Legal issues/ fines ?

[Overlord]

I have a friend who bought a boat in 2018 in PR. He is a British Citizen. The deal was concluded and he flew to PR via the USA, purchased the boat and sailed it directly to the Chesapeake. The boat was still registered in the US at the time. He had it hauled out with the intention of returning after a few months. He never checked into the USA, and flew out the next day.
There were no border patrol issues as he’d flown into the states , then flew on a separate flight to PR. Sailed back into the states and then flew back to the UK.
Due to Covid and many other extenuating circumstances, he only returned 5 years later , refitted the boat and now either wants to sell it or go cruising. But now the vessel has been in the state of MD for 5 years, in storage and during that time no fees or taxes have been paid.
During that time he registered the boat in the UK. The PO deregistered the boat with the USCG at the time of sale. What would the best plan forward for him be ? What, if any fines or penalties are there to be had?

[Snore]

Get an attorney or vessel title pro. This sounds like a steaming hot mess!

[Jammer]

Probably nothing. (I am not an attorney)

The state of MD has a 5% use tax on boats that may possibly have been due when he brought the boat there, or possibly now, depending on the details of the circumstances. They're unlikely to notice or care unless it spends the summer in the same slip.


As the boat is now foreign flagged it needs a cruising permit and could run into difficulties without one. (Unless 30' or less) But a cruising permit is not necessary if you stay in the same port, or if you clear into each port you visit (complex; rules unclear).



Way forward? Choices would be 1) to commence cruising by leaving the USA without stopping in any other place in the USA, 2) to register the boat in MD and pay the 5% tax, dropping the UK registration for a time, possibly forming a corporation that owns the boat 3) take the boat to a nearby state such as Delaware where it can be registered without paying the 5% tax and commence cruising from there (or sell the boat from there) (Delaware does not have a use tax on boats), 4) Take the boat to Canada and back and apply for a cruising permit upon returning, 5) Ask an attorney for advice (bring money), 6) Ask CBP for advice

[carstenb]

To start with, your friend needs a B1/B2 visa now that his boat is foreign registered. No way around this. Re the cruising permit - we had the same problem when covid caught us in Washington State. We were gone for over a year.

Over our many visits to the US (sailing our own boat) we've found the CPB to be quite helpful (despite their reputation). Find the nearest office and go talk with them. Although they are loathe to do it, they can issue a new cruising license without the boat having left the US.
They need a reason, but covid was certainly a good one (although covid is now a long time ago and they will probably ask why your friend didn't return for his boat sooner)

[Overlord]

Thanks Guys, this is where CF is so great. I appreciate the insight. Jammer, so the boat has been on the hard all this time. But he wants to splash the boat in a few weeks as he has potential buyers. It will need sea trials etc then more than likely haul out again and then the potential buyer would want to sail it away to Bahamas in December. Sailing away sounds good but there is always the possibility of needing to sail into another port on the east coast for any unforeseen reason and then this might pose a problem. He has considered going into customs hat in hand and explaining his story and the circumstances that led to this.
When you say 5%, is that of the total value of the boat? If so that could be substantial sum as his boat is worth a few hundred thousand. If he moved it to another state , and is approached by CG then he might be in a spot of bother as he wouldn’t have a cruising permit. He does have a B1 B2 visa. Is there any leniency with customs and immigration? The boat has not moved for 5 years. It was American registered when it was sailed back from Puerto Rico to Chesapeake. The registration was only changed a few months after arrive back in the USA. He is trying to establish if import tax was paid by the PO.
Your advise is greatly appreciated as he’s an older gentleman and I’m trying to assist him as he’s also beside himself with the realisation of this and the stress it’s causing him. Thanks ��

[boatman61]

Something I was told by NC C&I in Morehead City back in '05 about my Hunter 37c..
The boat is treated like a US citizen no matter its new registration and can come and go, or stay with zero penalties.
I on the other hand was subject to the usual conditions for a foreign national.
I left the boat on the hard for a year after my first failed attempt for the UK when I returned to London to earn some money for repairs and my second (successful) attempt.

[sailorboy1]

So MD isn't asking the friend for money??

They know nothing, just be quiet and continue on.

[jcapo]

Originally Posted by sailorboy1

So MD isn't asking the friend for money??

They know nothing, just be quiet and continue on.

Its always easier to ask for forgiveness than to ask for permission.

[more]

Originally Posted by Overlord

But now the vessel has been in the state of MD for 5 years, in storage and during ?

how state of MD know boat is in state 5 year.

[northwestsailor]

Originally Posted by Overlord

I have a friend who bought a boat in 2018 in PR. He is a British Citizen. The deal was concluded and he flew to PR via the USA, purchased the boat and sailed it directly to the Chesapeake. The boat was still registered in the US at the time. He had it hauled out with the intention of returning after a few months. He never checked into the USA, and flew out the next day.
There were no border patrol issues as he’d flown into the states , then flew on a separate flight to PR. Sailed back into the states and then flew back to the UK.
Due to Covid and many other extenuating circumstances, he only returned 5 years later , refitted the boat and now either wants to sell it or go cruising. But now the vessel has been in the state of MD for 5 years, in storage and during that time no fees or taxes have been paid.
During that time he registered the boat in the UK. The PO deregistered the boat with the USCG at the time of sale. What would the best plan forward for him be ? What, if any fines or penalties are there to be had?

Since the boat has been on the hard in a yard getting refitted probably no issues at all with anybody. Just pay the fees at the yard and head to Bermuda for a week.

[Jammer]

Originally Posted by Overlord

When you say 5%, is that of the total value of the boat? If so that could be substantial sum as his boat is worth a few hundred thousand.

I'm not in Maryland and so I'm not an expert. I believe there's a cap at $15,000 tax. There are various exemptions in Maryland including having the boat on the hard. There's an article here that might help:


https://baylawllc.com/avoiding-maryland-boat-tax/


Another fact to consider is that the USCG does not enforce state tax laws.

[Island Time O25]

States are funny that way.

My first boat was purchased in MA almost 20 years ago. For a whopping $400.00. Of course it needed some major work. So I hauled her to friend's backyard in NH right after the purchase and it took about a year to get all the work done.

It had a MA title but lapsed registration, which MA did not care about anyway. But the tax office gave me grief for not registering it right away. My point to them was that it WAS NOT in MA for that whole 1st year that I owned her so why would I need to register it in MA right away? So the clerk went to talk to her superior and came back with a new line - ok, bring us old registration from NH.

"But I was not in the water in NH at any time of that past year so I did not have to register it there. And since it was not in any waters in NH but on private property it would be just like storing an automobile which is not driven on public ways - no need to register, insure, etc. Back to her supervisor she went.

"Ok, just pay the 5% sales tax ($20.00 of the $400.00 purchase price) plus $4.23 in penalties and interest for not registering it with MA from day one". I wasn't going to lose that deal over $4.23 fine.

[DEAN2140]

I am always amazed at people who present complicated legal issues to this community, expect a reasoned response, and presumably act upon it.

[boatpoker]

Originally Posted by Jammer

As the boat is now foreign flagged it needs a cruising permit and could run into difficulties without one. (Unless 30' or less) But a cruising permit is not necessary if you stay in the same port, or if you clear into each port you visit (complex; rules unclear).

The rules are quite clear, the vessel may not move without a "Permission to Proceed" for which there is a small fee. If he coastal hops, he'll need a new "Permission to Proceed" from each port. Such "Permissions" may be acquired at any port with a CBP office.

It is unlikely that a "Cruising License" would be issued as the vessel must be out of the US for two weeks before being issued with a new "License".

[Overlord]

Presumption is the mother of all F*%#ups…