How To Legally Avoid WA Sales Tax

[evm1024]

Originally Posted by MJH

Your from Oregon so the way is pretty clear for you.

However, someone from WA may think he can save the tax by buying and storing the boat in OR, be careful. Prior to my purchase some time ago I enquired on OR purchase and found out there is a WA-OR agreement that WA residents buying along the Columbia river and some nearby ports will still get taxed by WA even if the boat is kept in those waters. You have to go a bit farther south to escape the tax and should check in advance with the WA Department of Revenue. I considered it but the drive to the boat in OR would be too long for me so I just paid the tax, some $5,000+ in my case.

MJH

The agreement is that WA laws are inforce from the Washington shore across the Columbia to the Oregon shore for Washington State residents. And that the Oregon laws run from Oregon to the Washington shore for Oregon residents.

[evm1024]

Just pay sales tax - What a non starter.

Sales/use tax in parts of Seattle run 10%. That is $15,000 on a $150,000 boat.

Remember you are entitled to 100% of the money you do not owe as taxes.

He is trying to figure out how to buy a boat in WA, Cruise in WA and return the boat to Oregon.

The question is how does he do this LEGALLY without owing WA sales tax. No tax evasion involved.

For those who say if you can afford... gee wiz....

It sounds like that if an Oregon resident buys a boat in WA they have 45 days to get out of state.

Going back to Oregon or up to Canada both meet that requirement.

How long you need to be gone from WA waters is unknown at this point. And you are limited to 60 days in WA waters per year unless you pay the $500 for a cruising permit.

Sounds like the cruising permit is the way to go. But in any case get real legal advise and talk to the WA DOL and dept of revenue. Keep it above board. And document everything (e.g. keep your fuel bills when in BC)

[jmschmidt]

What you ask is pretty easy but I'm not going to talk about it on this forum. Too many tax snitches read it.

WA had the bright idea a few years ago to tax every resident with a pilot license. Since I was a captain for a major airline, I was exempt. Seems the unions screamed bloody-murder about working people being taxed just because they had FAA issued licenses. Got the pols worried about getting votes from working people, I guess.

Likewise the silly city of Seattle will have to eat its head tax they put on employers since the money really comes out of the hides of working people who are getting smarter about who really pays taxes.

[Montanan]

Originally Posted by DesertBoater

I am looking at buying a boat in Puget Sound, cruising her there for a year, then heading south. I’d love to avoid the sales tax, since I don’t plan on sticking around long.

My understanding is that in years past, out of state residents could spend 60 + 120 days in WA before heading to Canada to reset the clock. Does WA simply allow you to clear into BC and return the next day with the clock reset, or do they have rules about how often you can do this?

How about BC? Are they still relaxed about foreign flagged vessels and how long they can stay?

DesertBoater: You have not provide information regarding your residency.

Are you a resident of Washington or a non-resident?

You have provided information regarding two aspects that aid in answering your question.
1) The location of purchase is the State of Washington.
2) The location of "primary" usage is the State of Washington at least for the first year.

You also have not indicated whether you are purchasing from a boat dealer / retailer. The procedure of tax compliance and responsibilities will depend on who the seller is as denoted below. It also depends on whether the dealer/retailer will sell the boat with a one time limited Use Permit which permit provides for use tax exemption at the time of their sale of the boat.

Note: The temporariness of dodging to Canada and leaving Puget's Sound, if you are not a Canadian (i.e., Non-Washington location of usage) scheme does not appear to provide for valid exemption from State sales or use taxation, or for excise tax, titling and registration. And I suspect it might put you into exposure to Canadian taxation if you claim Canadian residency or stay in Canadian waters for an extended period of time.

Reference link to guidance as to Title, Registration and Taxation Responsibilities. https://dor.wa.gov/sites/default/fil...x/BoatBroc.pdf

Assuming given the forum, the boat is a sailboat and longer than 16 feet an excise tax will be due and registration and title is also required, unless subject to certain exemptions.

The watercraft excise tax generally applies to all
registered boats that are 16 feet or longer or equipped
with a motor capacity of more than 10 horsepower.
Excise tax is calculated at one-half of one percent of
the boat’s fair market value. A vessel is exempt from
the watercraft excise tax if it is:
Used exclusively for commercial fishing purposes
Less than 16 feet in overall length and is not used
on federally regulated waters
Owned and held for sale by a dealer
Owned by certain nonprofit youth organizations.

As to sales and use tax, there are some use exemptions and there is an alternative "non-resident" permitting scheme which has its own set of usage regulations.

Sales and Use Tax
Use tax applies to the use of articles within this state
acquired without payment of sales tax. Thus, articles
purchased for use in this state are subject to sales tax
or use tax, but not both.
Sales tax is based on the selling price, while use tax is
based on the value of the article when it is first used
in Washington. The value includes any delivery charges
paid to the seller.
You owe use tax if you acquired your boat without
paying sales tax.
Sales tax and use tax rates are the same and,
depending on location, range from 7 to 9.5 percent.
If you purchase your boat from a Washington retailer,
the retailer will collect the sales tax due based on the
rate in effect at the retailer’s location. If you purchase
your boat from an individual or from out-of-state, the
county auditor or licensing agent will collect the use
tax based on the location the boat will be kept. If your
boat is not required to be registered, you may pay the
use tax by completing a Use Tax Return. This form is
available on the Department of Revenue’s website at
dor.wa.gov or call 1-800-647-7706.
Retail sales and use tax exemptions for boats are limited
to the following:
Boats 30 feet or longer owned by nonresident
individuals and brought into this state temporarily
for their use or enjoyment if the owner purchases a
vessel use permit, explained in Nonresident Boats
Purchases
Boats owned by nonresidents and brought into this
state temporarily for their use or enjoyment. Refer
to the Registration for Nonresidents section
Boats purchased in this state by nonresidents for
use outside of Washington, subject to the conditions
explained in Nonresident Boats Purchases
Boats purchased primarily for use in conducting
interstate or foreign commerce by transporting persons
or property for hire, or for use in conducting commercial
deep sea fishing operations outside the territorial
waters of this state. (“Primarily” means more than 50
percent of the time. If the boat is not used primarily for
the exempt purpose, sales or use tax applies.)
Boats purchased only to rent/lease or charter at
substantially fair rental value without an operator. The
lessor must collect sales tax on the lease payments. (If
the boat is leased or rented with an operator, or provided
to others at substantially less than fair rental value, the
lessor owes use tax on the full value of the boat.)

Nonresident Boats Purchases
Sales tax exemptions are available to a nonresident
who purchases a boat in Washington for use outside
the state if:
The boat requires Coast Guard registration or
registration by the state of principal use, and it will not
be used within Washington for more than 45 days, AND
an appropriate exemption certificate is completed at
the time of sale.
The boat is 30 feet or longer and the buyer is a
nonresident individual who, when purchasing the
boat, purchases a one-time vessel use permit from
the boat dealer. The cost of the permit is $500 for
boats 50 feet in length or less and $800 for boats
over 50 feet. The nonresident individual must make
an irrevocable election to take the exemption and
complete an affidavit. The vessel use permit, which
must be displayed on the boat, allows the nonresident
individual to use the boat in Washington for up to
12 continuous months without being subject to
registration and use tax requirements. After the
permit expires, the nonresident individual may not
use the boat in Washington for 24 months after the
permit expires. Any use of the boat in Washington
before the 24-month period ends will subject the
nonresident individual to the state’s registration
and use tax requirements. After the 24-month
period ends, the nonresident individual may use the
vessel in Washington as explained in the section
discussing registration requirements for nonresidents.
Nonresident entities, such as partnerships,
corporations, limited liability companies, etc., are not
eligible for this exemption. Not all boat dealers have
chosen to sell the vessel use permits.
The boat is 30 feet or longer and the buyer is a
nonresident individual who, after purchasing the boat
from someone other than a boat dealer, purchases a
one-time vessel use permit as described above within
14 days of purchasing the boat.

Personal Property Tax
Generally, boats exempt from the watercraft excise tax
are, instead, subject to the personal property tax. You
must list your vessel with the Special Programs Division
of the Department of Revenue at (360) 570-3265,
option 5. Certain vessels are taxed only for the time
they are in Washington. In January of each year, the
Department sends a Watercraft Personal Property Notice
of Value to each vessel owner showing the market value
and asking each owner to report how many days the
vessel was in the state the previous year. In March, the
property tax statement is mailed to each taxpayer with
full payment due by April 30.

Business Tax
If you use your boat for commercial activities, such as
charter or commercial fishing, you must register your
business with the Department of Revenue. Based on
the type of activity, your income may be subject to the
business and occupation tax or public utility tax. In
certain instances, you may be required to collect retail
sales tax.

Alternatively become a Montanan and sail in State. There are no sales / use or VAT taxes in Montana. Or if you are found of deserts you could try Nevada where there is also no sales / use tax and plenty of deserts for sand sailing.

[evm1024]

Originally Posted by DesertBoater

Sorry to not be more specific. I live in Oregon, where we don’t have sales tax. It would be great to spend 6 months in WA, six months in BC and then back to WA, but need to make sure I don’t get dinged with a big tax bill.

The OP did provide his residence state and plans. Just not inthe first post.

[Montanan]

Re: How To Legally Avoid WA Sales Tax
Quote:
Originally Posted by DesertBoater View Post
Sorry to not be more specific. I live in Oregon, where we don’t have sales tax. It would be great to spend 6 months in WA, six months in BC and then back to WA, but need to make sure I don’t get dinged with a big tax bill.
The OP did provide his residence state and plans. Just not in the first post.

Well that aids in clarifying the residency issue, Oregonian.

Suggest you consider purchasing the one time Washington Vessel Use Permit [$500 for under 50 feet in length, $800 for over 50 feet in length] albeit thence being subject to it specific usage limitations, and if such limitations are in keeping with your long-term plans. Assuming if the seller is a dealer/retailer that such dealer/retailer will sell a Vessel Use Permit with the sale of the boat.
If you return to Washington waters within the 24 month period after the first 12 months of permitted usage in Washington then you trigger Washington use taxation at its original purchase value at the rate applicable for its then Washington location. If you are uncertain as to your future usage, the vessel use permit fee is rather small for a one year usage permission, and the use tax will become due only in the future depending on where you sail the boat. If you bring it back to Oregon and thence stay out of Washington for 24 months after the one year permitted period all is good, say to Portlandia.

Unsure about the rules for taxation and periods of usage in BC as to temporary imporation provisions. Different country / provinces, different currency, differ laws. Also assumes that the Canadians will still permit Americans to enter their country, they may build a wall along their border and make America pay for it. And then there is the added issue and uncertainty of tariffs upon entry of the boat into Canadian waters what with the recent engagement of a trade war along the 49th parallel. So you might trigger large tariffs on top of GST/VAT/Use/Sale [whatever they are up-Nort] taxation wandering into BC waters, depending on length of stay, eh.

Canada has implemented a retaliatory 10 percent tariff duty on USA made boats effective July 1 for imports to Canada. They used to be duty free if made in the USA, Canada or Mexico under the NAFTA rules. There is also a GST, which I believe is 5 percent on the value for duty. So avoid triggering importation status, and the new "Trump tax", if you can.


Enjoy sailing the Salish Sea.

[Dooglas]

I would not advise anyone to try to cheat on the 60 day rule for in lieu WA sales tax on out-of-state registered boats. I have had too many friends caught trying to do this. the law is enforced and the fines are nasty. There are, however, a couple of other choices for legally extending the period of time an out-of-state boat may remain in Washington. Read the following WA instructions.

https://dor.wa.gov/sites/default/fil...x/BoatBroc.pdf

[Kenomac]

Just document your boat in Oregon or Rhode Island, then do an offshore delivery and no sales tax will be due. BUT you will probably need to leave WA immediately for either Oregon or Canada for a specified length of time.

Easy.

[Paul L]

Originally Posted by Kenomac

Just document your boat in Oregon or Rhode Island, no sales tax will be due.

Easy.

Defiantly easy, just not true. Days in WA are limited before use tax is due.

[Stu Jackson]

Originally Posted by Montanan

>>>>>>>>>>>>>>>>>>>>>


>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>


1. Canada has implemented a retaliatory 10 percent tariff duty on USA made boats effective July 1 for imports to Canada.



2. They used to be duty free if made in the USA, Canada or Mexico under the NAFTA rules. There is also a GST, which I believe is 5 percent on the value for duty. So avoid triggering importation status, and the new "Trump tax", if you can.


>>>>>>>>>>>>>>>>>>>>>>>

1. Can you cite & link a referewnce to this, please?


2. Terminology and specific words are very important. The first sentence is wrong. I just (March 2018) "imported" our 1986 boat into BC, Canada from California. The "import duty" was 12%, HST & GST.


It would be helpful to link to real information instead of making it up.


Importing marine pleasure craft

[Kelkara]

Originally Posted by Stu Jackson

1. Can you cite & link a referewnce to this, please?

2. Terminology and specific words are very important. The first sentence is wrong. I just (March 2018) "imported" our 1986 boat into BC, Canada from California. The "import duty" was 12%, HST & GST.

March was before July 1st ... If you had waited a few months you would have paid an extra 10%.

https://www.fin.gc.ca/access/tt-it/c...pcaa-1-eng.asp

The list includes "Sailboats, with or without auxiliary motor".

[Montanan]

Originally Posted by Stu Jackson

1. Can you cite & link a referewnce to this, please?


2. Terminology and specific words are very important. The first sentence is wrong. I just (March 2018) "imported" our 1986 boat into BC, Canada from California. The "import duty" was 12%, HST & GST.


It would be helpful to link to real information instead of making it up.


Importing marine pleasure craft

Stu, I would be glad to provide a link. But that is not to say that I am glad about any of the surtax tariff.

A couple of links provided below:

Canada Gazette, Part 2, Volume 152, Number 14:Â*United States Surtax Order (Other Goods)

https://www.tradeonlytoday.com/indus...-s-built-boats

Stu, the effective date of Canada's surtax tariff was July 1st, 2018. If you imported before that date there was NO surtax or other tariff duty imposed by Canada on a USA made boat.
One needs to differentiate between a surtax tariff duty which was zero and is now 10% and the other taxes that are due upon importation, such as the HST & GST which are NOT tariff duties. The total taxes and duties due upon importation to Canada would now be a surtax tariff of 10%, plus the HST and GST which HST and GST are calculated on the total imported value which includes the tariff duty on top of the boats invoiced / market value. The GST/HST is calculated on the Canadian dollar value of the goods, including tariff duty and excise tax [if any], and is collected at the border at the same time as these duties and taxes.

Thus Stu, I suspect that if you had imported your boat today, you would have incurred the new retaliatory duty of 10%, plus an additional HST & GST of 12% applied to 110% of the then market value of the boat as delivered at the border. Which I calculate would make the total surtax tariff duty, plus HST & GST to be 23.2% of the boats market value as determined delivered at the border. There may also be a Federal or Provincial excise tax in Canada associated with boats, not sure as I don't export boats.

Stu, I see from your profile that you are in British Columbia. Each province establishes its own type(s) of sales tax which is an addition to the Federal GST. There apparently being HST, GST, PST, and a QST, which are all alphabet soup to this Yank. The current GST and PST rate for British-Columbia in 2018: The global sales tax for BC is calculated from provincial sales tax (PST) BC rate (7%) and the goods and services tax (GST) in Canada rate (5%) for a total of 12%. That would be Zero in Montana.



You had very fortunate timing as to arranging for the March importation of your boat from the USA.

I am not a Canadian and as such am not an expert on Canadian taxation but I do export products to Canada and deal with the duty and taxes associated therewith depending on where and when title has transferred as part of the commercial transaction with my clients. So I might be ignorant or inaccurate or not fully knowledgeable about the "real information", but I did not "make up" the retaliatory surtax tariff information.

Enjoy your newly acquired / imported boat. All the best, from the Last Best Place - Montana.

P.S.: We have an amazing number of Canadians travel to Montana to shop for goods and to return to Canada which I believe is so as to not pay the HST and GST taxes and because there is no sales or use tax in Montana. The parking lot at Costco in Kalispell is full of Canadian licensed vehicles everyday, I would hazard to guess maybe one quarter of the shoppers. The Canadians typically load their car and truck with lots of goods and apparently travel across the border with out further taxation on their personal goods, or at least that seems to be the motivation for their extreme shopping habits in the USA; or perhaps the price of goods is just a lot less on the Montana side of the border even if one adds in a Canadian HST/GST taxation that may be due at the border.
By way of example, the State of Washington has an 0.5% excise tax on the sale of boats in Washington. That tax is not a sales or use tax and is charged and collected separately from the sales and use taxation and as I understand the excise tax is that it applies regardless of residency of the buyer or intended location of use of the boat.

[Montanan]

Good clarification Paul.

Re: How To Legally Avoid WA Sales Tax
Quote:
Originally Posted by Kenomac View Post
Just document your boat in Oregon or Rhode Island, no sales tax will be due.

Easy.

"Defiantly easy, just not true. Days in WA are limited before use tax is due."

Use tax is based on where an item is USED, not where it is documented / registered. If you use it in Washington then Washington use rules, including taxation, apply, the rules of a jurisdiction other than where the article is used do not apply to use regulations or use taxation. Temporary use in Washington provides for certain exemptions but such exemptions [such as registration, vessel use permits and use taxes] are limited as to defined periods of the term of use.

[Kenomac]

Originally Posted by Montanan

Good clarification Paul.

Re: How To Legally Avoid WA Sales Tax
Quote:
Originally Posted by Kenomac View Post
Just document your boat in Oregon or Rhode Island, no sales tax will be due.

Easy.

"Defiantly easy, just not true. Days in WA are limited before use tax is due."

Use tax is based on where an item is USED, not where it is documented / registered. If you use it in Washington then Washington use rules, including taxation, apply, the rules of a jurisdiction other than where the article is used do not apply to use regulations or use taxation. Temporary use in Washington provides for certain exemptions but such exemptions [such as registration, vessel use permits and use taxes] are limited as to defined periods of the term of use.

Please read the thread title “SALES TAX” not “use tax.” Two completely different taxes.

[jdazey]

Not quite. They are essentially the same tax. One is called "use tax" in order to tax vessels (or cars) that are imported from another state even though not sold in WA. Both are one-time taxes and taxed at the same rate. WA guidance to boaters is pretty clear on that.


Cheers,