Personal property tax on foreign-flag boat stored in US East Coats

[boatpoker]

Originally Posted by CaptJimFrei

In Chatham County NC, the tax man will go to the marina and dry storage places and get copies of the leases and send a bill to the boat owner. Unless you can prove your boat is parked in another county for 184 days, you will pay the Chatham County tax. I live in Wake County, but pay the Chatham taxes on my boats and trailers because the rate is lower.

NCDMV sends notice of tagged trailers to the counties for property tax purposes.

Are you a foreign flagged vessel in US waters with a valid Cruising License ?

[Montanan]

Depends on which state but foreign flagged boats with or without a cruising license can be subject to State and local taxation, e.g. property tax, use tax, excise tax, and require registration if the State becomes the principal place of use of the vessel.

The Federal cruising license merely reduces the customs procedures, specifically the license that is issued is only this:

License To Cruise in the Waters of the United States
To Port Directors:
For a period of ________ from ________(Date) the ________(Flag) ________ (Rig) yacht ________(Name) belonging to ________________ of (Owner's name) ________________(Address) shall be permitted to arrive at and depart from the United States and to cruise in the waters of the Customs port of

(Name of port or ports)
without entering and clearing, without filing manifests and obtaining or delivering permits to proceed, and without the payment of entry and clearance fees, or fees for receiving manifests and granting permits to proceed, duty on tonnage, tonnage tax, or light money.

This license is granted subject to the condition that the yacht named herein shall not engage in trade or violate the laws of the United States in any respect. Upon arrival at each port or place in the United States, the master shall report the fact of arrival to the Customs officer at the nearest customhouse. Such report shall be immediately made.

[boatpoker]

Originally Posted by Montanan

Depends on which state but foreign flagged boats with or without a cruising license can be subject to State and local taxation, e.g. property tax, use tax, excise tax, and require registration if the State becomes the principal place of use of the vessel.

Please direct me to the section that says foreign vessels under a cruising license may be subject to state & local taxes. Or ... a link to a state or local authority that claims it has the right to tax foreign pleasurecraft that have Federal permission to cruise US waters. .

[Montanan]

Originally Posted by boatpoker

Please direct me to the section that says foreign vessels under a cruising license may be subject to state & local taxes. Or ... a link to a state or local authority that claims it has the right to tax foreign pleasurecraft that have Federal permission to cruise US waters. .

Certain states provide explicit exemptions for foreign flagged vessels operating under a cruising license. Florida being the foremost as to exclusion of use taxation. Florida does not have personal property tax so that is not a factor.

Other states do not have explicit exemptions hence when a boat becomes required to be registered for having established the State as a place of principal use, e.g., after 30, 60, 90 or 120 days then the vessel is no longer deemed to be temporarily using the waters of the state at which time various taxes can be due.

By way of example, South Carolina:

SECTION 12-37-710. Return and assessment of personal property.

Every person shall annually list for taxation the following personal property, to wit:

(1) all the tangible personal property in the State owned or controlled by him;

(2) all the tangible property owned by him or by any other resident of this State and under his control which may be temporarily out of the State but is intended to be brought into the State;

(3) all tangible personal property owned or controlled by him which may have been sent out of the State for sale and not yet sold; and

(4) all the moneys, credits, investments in bonds, stocks, joint-stock companies or otherwise, owned or controlled by him, whether in or out of this State.

HISTORY: 1962 Code Section 65-1624; 1952 Code Section 65-1624; 1942 Code Section 2604; 1932 Code Section 2604; Civ. C. '22 Section 344; Civ. C. '12 Section 296; Civ. C. '02 Section 268; G. S. 173; R. S. 224, 225; 2015 Act No. 87 (S.379), Section 7, eff June 11, 2015.

Effect of Amendment

2015 Act No. 87, Section 7, in the introductory paragraph, substituted "Every person shall" for "Every person of full age and of sound mind shall".

SECTION 12-37-712. Access to marina records and premises.

A marina must provide immediate access to its business records and premises to city, county, and state tax authority employees for the purpose of making a property tax assessment. For the purposes of this section, "marina" means a facility that provides mooring or dry storage for watercraft on a leased or rental basis, and "business records" means only the name and billing address of the person leasing or renting space for a boat in a marina, as well as the make, model, and year, if available.

HISTORY: 2005 Act No. 145, Section 55, eff June 7, 2005; 2006 Act No. 386, Section 45, eff June 14, 2006.

SECTION 12-37-714. Boats with situs in State; boat or motor under contract for repairs.

In addition to any other provisions of law subjecting boats and boat motors to property tax in this State:

(1) A boat, including its motor if separately taxed, used in interstate commerce having a tax situs in this State and at least one other state is subject to property tax in this State. The value of such a boat must be determined based on the fair market value of the boat multiplied by a fraction representing the number of days present in this State. The fraction is determined by dividing the number of days the boat was present in this State by three hundred sixty-five days. A boat used in interstate commerce must be physically present in this State for thirty days in the aggregate in a property tax year to become subject to ad valorem taxation.

(2) A boat, including its motor if the motor is separately taxed, which is not currently taxed in this State and is not used exclusively in interstate commerce, is subject to property tax in this State if it is present within this State for sixty consecutive days or for ninety days in the aggregate in a property tax year. Upon an ordinance passed by the local governing body, a county may subject a boat, including its motor if the motor is separately taxed, to property tax if it is within this State for ninety days in the aggregate, regardless of the number of consecutive days. Also, upon an ordinance passed by the local governing body, a county may increase the number of days in the aggregate a boat, including its motor if the motor is taxed separately, must be in this State to be subject to property tax to one hundred eighty days in a property tax year, regardless of the number of consecutive days. Upon written request by a tax official, the owner must provide documentation or logs relating to the whereabouts of the boat in question. Failure to produce requested documents creates a rebuttable presumption that the boat in question is taxable within this State.

(3) When a boat, or motor if separately taxed, is subject to a written contract for repairs and located in a marine repair facility in this State, the time periods provided pursuant to items (1) and (2) of this section are tolled.

HISTORY: 2006 Act No. 386, Section 34.A, eff June 14, 2006; 2006 Act No. 386, Section 39.B, eff June 14, 2006 applicable for property tax years beginning after 2005; 2007 Act No. 116, Section 66.A, eff June 28, 2007, applicable for tax years beginning after 2007; 2008 Act No. 313, Section 9, eff June 12, 2008; 2010 Act No. 279, Section 2, eff June 16, 2010.

SECTION 12-37-715. Frequency of ad valorem taxation on personal property; exception.

Notwithstanding any other provision of law, no personal property may be taxed for ad valorem purposes more than once in any tax year, except as provided for by the provisions of Section 56-3-210.

[boatpoker]

Originally Posted by Montanan

Certain states provide explicit exemptions for foreign flagged vessels operating under a cruising license. Florida being the foremost as to exclusion of use taxation. Florida does not have personal property tax so that is not a factor.

Other states do not have explicit exemptions hence when a boat becomes required to be registered for having established the State as a place of principal use, e.g., after 30, 60, 90 or 120 days then the vessel is no longer deemed to be temporarily using the waters of the state at which time various taxes can be due.

By way of example, South Carolina:

SECTION 12-37-710. Return and assessment of personal property.

Every person shall annually list for taxation the following personal property, to wit:

(1) all the tangible personal property in the State owned or controlled by him;

(2) all the tangible property owned by him or by any other resident of this State and under his control which may be temporarily out of the State but is intended to be brought into the State;

(3) all tangible personal property owned or controlled by him which may have been sent out of the State for sale and not yet sold; and

(4) all the moneys, credits, investments in bonds, stocks, joint-stock companies or otherwise, owned or controlled by him, whether in or out of this State.

HISTORY: 1962 Code Section 65-1624; 1952 Code Section 65-1624; 1942 Code Section 2604; 1932 Code Section 2604; Civ. C. '22 Section 344; Civ. C. '12 Section 296; Civ. C. '02 Section 268; G. S. 173; R. S. 224, 225; 2015 Act No. 87 (S.379), Section 7, eff June 11, 2015.

Effect of Amendment

2015 Act No. 87, Section 7, in the introductory paragraph, substituted "Every person shall" for "Every person of full age and of sound mind shall".

SECTION 12-37-712. Access to marina records and premises.

A marina must provide immediate access to its business records and premises to city, county, and state tax authority employees for the purpose of making a property tax assessment. For the purposes of this section, "marina" means a facility that provides mooring or dry storage for watercraft on a leased or rental basis, and "business records" means only the name and billing address of the person leasing or renting space for a boat in a marina, as well as the make, model, and year, if available.

HISTORY: 2005 Act No. 145, Section 55, eff June 7, 2005; 2006 Act No. 386, Section 45, eff June 14, 2006.

SECTION 12-37-714. Boats with situs in State; boat or motor under contract for repairs.

In addition to any other provisions of law subjecting boats and boat motors to property tax in this State:

(1) A boat, including its motor if separately taxed, used in interstate commerce having a tax situs in this State and at least one other state is subject to property tax in this State. The value of such a boat must be determined based on the fair market value of the boat multiplied by a fraction representing the number of days present in this State. The fraction is determined by dividing the number of days the boat was present in this State by three hundred sixty-five days. A boat used in interstate commerce must be physically present in this State for thirty days in the aggregate in a property tax year to become subject to ad valorem taxation.

(2) A boat, including its motor if the motor is separately taxed, which is not currently taxed in this State and is not used exclusively in interstate commerce, is subject to property tax in this State if it is present within this State for sixty consecutive days or for ninety days in the aggregate in a property tax year. Upon an ordinance passed by the local governing body, a county may subject a boat, including its motor if the motor is separately taxed, to property tax if it is within this State for ninety days in the aggregate, regardless of the number of consecutive days. Also, upon an ordinance passed by the local governing body, a county may increase the number of days in the aggregate a boat, including its motor if the motor is taxed separately, must be in this State to be subject to property tax to one hundred eighty days in a property tax year, regardless of the number of consecutive days. Upon written request by a tax official, the owner must provide documentation or logs relating to the whereabouts of the boat in question. Failure to produce requested documents creates a rebuttable presumption that the boat in question is taxable within this State.

(3) When a boat, or motor if separately taxed, is subject to a written contract for repairs and located in a marine repair facility in this State, the time periods provided pursuant to items (1) and (2) of this section are tolled.

HISTORY: 2006 Act No. 386, Section 34.A, eff June 14, 2006; 2006 Act No. 386, Section 39.B, eff June 14, 2006 applicable for property tax years beginning after 2005; 2007 Act No. 116, Section 66.A, eff June 28, 2007, applicable for tax years beginning after 2007; 2008 Act No. 313, Section 9, eff June 12, 2008; 2010 Act No. 279, Section 2, eff June 16, 2010.

SECTION 12-37-715. Frequency of ad valorem taxation on personal property; exception.

Notwithstanding any other provision of law, no personal property may be taxed for ad valorem purposes more than once in any tax year, except as provided for by the provisions of Section 56-3-210.

So nothing about a foreign vessel under a cruising license ... got it.

[Montanan]

Every State is unique, the devil is in the details.

Another example of state government charges include the non-resident use permit [permit fee in lieu of sales or use taxation] in Washington.


Nonresident vessel temporary use period
Nonresidents may use their properly registered vessel in Washington for up to 60 days.

A properly registered vessel has:

been registered or numbered under the laws of a country other than the United States; or
a valid United States Customs Service cruising license issued pursuant to 19 C.F.R. Sec. 4.94, or
a valid number under federal law or by an approved issuing authority of the state of principal operation.
After 60 days, a vessel owned by a nonresident becomes subject to registration and use tax in Washington.

Vessels owned by nonresident individuals are allowed to have their vessel in Washington for a period not to exceed 6 months in any consecutive 12 month period without incurring a registration and use tax obligation if before the 61st day of use in Washington, the vessel has been issued a once-renewable 60-day cruise permit by the Department of Licensing indicating when the vessel first came into the state. Taken together, nonresident individuals are allowed to have a vessel in Washington for 60 days without registration. After that, they may obtain a once-renewable 60-day cruise permit from DOL. This totals 180 days. (RCW 88.02.570)

Vessels purchased in Washington by nonresidents must still be removed within 45 days of purchase (unless a use permit issued underRCW 82.12.700 is obtained at the time of purchase of the vessel – see discussion of the one year use permit). Once removed from Washington waters, the vessel can return for the rest of the statutorily allowed nonresident use period. The vessel owner must prove that these requirements are met to sustain the exemption.

Nonresident temporary use Q&A
For nonresidents, how is the time that a boat is in Washington for "commissioning" treated for purposes of the 45-day period and the temporary use period?

Commissioning is the activity of providing upgraded instrumentation, equipment, appointments, etc. If a buyer contracts with a dealer to buy a certain boat, and the dealer contracts with a third party to "commission" it (e.g., add the necessary electronics gear), the 45-day period does not begin until the boat is delivered to the buyer (i.e., after the commissioning).

If the boat is first delivered to the customer and the customer hires a third party to do the commissioning, then delivery has occurred and the clock starts prior to commissioning. However, if the nonresident files a repair affidavit for the time that it is being commissioned, the clock would stop the 45-day period within which a nonresident buyer must remove the boat from Washington for the purchase to be exempt from retail sales tax. The commissioning in this situation would be considered a repair activity for the purposes of the nonresident vessel repair affidavit.

A nonresident purchases a boat from a Washington dealer/broker. Upon taking delivery of the boat, he needs two months of work done on the vessel for commissioning. He files a "Nonresident Out-of-State Vessel Repair Affidavit" with the Department of Revenue. Does this stop the countdown on the 45-day period? When does the 45-day countdown then pick up again?

Yes. The clock starts again when the affidavit expires or the repairs are substantially complete, whichever date comes first.

Is the temporary use period for nonresidents computed on a calendar year basis or on a consecutive 12-month basis?

This period is based on any consecutive 12-month period.

Are boats owned by nonresident trusts considered as being owned by an individual (natural person) or by a fictitious entity (non-natural person)?

Boats that have been irrevocably contributed to a trust are treated as being owned by a fictitious entity (non-natural person), not an individual (natural person). Therefore, such boats owned by a trust that are nonresidents of Washington are not eligible for the extended temporary use accorded to vessels owned by natural persons.

Nonresident vessels held for sale
Nonresident vessels in Washington solely for the purpose of sale and held and/or controlled by vessel dealers or brokers are not subject to the time limit for nonresident use. However, if the nonresident owner uses the vessel in Washington while it is held for sale, use tax is due. Generally, to avoid use tax, a crew may not remain on the vessel while it’s for sale in Washington.

Nonresident individuals bringing a vessel into Washington
A nonresident individual who acquired a vessel of 30 feet or longer outside Washington may also purchase a one-year use permit. The nonresident individual must, however, purchase a permit from a licensed vessel dealer within 14 days of first entering Washington with the vessel.

Purchasing a permit
When purchasing a use permit from a licensed vessel dealer that also sold the vessel to the nonresident at the same time, the nonresident individual must:

Show proof of current nonresident status, such as a driver’s license
Make an irrevocable election to take the exemption and purchase a 12-month use permit,
Complete an affidavit for the vessel dealer; and
Display the use permit on the vessel for which it is purchased.
The cost of the use permit is $500 for vessels 50 feet and less and $800 for vessels greater than 50 feet. Use permits are valid for 12 consecutive months and may not be renewed. Before the use permit expires, the vessel must be removed from Washington for a minimum of 24 months.

Vessel Dealer Requirements
Vessel dealers are not required to sell these use permits. However, a dealer who chooses to sell the permits to nonresidents purchasing vessels from them must also sell the permits to nonresidents who bring their vessels
into the state.
When selling a use permit, a vessel dealer must:
l Examine one piece of photo identification to ensure the individual qualifies as a nonresident;
l Identify the expiration date on the use permit (decal) using a permanent marking pen; and
l Obtain a completed affidavit from the nonresident individual.
The vessel dealer must make two copies of the affidavit - one copy for the nonresident individual and one for
the dealer’s business records. The dealer must mail original affidavits to the Department of Revenue on a
quarterly basis.
Dealers will remit permit fees collected to the Department with their excise tax returns and must file
electronically.
Licensed vessel dealers may obtain use permits and affidavits by contacting Taxpayer Account Administration
at (360) 902-7067.

[Montanan]

Originally Posted by boatpoker

So nothing about a foreign vessel under a cruising license ... got it.

Unless the state provides for some unique treatment of a vessel under a cruising license then there is none. The cruising license is a Federal license with quite limited effect, somewhat simplifies clearances and entry.

Florida being the cruising capital of the USA provides exemption of their use taxation. They wish to encourage marine visitation.

https://floridarevenue.com/Forms_lib...da%20use%20tax.


Planning to buy a boat in Florida, or have plans to bring one into Florida? The Florida Department of Revenue reminds you that tax compliance is an important aspect of boat ownership.

What is Taxable?
Sales and Use Tax

All boats sold, delivered, used, or stored in Florida are subject to Florida’s sales and use tax, plus any applicable discretionary sales surtax, unless exempt. Florida boat dealers and brokers are required to collect tax from the purchaser at the time of sale or delivery.
When a boat is sold by someone other than a registered boat dealer, or a boat is brought into Florida for use in Florida, Florida use tax is due. The “use” part of Florida’s sales and use tax provides uniform taxation of items. Florida’s 6% use tax, plus any applicable discretionary sales surtax, is due on a boat used or stored in Florida when:
• The boat is purchased from a person who is not a registered boat dealer and the sale or delivery
of the boat occurs in Florida;
• The boat is purchased in another state, a territory of the United States, or the District of Columbia and is brought into Florida within six (6) months of the purchase date; or
• The boat is purchased in a foreign country and is brought into Florida at any time.

When the purchaser does not pay Florida sales and use tax to the seller for a boat purchase, any sales and use tax, plus any applicable discretionary sales surtax, is paid to the county tax collector, licensed private tag agency, or the Department of Highway Safety and Motor Vehicles when registering the boat in Florida.

Some specific exemptions:

Foreign-Flagged Vessels

Foreign-flagged vessels or boats holding a valid “License to Cruise in the Waters of the United States” issued by the United States Customs Service pursuant to 19 Code of Federal Regulations 4.94 are not subject to Florida use tax.

Boats Imported for Sale

A boat that is brought into Florida for the sole purpose of sale at retail by a registered boat dealer or broker is exempt from Florida use tax. The boat must be under the care, custody, and control of the dealer or broker, and personal use of the boat is not permitted while it is in Florida.

Boats Temporarily Docked in Florida

When Florida sales or use tax has not been paid on a boat brought into Florida, the boat is not subject to Florida use tax when the boat remains in a Florida registered facility that rents dockage or slippage for a period not to exceed a total of 20 days in any calendar year. The 20-day period begins on the day the boat is docked at the facility. One needs to keep moving on, can't settle in one marina for more than 20 days without triggering the privilege use taxation.

[Rimica]

I had a Canadian registered boat stored in Cape Charles Virginia during Covid. We had a valid cruising permit during that period. I received a tax bill in early 2019. I contacted a lawyer familiar with the boating world. He contacted the authorities and got the bill cancelled.