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Old 01-09-2017, 13:07   #1
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HELP! Need advice on US east coast tax laws...

I have a unique problem that I cannot seem to find the answer to.

I live in California and am buying a catamaran in Maryland that will be registered with the USCG to my California address. I plan to put the boat in the water next May, and within 30 days, sail it to Massachusetts where I will visit family before departing on a world cruise in October. I'm not a tax evader, but I would like to avoid paying the 5% Mass use/sales tax as I intend to use the boat elsewhere during my world cruise.

So, here's my question. If I don't pay any state's use/sales tax and keep the boat in Massachusetts for 59 days, how long must I cruise out of state before being allowed back into Massachusetts waters? Can I stay in Mass for 59 days, leave for a week to Rhode Island and return for another 59 days, or am I asking for trouble? I hear the Mass Harbor Patrol folks don't mess around.

And less serious, should I be worried that Maryland might also want tax, given I am buying the boat there and storing it on the hard for several months before using it?

Thanks all.
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Old 01-09-2017, 13:31   #2
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Re: HELP! Need advice on US east coast tax laws...

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And less serious, should I be worried that Maryland might also want tax, given I am buying the boat there and storing it on the hard for several months before using it?
I believe that Maryland will only hit you up if the boat is resident in MD...if it spends more than half the year there.

But this, and your Massachusetts question are ones that your broker should be able to answer if they are halfway competent. It's one reason to use a buyer's broker; they can help you with documentation, title, taxes, etc. and should be able to formulate options for you. It costs you nothing. A selling broker is not going to be nearly so helpful or accommodating.
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Old 01-09-2017, 13:36   #3
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Re: HELP! Need advice on US east coast tax laws...

Why not just leave it in RI ? Half the owners on my dock come from MA. They must have a reason.
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Old 01-09-2017, 13:42   #4
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Re: HELP! Need advice on US east coast tax laws...

Check with these guys:

How to avoid paying taxes on your boat...legally! - Answers in Boat Tax Law
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Old 01-09-2017, 14:01   #5
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Re: HELP! Need advice on US east coast tax laws...

I'm not a MA tax expert but I can tell you that the 60day grace period is only available once.
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Old 01-09-2017, 19:11   #6
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Re: HELP! Need advice on US east coast tax laws...

I would worry about registering it in California. They are known to be incredibly aggressive money collectors and if they get a whiff of this transaction they will chase you wherever you are.
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Old 02-09-2017, 05:45   #7
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Re: HELP! Need advice on US east coast tax laws...

One of the beauty of Al Gore's Internet is that it's easy to find information, even from far away.

You should be able to go to each state's DNR or DMV website and read the requirements for boat registration and get all your answers. The information you find there will be more reliable than what someone on a boating forum can tell you.

If what you read is not clear to you, contact them by email or telephone and ask them to clear it up.

Two things:

1) You're going to have to register it somewhere and that somewhere is where the boat spends the most time.

2) Federal documentation does not change the tax status. You will still be liable for taxes in the state of primary use.
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Old 02-09-2017, 08:11   #8
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Re: HELP! Need advice on US east coast tax laws...

Purchased out of state but documented at your residence in CA.
I am sure you will receive a tax bill from your county.
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Old 02-09-2017, 08:34   #9
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Re: HELP! Need advice on US east coast tax laws...

Great News: You have bought a new boat (new to you). I bought a boat in Maryland a few years past , had it hauled for two months, and then cruised out of the State. Taxes did not appear to be an issue. This is a question for your Maryland broker if you used one, if not I would think most any Maryland broker would answer that question for you. Same answer regarding Mass. Contact a Mass broker who should be able to answer your question.
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Old 02-09-2017, 08:55   #10
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Re: HELP! Need advice on US east coast tax laws...

Once a state comes after you for unpaid sales tax (and they will come) your only decent defense will be that you paid in another state. If you bought in a no tax state they will demand the use tax in the same amount possibly plus penalties. That is what the 'use tax' is for. Don't be surprised if California is at the head of the line. The odds of coming up with a legal tax avoidance scheme are slim indeed.
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Old 02-09-2017, 09:02   #11
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Re: HELP! Need advice on US east coast tax laws...

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I checked. It was a click bait headline and includes nothing on avoiding use tax after avoiding sales tax, probably because there are no practical ways.
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Old 02-09-2017, 09:14   #12
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Re: HELP! Need advice on US east coast tax laws...

Take delivery then move it to Delaware to store it. You can then register it at you leisure in Delaware (no sales tax), and it will be registered "somewhere" when you cruise to other states. You don't need to be a resident of Delaware.
If your destination is MA, I would suggest Summit North Marina in Bear, on the C&D Canal.
Delaware registers boats at select dealers, and they may not be aware they can register a documented boat. You can email the state agency, and they will guide the dealer thru the process. Maryland will want to either collect sales tax, or you sign an affidavit that you are leaving MD waters. This was my experience in 2010 when I lived in NY.
Good Luck & Enjoy!
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Old 02-09-2017, 10:52   #13
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Re: HELP! Need advice on US east coast tax laws...

Skylark is a USCG documented vessel, flies the US flag and is located in The Netherlands. Since I am a full time resident of Germany, I paid the sales tax (import tax) to the Dutch and had a Post Construction Assessment survey obtaining the RCD catagory "A". Skylark is not 101% legal and the Dutch don't have any property tax on boats.

South Carolina tried to charge me property tax on Skylark, since my USCG documentation papers were being posted to my SC address, but all it took was a letter explaining that the boat is not, was not and will not be located in SC, hence their property tax bill is not going to be paid.
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Old 02-09-2017, 10:53   #14
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Re: HELP! Need advice on US east coast tax laws...

Skylark is not registered in any state, since she is not located in any state of the USA. I paid sales tax to Connecticut when I purchased her and paid sales tax again to The Netherlands for importing her into the EU.
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Old 02-09-2017, 10:57   #15
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Re: HELP! Need advice on US east coast tax laws...

Massachusetts, like the rest of the NE states, has a time period (often 90-180 days) where they will tell you that if the boat is in their waters more than that many days, it must be titled and registered IN THAT STATE. And going back to the 1970's when the Delaware corporate tax dodge was so popular, these states ALL have their tax men walking the docks, looking for Delaware registrations and taking notes. And sending out collection letters as appropriate.
In some places, they have marina's file a list of anyone with monthly or annual marina contracts, so there's less walking to do.

Bottom line? If they see it, smell it, or hear about it? Tax men will try to tax it. The OP needs to find out the specific laws in EACH state that he will be visiting. That may mean, first, NOT registering the boat in Cali, NOT documenting the boat in Cali. As a Cali resident, he may still be liable for use tax on an out of state purchase, I don't know Cali's laws. But unless he is a bonafide resident of a non-tax state, or has been able to expressly REVOKE and terminate his residency in other states, they'll come after it.
And since they can literally arrest and impound the boat...that can put a crimp in sailing plains. Even if you pay tax and title the boat in your "real" home state, the next one can come after you if you linger too long.
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