Beating the Tax Man - East Coast

[hellosailor]

" Since you must pick someplace in the USA why not pick a"
Because that's usually outright tax evasion, which is illegal, and the tax men aren't dumb, they're just too busy to catch everyone right away.
Vehicle registration and title are often intimitely tied to RESIDENCY and claiming one or the other often tolls a whole world of pain on someone who is claiming it fraudulently. Lots of people claim to get away with it. Some folks even go 25 years without paying any federal income tax. Then, one day, they get a letter in the mail.
And a chance to pay 25 years of back penalties and interest, while paying a lawyer to discuss repayments versus jail time.

The few folks who do figure out good tax evasion schemes sure as hell aren't going to spoil their own game by openly advertising it on the internet. And the ones who offer to tell you all about it for $49.95, are going to tell you to sell the same package for the same price and use the proceeds to just pay the taxes.

[Pblais]

Most US States apply whatever their automobile rules are to boats concerning the requirement to register the boat and pay sales/use taxes.

Not really. Cars are easy. A chimp can call values on cars and have 250,000 comparables. Blue book on cars is solid but not for boats.

[Jonathan Eells]

I've been doing my homework like a good little boy. Talked to a handful of lawyers on this issue, especially the LLC angle, and I learned the following little tidbit: (at least in California) transferring property into an LLC and then buying and selling the LLC as a means of avoiding sales and use taxes is specifically named in the law as fraud. Now, the gamble some people take is that the state won't find out such a thing has happened. Apparently, it's difficult for the state tax board to even find out that such a "fraudulent" transfer has occurred.

[Mule]

I cannot cruise behind bars or with NO money, or from an impounded boat so "I Give" in more ways than one.

[osirissail]

Hellosailor - Full time cruising sailors live outside the USA - but - must have a USA "address" for Federal Tax Purposes, Drivers Licenses, and so forth and so forth. They use PMBO's or friends and relatives as their "address." Picking one in a low cost state is absolutely legal for all purposes and has never been questioned.
You are quite right that if you live on land inside one state and register the boat in another State, it can be questionable which State is your tax domicile where you will have to pay the appropriate taxes. In practical experience I was amazed when I lived in completely within Missouri (a very taxing State) how many of my neighbors had addresses in Illinois where they registered their autos and boats (a very low taxing State).

[hellosailor]

osiris-
With fifty sovereign states and eleven "insular possessions"...certainly your mileage may vary in different parts of the US.
Same agencies allow for a "mailing address", others are concerned about "residence", others "domicile"...and for most if not all states, you are only allowed to have a drivers license if you are a resident of that state. (And only one dl per customer to anyone, normally, having a full one in more than one state is AFAIK illegal in all of them.)
Some places allow you to establish a "residence" if you intend to return and live there when your traveling is done, others require your body to actually reside there. In at least one state, if you have a driver's license you will be considered a resident--and you'll receive your mandatory summons for jury duty, which can be postponed once but not exempted. So, you might wind up either paying a $500 summons for failure to appear, or having to fly home with an open return ticket to serve.
Little "gotchas" like that just don't always make provision for the traveling life.

Then, there's the tax man, who prefers to shoot first and ask questions later, so to speak. If you've been keeping up with the news of the US IRS and the UBS bank, now expanded to a number of "haven" banks and nations...anyone using a traditional haven for any tax purpose is likely to get a rude surprise as this expands. Maybe not for a year or two or ten, but the great thing about banks is that paper trails sometimes stick around a long long time, and the tax men don't mind waiting. (They charge way more than bank interest, they'd rather wait and accrue.)

I won't pay 'em a cent they aren't due, but I'll send anything they demand--and then demand it right back.

[osirissail]

HelloSailor you are right on as the expression goes. But as a long term cruiser remaining out the USA as much as feasible - I am only concerned with the Fed/State Tax, Drivers license, banking and insurance requirements. Local governments do not have jurisdiction as I don't live there day to day and own no property in the USA. You do have to be careful and coordinate all your various "irons in the fire" to be sure of consistency and any legalities. Once it is all set up properly and legally, the only nuisance is the unscheduled inquires from the IRS or other departments of the chosen State and the Fed's. For instance USCG Documentation, FCC licenses, etc. The annual USCG Documentation requirements are a real pain in the ass as the mailing time between the USA and a Caribbean country can be week, months, or never. PMBO services make their money watching this stuff for you and firing off emails or whatever to keep you from getting burned by a stray "iron." Relatives are cheaper, but sometimes get a little annoyed at the deluge of mail coming and going.
- - If a need to change a relative because they are fed up, I would need to revise all the paperwork mentioned to get everything over to the new address/State. That is why so many use commercial PMBO services.
- - Jury Duty is not a problem in Florida, once you get them to understand that you are not physically in the State, not an easy job, they strike you from the lists and you never hear from them again.
- - The only misunderstanding I have is with your "Some places allow you to establish a "residence" if you intend to return and live there when your traveling is done, others require your body to actually reside there." Luckily, in the USA, no government at any level can "allow or disallow" your establishing a "residence." You determine where your "residence/tax home" will be and then make sure you are totally coordinated with all the above mentioned aspects.
- - There are Federal and some State Tax considerations if you are physically living in the USA about where your "principal" residence is located. But they always boil down to either "where you earn your money" or "Where you spend the majority of your physical time." You can have "homes" in all 50 States and the possessions but only one "Tax home" and all the above aspects should be coordinated to that one address that is your State/Federal Tax "home".

[hellosailor]

"Luckily, in the USA, no government at any level can "allow or disallow" your establishing a "residence." "
Honestly, not quite! Some jurisdictions will not allow you to declare residency unless you actually reside there on some basis, i.e. 183 days per calendar year, 90 days within a year, something specific. Others are more generous and literally will allow you to declare residency simply based on "Well, after I get back from Tau Ceti, I plan to move back into the old neighborhood, if it is still above sea level."
You might be right about none being able to DISallow residency...but I suspect that is like the case now in the courts for Miami and sex offenders. Miami/Dade has managed to use zoning to effectively make it impossible for a sex offender to legally live in Miami unless they live under the Julia Tuttle Causeway. Where they've been allowed to live and even to use the address for drivers' licenses!

Yes, there are usually options for residency and multiple residencues are possible -- and even get imposed on some folks whether they want them or not. There was some poor fellow about 15-20 years ago who found out his house was on an unclear NY/CT border location, and BOTH STATES decided he belonged to them and had to pay full taxes to them. Poor fellow...I wonder what ever happened to him.

It would also seem that even if you convince Florida that you reside there without living there...isn't or shouldn't there be a way that a US citizen can vote for President, without being a citizen or resident of any particular state? (Which is another peculiarity, in some states you have to live there to be a citizen of the state. In others, if you'd been born there, your state citizenship is a permanent one, totally separate from your residency or domicile.)

Ah, serving one master. "Yes, Doctor Fhrankenshtein!"

[osirissail]

- - The original intent of my posts was to inform what actual cruising sailors have to do after they "sell everything and sail off into the sunset." Unless you renounce your citizenship, turn in your passport, -and- have no money being paid to you from within the borders of the USA, you cannot avoid paying taxes and/or be exempt from having to have a domicile address in the USA. All your USA citizenship rights to vote, drive, document/register your boat and other related licenses and to pay taxes are keyed to your personally declared "domicile." And you get to chose where that one place will be located.
- - The following is a discussion of the background of such requirements and "hellosailor" comments and not strictly "on subject" . . .
There is something a bit strange about your post - >>>.but I suspect that is like the case now in the courts for Miami and sex offenders. Miami/Dade has managed to use zoning to effectively make it impossible for a sex offender to legally live in Miami unless they live under the Julia Tuttle Causeway. Where they've been allowed to live and even to use the address for drivers' licenses!<<<
- - Such restrictions are constantly being passed by local jurisdictions in the name of public safety and eventually (sometimes it takes years) they make it all the way to the US Supreme Court where they normally are ruled unconstitutional and negated. No State or Locality can prevent any US Citizen from residing where they choose. However, if you have been convicted of a felony offense you have waived many of your Constitutional Rights (not all, just some) as you have chosen to "do the crime". Let's refer to such felons as "citizen(-)". If you have not been convicted of a felony then you are a full "citizen" of the purposes of this discussion.
- - But it must be legally demonstrated that a citizen(-) is an "imminent hazard to the public safety" before any further restrictions can be imposed. And that is always being tested in the courts (e.g. the Miami case you mentioned). Many decades ago there were "vagrant/vagrancy" laws which made simple sense - any citizen not gainfully employed and wandering the streets was an "undesirable" person and the police would make them leave the area or lock them up. The U.S. Supreme Court struck down all such laws as patently unconstitutional since there were no crimes committed and the laws violated the right to free movement. Being poor is not a crime. In not so ancient history it was crime. The result now is all the "homeless" living on the streets and parks. I suspect the "sex-offender" restrictions will also eventually be declared unconstitutional. The conflict comes from - if he is a public threat why is he out of prison.
- - The basic right of free movement within the USA is so fundamental to our Constitution that all infringements have eventually been negated. Again, no political jurisdiction can tell a citizen where they can and cannot live (felons (citizen(-)) currently excepted but under legal challenge). Nor can any political jurisdiction prevent a citizen from voting in the place they have chosen to live. The US Supreme Court struck down all the southern and other segregation and voter laws seeking to keep Blacks from voting. Voter fraud, trying to vote in two or more places at the same time can result in your becoming a felon (except in Chicago ) and then becoming a citizen(-) and forfeiting many citizenship rights including currently, free movement.
- - Many places in the country have tried to impose restrictions on free movement. But eventually they get thrown out. Nothing happens fast in the legal system.
- - Residency (where you chose to actually live) for U.S. citizens within the USA is solely up to the citizen. Voting in local/State elections is regulated by the States but any attempt to restrict voters for racial or economic segregation purposes has always eventually been ruled unconstitutional. It takes time, but even voter registration restrictions on having to have been in the locality for "x" days are eventually, when challenged, negated.
- - Tax laws have always - for some strange reason, well not really - every government at every level wants their money - been in conflict with the Constitution. But since politicians make the laws and judge the laws, they are not above protecting their income first and putting the Constitution second. A shame but unfortunately real life.
- - Regulated activities such as voting, drivers licenses, and collection of taxes have historically required that a physical address be maintained within the USA. Recently the governments tried to rule PMBO's as not a valid address, but that was easily struck down by the Congress. Many USA citizens live and work overseas and to negate any variation of physical address would mean not being able to collect taxes and all levels of government agree that they will not jeopardize that. And all other things flow downhill from there. Even felons do not lose the "rights to pay taxes." Tied to that is the old "Taxation without Representation," so voter rights are jealously guarded.
- - The history of some citizens trying to limit the Constitutional Rights of other citizens goes all the back to the founding of the country. And all along that history courts have sometimes affirmed for periods of time those restrictions but eventually end up striking them down. There are some bedrock principles that are written into the Constitution and a citizen's right of free movement within the USA is at the top of the list. Although recently that right seems to have been devolved down to walking . . .
- - "Residency" is strictly defined as the length of time you are living in a location/place. It is commonly used for "tax/fees" purposes to trigger when an additional tax/fee can start to be imposed. For instance keeping a automobile, boat, etc. physically within Florida for more than 90 consecutive days triggers the states ability to impose fees and taxes. Most other states have the same rules.
- - US Tax Law has switched to using "domicile" to mean the declared place you are living - without any time limits. Many people involved in transportation services are away from their domicile for most of the year. But they pay taxes, vote and are issued various licenses based on their domicile address. If you are "residing" - which means spending significant time in a jurisdiction - say in a high taxing State/locality and your "domicile" is in a low tax State a "turf war" usually develops as to who can extract taxes from you. This has been fought through the courts for many decades over and over and has come down to strict set of rules that is based on "where you make your money" - which devolves down to "where you collect your money." In Interstate Commerce you can declare your domicile and your paychecks are sent there. You then must demonstrate that all of your citizenship activities occur in that jurisdiction which includes voting, drivers licenses, home ownership - if any, etc. All this is highly technical and complicated and is constantly being tested when a interstate workers try to establish a tax domicile in a low tax State but have a home (residency), vote, send their kids to school in a high tax State.
- - Sorry about the long-winded-ness but I have been in Interstate and International transportation for more than 50 years and paid enormous amounts of taxes - so the subject is very close to my wallet.

[hellosailor]

Good point, they are not "citizens" in the full meaning of the word.
"There is something a bit strange about your post -...they make it all the way to the US Supreme Court where they normally are ruled unconstitutional and negated. No State or Locality can prevent any US Citizen from residing where they choose."
...Let's refer to such felons as "citizen(-)"."
Most excellent way to phrase it!
Miami is, after all, a Carl Hiassen novel with or without his having to write it.
Which is not to say it is "bad" or "different" from anyplace else, after all, most of the US still encourages even the dead to vote

"Sorry about the long-winded-ness but I have been in Interstate and International transportation for more than 50 years and paid enormous amounts of taxes - so the subject is very close to my wallet."

The mods tend to get more upset about wandering threads than I do, I'm here for the beer and conversation.

Interstate transportation....Gee, yathink if we could cross "Ice Road Truckers" with "Volvo Ocean Race" we could get a popular TV series about long distance sailing!?

I'm sure tax dodges and tax "interviews" could make an interesting part of the show. :-)