of sales. Okay move the boat to a location that has a favorable rule on sale and conclude it there. Hmmm.... Don't like that. Create a "use" tax. Okay, but that means whenever I take property across a state line you trigger the tax. Ahh... that doesn't really work well because of all those cars, trucks, planes and snowmobiles that are constantly crossing state boundaries. (aside from the Federal constitution that prohibits the states from regulating interstate commerce.) Okay, put in how long these mobile conveyances can stay until they trigger a "use" tax statute. 1 hour, 1 day, 1 month... Whatever they are, they must be very well articulated and can not be "vague" (triggers more constitutional law).
There are significant differences between these state statutes (more constitutional law, states rights and all). These differences provide individuals and companies with incentives to do certain things within a jurisdiction based upon their needs. I incorporate in Delaware because they make it prudent for me to do so. I purchase a boat in North Carolina because, 1) It is physically possible, and 2) It has financial benefit. I don't leave the boat there, I move it between Florida, Georgia, South Carolina, Maryland, Virgina etc... because 1) they are pretty spots to cruise. 2) It is physically possible, and 3) It has financial benefit.

I don't know why the states wrote the laws the way they did. (Many times the legislators don't know either. Different people, different agendas!) Maybe they want people to buy a boat in the state and leave it there. Maybe they think you will increase the revenue or benefit to the state in hundreds of different ways. As a non-legislator, I don't necessarily have to understand why they make the tax code as they do. But, as a responsible citizen, I should comply with the rules. Are there things that one can do to NOT trigger a tax liability? Absolutely! Most of the complexity of our tax law is focused on promoting certain behavior.

As I suggested, whether it should be that way is highly philosophical and probably inappropriate for this forum. But, it is that way. Lots of resources for finding out the rules/laws. Boats US and most states have websites that articulate the sales and use tax laws as the relate to boat use. I'd look there and plan accordingly.

[cdennyb]

so... in my daze of ignorance... maybe someone knows this answer... Do ALL 48 or 50 states have USE TAX?, not sales tax... that's already been determined. but the USE TAX which has been indicated here to be asked (no...demanded) for if the sales tax is NOT collected such as an off-shore transaction to a Delaware based corporation in this example.

[Pblais]

Use tax is applied to anything that would normally have a sales tax added if purchased in a local location. It's not just boats. When you fill out customs declarations for things you bought overseas MANY states round up the data from US Customs and come looking for you. You don't even have to currently be a resident at the time they come after you either. They don't have more than 7 years to catch you as I recall but they do charge interest and offer a large penalty unless you pay the owed amount with interest promptly. On big ticket items the state may set up a person that just looks for the things that can be documented. They send out a notice with the full weight of the state attorney general backing it up. MN got me on that one. They also tie into all overseas shipping like FedEx and the rest. You'll get papers from the shipper that basically say they have to rat you out under the law.

States also follow up with brokers. It's why they usually need a license. It's to make sure they don't scam the tax money owed the state. It's not about anything else. With the last we bought boat it was located in DE and the broker was from MD. We had to sign papers to protect the broker from not collecting taxes due to MD. The owner of the boat was a DE resident. We then filled out papers and mailed a check to VA for $2,000 to avoid paying the full value under VA Use Tax plus penalties for getting caught not paying the maximum tax at the time of purchase. It's just a nice way of collecting the smaller fee without having to work as hard.

Don't let your daze of ignorance get you in trouble. When it comes to taxes you are assumed guilty when charged and the penalties continue until you pay. It's only if they want to throw you in jail that they need a trial.

[Rhosyn Mor]

THis can get quite deep, obviously, but it was mentioned about registering a vessel in a corporation etc. Rhosyn Mor is on a Cruising permit, which allows one year in the USA tax free, no matter where I am, or for how long. BUT ( and there is always a but) she must not be owned by an american citizen or US corporation, OR RESIDENT, the ownership by the aforementioned triggers duty, the amount of which is unmentioned. The definition of resident is the federal one, not the states one, so incoroporating within the USA would not releive you of the tax burden.
just an FYI

[Just a Tinch]

Originally Posted by Captain Bill

Hellosailor, That's an interesting observation. Do you know how Florida enforces this law on RVs and automobiles? I see lots of RVs and automobiles from other states and Canada arriving in Florida every fall and returning north in the spring. None of them seem to be sporting new Florida license tags when they're headed north, and I'll bet a lot of them have been in Florida for more than 90 days. I've never heard of the police in Florida stopping vehicles with out of state plates and asking them how long they have been in Florida.

The reason that RV's and cars from the north are not "bothered"....is because Florida relies on "tourism" for a large part of its economy. Those people most likely do not have a permanent address in FL, and carry a license from their home state. I've never seen one of them bothered either....and I am a "Floridian".

As to being a resident of the state of Florida and purchasing a boat, even one that is documented.... As a resident of the state you will pay sales taxes or use tax to FL...UNLESS the sales taxes were paid at the point of sale, and they were greater than FL's. If the vessel is documented and you bring it to FL as a FL resident, as I did... We bought our boat in the Annapolis area, and the sales taxes were paid through the broker, and I did the "registration" process...which for our documented boat is a basically a "tax sticker", which has the USCG document number on it as well as the year sticker. In our case....since the vessel is certified as an antique, and I am a FL resident (DL & Voters Reg)...I pay $5.25 a year as opposed to about $183.00. The antique vessel MUST be 30 years or older and powered by its original powerplant(s)....

There are a number of people in my marina that have their "domiciles" in other states permanently....but leave their boats in FL all year long and they are required to have the tax sticker...just the same as mine....and it is rather inexpensive. Its not that big of an issue $ wise.

A FL resident who attempts to evade the payment of sales or use taxes will get nailed to the wall when caught. They are subject to paying the back taxes with interest, penalties and could even face jail time.

So, the bottom line is: Talk to someone in a county tax office with a lot of boats registered in that county....preferably in a coastal county, or call Tallahassee.

FL does register Documented boats, but does not title them.

Official Website Florida Department of Highway Safety and Motor Vehicles

[Just a Tinch]

Originally Posted by Strygaldwir

Sales tax is not based on residency but location of sales.

That will be entirely dependent upon the state involved. Most states honor a "point of delivery" rule. We bought our boat in MD, but paid FL sales tax as FL residents. When I owned my businesses, I only collected sales taxes on sales "delivered" in FL....everything being shipped to other states were not assessed FL sales or use taxes, and the invoice stated that the buyer assumed all responsibility for the payment of his or her state's sales and or use taxes.

I don't know why the states wrote the laws the way they did.

?Because they can? Look at other issues in this country and world.... They certainly haven't fixed them....

Insofar as tax liabilities on any major purchase...one would be best served by contacting the state where the boat is to be berthed, and what limits are in effect as to time.

For instance....if I take my USCG Documented and FL registered boat to SC and stay there more than about 60 or 90 days or so....I become subject to their "property taxes" and they are nothing to sneeze at.... Walter Hinton : SC Boat Property Tax

[hellosailor]

Captain Bill, AFAIK Florida turns a blind eye to RVs and autos unless someone reports it in. The snowbirds from the northern states--and Canada--often rent or own apartments in Florida and unless a neighbor calls in to complain, who's to know?

Unless of course they are in an accident, and someone makes the mistake of saying "i was on my way home from the supermarket" and their insurer says "Home? Isn't that in?..." and walks away from the insurance. Little things like that catch up with some folks everywhere, every year.

But there are so many cars, and unlike boats, the cars don't sign seasonal marina dockage contracts. The RVs...maybe the tax men are smart enough to canvas the RV parks the same way that they canvas the marinas?

I'm told the Canadians lose their national health benefits if they stay in the US more than six months in any one year, and since Florida allows cars to be kept for 185 days in any year before they become "attached"...that wouldn't be a problem for many snowbirds. They'd be gone before the six months and 185 days tolled, in any case.

[Captain Jaz]

Hi, I have a question that is very similar to this thread, so I thought it best to post it here rather than start a new thread.
I brought a 27' sail boat from a marina in MD for $2000 in january , although due to difficulties as we used Paypal which required us to open business accounts (still free though), he didn't recieve the money till march. It was listed as tax paid, though that has now expired. They're keeping it for me for free, and as I haven't got any papers for it yet, does this mean I don't offically 'own' it yet? After all, if I owned it, I would be able to sell it, which I can't without documentation.
But anyway, I shall be joining her in a few days, and as soon as I arrive I'll be moving her to a Marina I've found in VA, where I will be staying for about 2 months till I leave the USA for Europe.
My questions are - What taxes etc will I need to pay and what will it cost me?
And can I get parts shipped to me VAT exempt as I'm 'in transit'?

[hellosailor]

"he didn't recieve the money till march."
If consideration (the payment) changed hands in March, the sale probably was in March. If Maryland requires sales tax to be paid unless the boat is removed in ## days--you'll be forever required to pay that, plus fines and penalties and interest. You'd best contact the MD authorities to find out what they require and what is allowed or exempted.

AFAIK VAT is a total non-issue for US-flagged vessels and US state registered vessels, what happens when and if you flag it (presumably UK) is a matter for the UK authorities. In the US, AFAIK no one care about enforcing VAT, it is not our job.

Always best to check with the taxman directly--for whichever state or nation you think will demand a piece of you.

[Hud3]

Years ago, I bought a boat in Maryland and moved it immediately to Virginia. There is specific paperwork in Maryland for that circumstance, which I filled out and filed with Maryland authorities. They require that you prove that you actually removed the boat from Maryland within a specific period of time, which I have forgotten (maybe 30 or 60 days). "Proof" was paying relevant fees in Virginia and sending Maryland a copy of the receipt.

I think you may have an "issue" to deal with. Maryland can be very aggressive in enforcing boat fees.