CA tax aggravation - vessel on east coast

[Paul L]

Originally Posted by edmundsteele

OK. Here is my two cents worth. I am sure somebody will instantly correct me but nevertheless, it is my understanding that the USCG only requires a unique combination of name and hailing port on the stern. ......
Ed

The USCG does not require unique names, like many other countries do.

[svrecess]

So here's my question..



Let's say you get a boat that is newly documented and hasn't been registered in any state (and you're not a resident of CA or similar states). Let's also say your plan is to never be in one state for very long and that you don't even intend to be in the US much ever. However, you know you will be in some states at some point for some time (a month maybe). Do you decide to get registration in a state that doesn't tax or just stay Documented only?



Sure, supposedly all states say you can visit for up to some time (usually 60-90 days, right?) but without any state registration, aren't you a red flag to them? What makes them decide: this boat has been in our jurisdiction for more than xx days?

[Trimaran Ken]

Originally Posted by svrecess

Let's say you get a boat that is newly documented and hasn't been registered in any state (and you're not a resident of CA or similar states). Let's also say your plan is to never be in one state for very long and that you don't even intend to be in the US much ever. However, you know you will be in some states at some point for some time (a month maybe). Do you decide to get registration in a state that doesn't tax or just stay Documented only?

Massachusetts has an incomprehensible law that says if your boat is CG Documented, you may NOT register it in MA, even though you and the boat live here.

I have never been stopped in any state (MA, FL, VT, CT) because I didn't have a state sticker on the boat.

I do have to pay state excise tax, so if it ever came up in a legal way, I could prove the boat and I live in MA.

If it bothers you not having a state sticker, you could register it in Rhode Island. They have no sales tax or property tax on boats, and you don't need a RI address on your registration.

BTW, The MA Excise Tax is minimal on boats over 10 years old. My yearly tax is about 1% of the boat's current value. They have a weird way of calculating the tax.

[Paul L]

Originally Posted by svrecess

So here's my question..



Let's say you get a boat that is newly documented and hasn't been registered in any state (and you're not a resident of CA or similar states). Let's also say your plan is to never be in one state for very long and that you don't even intend to be in the US much ever. However, you know you will be in some states at some point for some time (a month maybe). Do you decide to get registration in a state that doesn't tax or just stay Documented only?



Sure, supposedly all states say you can visit for up to some time (usually 60-90 days, right?) but without any state registration, aren't you a red flag to them? What makes them decide: this boat has been in our jurisdiction for more than xx days?

Leave it documented and enjoy your cruising. If plans change and you decide to stay for an extended period in one state, then deal with them at the time.

[skenn_ie]

Register it in the same place that many politicians keep their money, Panama. Alternatively, there is a registration agency in the Netherlands that doesn't care where you are. Many global nomads use them.

[SailingPNW]

Originally Posted by a64pilot

The thing that strikes me is do you people really keep receipts from moorings, marinas etc?

No I haven't kept receipts, however I could get my bank to print off payments made to the marina and could get my marina to provide a notarized letter if necessary. That said if you have been off hook you could find it more challenging.

Either way avoid getting upset and providing terse answers. Answer each question professionally and completely. If the accountant reviewing your letter and records feel comfortable with your responses they will likely close the case. If they feel you are being evasive and hiding stuff, that will likely get them to inquire further.

Is it fun no, but their job is to track down people cheating the system which is common. Don't let it become personal.

[mako]

I've been chatting back and forth with the Dept of Revenue in my home state of Alabama. If you USCG document the vessel as commercial, and obtain a license from Natural Resources (like a commercial fishing license, mussel license, research collector, shrimper, etc.) then there is no sales/use/excise tax due when purchasing a new vessel (which is my case).

County and City governments may have other regs, but that is State level.

I need to check with insurers next to make sure that they will issue a hull policy for a personal yacht, if the vessel is commercially documented but inactive for any commercial service.

Does anyone know about that?

[Stu Jackson]

Here is the text of the letter I sent to CA:


October 28, 2016

City of Oakland
Office of Tax Assessor / Property Tax

1221 Oak Street
Oakland, CA 94612

Re: Removal of Property from the State of California

Gentlemen,

The purpose of this is to formally advise you that we have removed our vessel from the State, and request that you remove us from the property tax rolls.

The vessel is a 1986 Catalina 34, Hull Number: CTY--------------.

We have moved the boat to Canada.

Attached are six pages of receipts for fuel and berthing indicating clearly that we sailed the boat from San Francisco to Vancouver Island. We did so from August 8, 2016 to September 18, 2016. Also included are the deposit and first month receipts from our new marina in Maple Bay, Duncan, British Columbia, Canada.

Please remove us from your tax records.


Very truly yours,




*******************************************


What's so hard?

[Montanan]

Originally Posted by Stu Jackson

Here is the text of the letter I sent to CA:


October 28, 2016

City of Oakland
Office of Tax Assessor / Property Tax

1221 Oak Street
Oakland, CA 94612

Re: Removal of Property from the State of California

Gentlemen,

The purpose of this is to formally advise you that we have removed our vessel from the State, and request that you remove us from the property tax rolls.

The vessel is a 1986 Catalina 34, Hull Number: CTY--------------.

We have moved the boat to Canada.

Attached are six pages of receipts for fuel and berthing indicating clearly that we sailed the boat from San Francisco to Vancouver Island. We did so from August 8, 2016 to September 18, 2016. Also included are the deposit and first month receipts from our new marina in Maple Bay, Duncan, British Columbia, Canada.

Please remove us from your tax records.


Very truly yours,




*******************************************


What's so hard?

Exactly Stu, taxation is not hard; they are simply imposed and rule based. Learn the rules and apply them correctly. The jurisdictional rules are readily available on line and by publications. In your instance, property taxation was simple, your boat was presumably in California on January 1, 2016 which is the date for establishing property tax assessment for the fiscal year 2016. Hence property tax was due for the fiscal year 2016. The boat was moved during 2016 and the boat was relocated to Canada and was not in California on January 1, 2017 hence there was no longer property to assess by California on January 1, 2017. There is no partial year pro-ration of boat property taxation in California. You provided the State with the facts and supporting documentation to allow them to not include the boat in their assessment for January 1, 2017. You made the process respectful and easy for the bureaucrats to fulfill their tasks.
Too many boat owners are being ignorant of jurisdictional laws and requirements and / or attempting to evade them. Avoidance is legal, evasion is illegal and has consequences. And again because of ignorance, there is unnecessary confusion as to USCG Documentation versus State specific requirements as to registration, titling, types of permits, fees, and as to taxation [be that sales, use, excise, property, value added, etc.].
Dang, come on boaters just search the web for the rules and laws of the jurisdiction that applies when and where the boat is, has been or will be located. The devil is in the details that apply to your boat and specific situation. Rant done, over and out. Sorry Cruisers for being curt, the annoyance of smoke of fire season is getting to me and making me a tad intolerant and not sympathetic. Wishing for clear, Big Skies.

[Montanan]

Originally Posted by makobuilders

I've been chatting back and forth with the Dept of Revenue in my home state of Alabama. If you USCG document the vessel as commercial, and obtain a license from Natural Resources (like a commercial fishing license, mussel license, research collector, shrimper, etc.) then there is no sales/use/excise tax due when purchasing a new vessel (which is my case).

County and City governments may have other regs, but that is State level.

I need to check with insurers next to make sure that they will issue a hull policy for a personal yacht, if the vessel is commercially documented but inactive for any commercial service.

Does anyone know about that?

Mako: The underwriter's policy will be specific as to its endorsement for covered uses of the vessel. If you use if for non-recreational purposes, and the policy endorsements limits to recreational purposes, your coverage will likely [read, certainly] not cover your claim or liability. So if you change its usage, i.e., become "active" as to commercial endorsement purposes, be sure to have your insurance policy changed with new endorsements BEFORE you change its use from only recreational to any commercial purpose.

Note: Your vessel's documentation covering endorsed commercial uses also allows for its recreational purposes, but a boat documented for recreational purposes is not be used for commercial purposes. Per the National Vessel Documentation website: "A Certificate of Documentation may be endorsed for fishery, coastwise, registry, or recreation. Any documented vessel may be used for recreational purposes, regardless of its endorsement, but a vessel documented with a recreational endorsement only may not be used for any other purpose. Registry endorsements are generally used for foreign trade."

This thread keeps wandering from subject to subject, now shifting to insurance matters.

[mako]

Originally Posted by Montanan

Mako: The underwriter's policy will be specific as to its endorsement for covered uses of the vessel....

This thread keeps wandering from subject to subject, now shifting to insurance matters.

Montana-Man thanks for the reply. Everything that you said seems logical and I will certainly be clarifying with insurers eventually.

Regarding thread wander - at least no one has started talking about anchors yet!

[Montanan]

Originally Posted by makobuilders

Montana-Man thanks for the reply. Everything that you said seems logical and I will certainly be clarifying with insurers eventually.

Regarding thread wander - at least no one has started talking about anchors yet!

Oh yes, one of the Cruisersforum's favorite subjects being Federal and State tax deductions for casualty loss of anchors and rode. As a general rule, the bigger the anchor, and the longer the scope of rode, the greater the deduction, albeit the deduction is allowable for the value of an anchor that must weigh at least 1 metric tonne [the loss of anchors weighing less than one metric ton each are not deductible losses]. And the deduction for loss of rode is only allowable if the scope during use was 2,500 feet, or a ratio of 25:1, which ever is less, when anchored and the rode was of a minimum of Grade 40, 1" diameter chain for boats less than 50 feet LWL.

And don't forget to itemize your mileage deductions of $0.545 per mile your boat dragged for business purposes when anchored in 2018 which is deductible if and only if it exceeds 2% of your adjusted gross income and if the dragging occurred in the waters of the USA; no foreign water dragging mileage allowances for US tax purposes, except in California and Wyoming. Detailed documentation of all mileage dragged is required with stated business purpose for each dragging event.

All reportable using IRS Form: 2018WE-B-SINKING.

Happy sailing and tax return preparation.

[Ranthra]

Issue resolved. got a letter from California yesterday simply stating that the information that was provided has allowed them to close the case.


Thanks to the sound and reasoned advice to some of the posters here. It went against my instincts to fight back, but did lead to the desired outcome.

[MB750]

One of the big reasons I left that state...