Buying a boat in Florida

[GinoDelG]

Hello all,
I'm about to buy a new catamaran from a broker in Florida. I want to avoid Florida sales tax by moving it out of the state within 90 days. My wife and I live aboard our current boat and move up and down the east coast each year, generally spending winters in the Bahamas or Caribbean. We use the SBI mail forwarding service and have Florida voter registration and drivers licenses but do not have a residence in Florida. Should I try to do the paperwork myself or would it be best to hire an expert to do it for me?

[mvweebles]

Definitely find an expert. Florida led the way in taxing transient assets, though California (with whom I had experience) got pretty savvy too. You will not have a presumption of innocence so once ensnared, it can be a tough slog.

Curious, where do you plan to register the boat? Given your drivers license and car registration have a Florida address (residence of convenience courtesy of SBI), what's your theory on not owing Florida tax?

[GinoDelG]

My understanding, although I'm not 100 percent on this, is that Florida requires you to pay the tax if you have a residence in Florida, which we do not. We would apply for Coast Guard documentation and list a marina in the Rhode Island area.

[MicHughV]

Many people try (or have tried) to escape the sales tax thing, by moving the boat elsewhere, but sooner or later, this will trip you up.
You will either end paying sales tax or penalties elsewhere, or bite the bullet and pay in Florida.
Nobody likes to stroke that big check to a guv'mint agency, but consider it as just the price of the boat.
Pay it and enjoy the boat without constantly having to look over your shoulder.
My 2c....

[Bobby Lex]

You are asking for tax advice on a boating forum instead of on a tax forum.

I think you should consult with to a tax expert -- particularly one who is familiar with sales tax issues on boat sales in Florida. I don't think that it's as easy as simply claiming "I'll claim the boat's home port is Rhode Island" (where there is no sales tax on boat sales) even though (I assume) you've never been to Rhode Island, never will go there, the boat's never been there, the boat's never going to go there.

If it were that easy, everybody who buys a boat would simply do the same thing.

Also, IIRC, I think that a Florida broker is required to collect sales tax and remit it to the State. Not 100% sure on that, though.

There are other complications as well:
1. U.S. boats that are USCG documented still have to be registered somewhere. Presumably, under your plan, you will need to register it in Rhode Island. Have you checked with that State to see what they require to do that? A Rhode Island drivers license perhaps? Some other proof of connection to that State? A deed? A lease?
2. What is your insurance company requiring as far as evidence of the boat's home port? A marina contract? State registration? A sworn affidavit?

There are a lot of moving parts here. A lot of potential pitfalls. A lot of potential liability. What are you going to do when you are wintering in Grenada and SBI notifies you that you got a certified letter from the Florida Department of Revenue inquiring about unpaid sales tax? Are you prepared to fly back to the States, hire a tax lawyer, and spend the next months or longer fighting the DOR? Even if you win, will it have been worth it?

I'm with MicHughV -- just pay the sales tax and not have to worry about the Pandora's box of issues that can arise out of trying to outwit the tax man.

Just my .02

Bob

[S/V Illusion]

Originally Posted by GinoDelG

My understanding, although I'm not 100 percent on this, is that Florida requires you to pay the tax if you have a residence in Florida, which we do not. We would apply for Coast Guard documentation and list a marina in the Rhode Island area.

Sounds more like a tax avoidance plan rather than a tax minimization plan.
Also sounds like you picked Rhode Island more to avoid taxes than any other reason.
Regardless, I don’t think:
1. You understand Florida’s regs properly regarding how they determine tax applicability, and
2. This isn’t the place to get reliable tax advice.

We all try to minimize our tax burden but gaming the system hurts all of us.

[Sand crab]

Originally Posted by Bobby Lex

1. U.S. boats that are USCG documented still have to be registered somewhere.

I'm not sure that is correct. Documented is a federal registration and they say that on their website. If you move around a bit you can avoid state registration. The OPs situation is different being 'mostly' a resident of Fla.

[Sand crab]

Go to this page and click on the General Info tab and it says:
What is Vessel Documentation? Vessel documentation is a national form of registration

https://www.dco.uscg.mil/Our-Organiz...on-Center/FAQ/

[mvweebles]

Originally Posted by GinoDelG

My understanding, although I'm not 100 percent on this, is that Florida requires you to pay the tax if you have a residence in Florida, which we do not. We would apply for Coast Guard documentation and list a marina in the Rhode Island area.

Didn't John Kerry (Senator from Massachusetts) bump into trouble for registering his yacht in Rhode Island instead of Massachusetts for tax reasons?

On the face of it, you're splitting hairs. Again, no expert, but the 90-day rule is for folks who legitimately live somewhere else and buy a boat in Florida, then return to their home state. You clearly established yourself in Florida, perhaps leveraging Florida's favorable income tax status.

Once a taxing authority smells blood, they are relentless and brutal. The burden of proof quickly shifts to the taxpayer and is extremely difficult to reverse. They will seek utility bills (with billing addresses), bank statements, phone records, travel records, all sorts of documentation that you will not want to provide.

There's nothing wrong with minimizing your tax. But you'll need someone skilled in Florida taxation processes (not just the law).

[chubby]

Originally Posted by GinoDelG

Hello all,
I'm about to buy a new catamaran from a broker in Florida. I want to avoid Florida sales tax by moving it out of the state within 90 days. My wife and I live aboard our current boat and move up and down the east coast each year, generally spending winters in the Bahamas or Caribbean. We use the SBI mail forwarding service and have Florida voter registration and drivers licenses but do not have a residence in Florida. Should I try to do the paperwork myself or would it be best to hire an expert to do it for me?

do you have voter registration and a DL elsewhere?


so...

how are you convincing yourself that you didn't have residence in florida?



i mean.. why are you even voting in florida if you don't consider yourself a resident there?

[S/V Illusion]

Originally Posted by Sand crab

I'm not sure that is correct. Documented is a federal registration and they say that on their website. If you move around a bit you can avoid state registration. The OPs situation is different being 'mostly' a resident of Fla.

Florida doesn’t care about documentation.

[MicHughV]

You might be able to do a lot of things in the US and get away with it, but tax evasion is one of those things that has sunk a lot of people.
This "sales tax" thread has been taken up here on this CF before, and the consensus then, as is now, is to pay the sales tax and be done with it.

I'm betting any tax attorney, accountant, or other expert in the field will advise you the same.

[Bobby Lex]

Originally Posted by Sand crab

Go to this page and click on the General Info tab and it says:
What is Vessel Documentation? Vessel documentation is a national form of registration

https://www.dco.uscg.mil/Our-Organiz...on-Center/FAQ/

I think we're having a semantics debate here. USCG documentation is actually a Titling process. You get a Federal title rather than a State title for your boat.

That is not the same as "registration" despite the fact that your citation uses the phrase "national form of registration".

Many states, including Florida, require boat owners to register their boat even if that boat is USCG documented. You pay a state registration fee (not to be confused with sales tax) and you get a sticker that you must affix to your boat. Even if the boat is documented. I don't know if all states require the same thing. But I do know that Florida does.

The OP is a Florida resident for all intents and purposes, he's buying a boat in Florida. But he is trying to avoid paying Florida sales tax. At first glance that really looks like an uphill battle for sure.

Clearly it's a complex issue that requires expert legal and tax assistance. Not the kind of assistance one is likely to get from a boating forum.

Bob

[MicHughV]

To the OP....post back here and let us know how you made out...you realize off course, that you are now on record trying to scheme out a tax evasion plan...

[jalmberg]

I think you are dreaming. The Florida DMV is very good at knowing about boat sales, and will sooner or later send you a bill. Possibly with a penalty.