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Old 14-05-2022, 19:51   #1
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Sales tax on a boat that will be leaving the country

So we are finalizing purchase on our boat on Lake Michigan and the broker is asking us what we want to do about sales tax for the area of use. I'm not sure exactly how to answer this because the plan is to sail the boat on the great lakes this summer and then next summer go up the St Lawrence and down to the Caribbean. Is there anything we can do to legitimately avoid the sales tax since we will be shortly leaving the country?
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Old 14-05-2022, 20:32   #2
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Re: Sales tax on a boat that will be leaving the country

"Shortly leaving" a year later? Hardly.


Wouldn't you do some research and homework to find out where you could legally pay sales tax and legally either register (state) or document (Federal) the boat?


How can we help you if you don't tell us where you are?
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Old 15-05-2022, 07:38   #3
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Re: Sales tax on a boat that will be leaving the country

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Originally Posted by nuru05 View Post
So we are finalizing purchase on our boat on Lake Michigan and the broker is asking us what we want to do about sales tax for the area of use. I'm not sure exactly how to answer this because the plan is to sail the boat on the great lakes this summer and then next summer go up the St Lawrence and down to the Caribbean. Is there anything we can do to legitimately avoid the sales tax since we will be shortly leaving the country?
In most states boat sales tax is paid when you register the boat for used boat purchases between a private buyer and seller. And each state has their own rules about what triggers a registration requirement, often very detailed to the day based on how many days the boat spends in that state's waters. So without all those details, the question as posed isn't answerable, unfortunately.
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Old 15-05-2022, 07:54   #4
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Re: Sales tax on a boat that will be leaving the country

"the plan is to sail the boat on the great lakes this summer"






There's your answer.
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Old 15-05-2022, 08:07   #5
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Re: Sales tax on a boat that will be leaving the country

I get the OP’s question, although I doubt you can avoid sales tax if you plan to keep the boat in the US for a year, but maybe. I’d be more disappointed that my broker couldn’t walk me through the nuances.

The OP has the choice of four states in which to moor and principally use the boat. Each of those states has differing rules and tax rates (although they are pretty similar, ranging from 5-7%). Maybe (would take some research) each of those states has a 90-day rule about removing the boat from the state? Move the boat to a new marina in a different state every 3 months (what about winter?)?

Or what do the states say about leasing a boat? Can you structure the deal with the seller as a lease-to-own with final transfer taking place once you leave (if I were the seller the premium to do that would be more than the 5-7% sales tax)?

This has got to be a pretty standard decision in that area, if your broker can’t walk you through all the options and their ramifications then you need a new broker.
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Old 15-05-2022, 08:17   #6
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Re: Sales tax on a boat that will be leaving the country

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"the plan is to sail the boat on the great lakes this summer"






There's your answer.
Turns out the Great Lakes encompass several states and two countries. Again each with very specific and unique rules. There is no generic answer to this question, it is highly specific based on exactly what the user plans to do. Not sure how many different times or ways that needs to be articulated?
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Old 15-05-2022, 08:42   #7
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Re: Sales tax on a boat that will be leaving the country

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Turns out the Great Lakes encompass several states and two countries. Again each with very specific and unique rules. There is no generic answer to this question, it is highly specific based on exactly what the user plans to do. Not sure how many different times or ways that needs to be articulated?

The question was "Do I have to pay sales tax?"


The answer is "Yes". Which tax depends on where the boat is registered.
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Old 15-05-2022, 17:02   #8
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Re: Sales tax on a boat that will be leaving the country

In some states, like NY the broker is required to collect sales tax and submit to the proper state.

Pay the tax, it is your obligation and responsibility.
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Old 15-05-2022, 17:42   #9
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Re: Sales tax on a boat that will be leaving the country

When I bought my boat in Washington I had 30 days to get out of the state. I was moving it to Canada so I didn't need to worry about any taxes except here.

Talk to a couple of brokers and the tax department.
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Old 15-05-2022, 19:39   #10
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Re: Sales tax on a boat that will be leaving the country

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Is there anything we can do to legitimately avoid the sales tax since we will be shortly leaving the country?
I'm gonna say 'sure', if you're a resident of a state that doesn't have sales taxes (Alaska, Delaware, Montana, New Hampshire, and Oregon).

Now, you can try to register the boat in one of the 5 states, and you might be successful. BUT... if your home state/state of residence finds out, you will have to prove that you did, in fact, keep the boat where it is registered. And if you can't? You will have to pay the taxes, penalties and possible legal fees.

You could also leave the country and not come back, but that's not foolproof.

Just pay the tax.
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Old 16-05-2022, 06:27   #11
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Re: Sales tax on a boat that will be leaving the country

The state that you are a resident of rarely has anything to do with sales/use tax or registration of a boat. Sales tax is based on where the boat is sold/bought. Use tax is based on where the boat is used. Registration is based on where the boat is located for a defined period of time.

As an example... Say you buy a boat in Florida and immediately move it to Georgia, to use it there for a year or so. Because you moved it immediately, Florida will not charge you sales tax, but Georgia will want you to pay use tax. Georgia will also require you to register it there (may be an exception if you document the boat). Had you kept the boat in Florida then Florida would charge you sales tax. This is all completely regardless of where you happen to live.

If, two years later you move the boat back to Florida, after 90 days Florida will require you to register it with them. Again, regardless of where you are a resident.
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Old 16-05-2022, 08:32   #12
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Re: Sales tax on a boat that will be leaving the country

No sales tax on boats in Rhode Island (by law) and USCG documented don't need to be registered there. Just have to establish a "presence" there. I used a LLC registered in RI for boat bought in Fl and removed from FL within 90 days. No sales tax.


Ck rules for state where you close the sale. For instance, in Florida you have 90 days to get the boat out of the state before you will owe sales tax (and maybe time in a yard having work done doesn't count against the 90).
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Old 16-05-2022, 09:48   #13
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Re: Sales tax on a boat that will be leaving the country

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Originally Posted by denverd0n;362381[/quote
The state that you are a resident of rarely has anything to do with sales/use tax or registration of a boat. Sales tax is based on where the boat is sold/bought. Use tax is based on where the boat is used. Registration is based on where the boat is located for a defined period of time.

As an example... Say you buy a boat in Florida and immediately move it to Georgia, to use it there for a year or so. Because you moved it immediately, Florida will not charge you sales tax, but Georgia will want you to pay use tax. Georgia will also require you to register it there (may be an exception if you document the boat). Had you kept the boat in Florida then Florida would charge you sales tax. This is all completely regardless of where you happen to live.

If, two years later you move the boat back to Florida, after 90 days Florida will require you to register it with them. Again, regardless of where you are a resident.
I'm gonna say 'nope', but at the very least, it depends on the state.

I'm in Wisconsin. If I buy a boat in a surrounding state, I will be charged Wisconsin sales tax when I register the boat in Wisconsin. I can try and skirt this, say by using USCG registration. But if I get caught, it can get very expensive penalty wise (depends somewhat on how much you are trying and defraud the government out of) and might result in jail time. And registering in a state that doesn't have sales tax only works for a while. If I register in Delaware (no sales tax), but keep the boat in Wisconsin? I have to pay Wisconsin sales tax.

The gummint wants 'their' money; they work durn hard to get it.
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Old 16-05-2022, 09:54   #14
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Re: Sales tax on a boat that will be leaving the country

Just pay the tax and follow the rules. It will be much easier if you are staying in US waters for a year. If you are leaving right away then that is another story. I did that after buying a boat in FL. Federal documentation an dthen sailed it to the Eastern Caribe and never owed tax to a state. But if I am sailing for a whole season or more in US waters then I want all the ducks in a row. Your insurance co. probably wants that too
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Old 16-05-2022, 09:59   #15
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Re: Sales tax on a boat that will be leaving the country

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Originally Posted by denverd0n View Post
The state that you are a resident of rarely has anything to do with sales/use tax or registration of a boat. Sales tax is based on where the boat is sold/bought. Use tax is based on where the boat is used. Registration is based on where the boat is located for a defined period of time.

As an example... Say you buy a boat in Florida and immediately move it to Georgia, to use it there for a year or so. Because you moved it immediately, Florida will not charge you sales tax, but Georgia will want you to pay use tax. Georgia will also require you to register it there (may be an exception if you document the boat). Had you kept the boat in Florida then Florida would charge you sales tax. This is all completely regardless of where you happen to live.

If, two years later you move the boat back to Florida, after 90 days Florida will require you to register it with them. Again, regardless of where you are a resident.



The way the law is written, you'd technically STILL owe in Florida if you always had the intent to keep the boat there.


So if you have a residence there, vote there, and register cars there, and buy a boat there but keep it in Georgia to avoid taxes, they could potentially have a case to charge you when you brought it back to Florida.


But I don't think they'd push it.
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