My question deals with documented vessels purchased in Delaware and Documented. If the vessel is kept in Delaware for more than 183 days is it subject to the Maryland Excise tax if it sails in Maryland waters for 150 days?
I preface with the infuriating lawyer answer “it depends.” Theoretically if the purchase occurred in DE and you have more days in a single other state than you have in MD then you should be ok, but…… I have seen DE residents who have dockage facilities in both MD and in DE. The slip rental in MD is a yearly contract so on its face it looks like evidence that the vessel is kept in Maryland for a year. Remember that the burden of proof rests with the tax payer and if you receive an assessment letter that is considered prima facia evidence that you owe the tax. The state’s initial burden has been met by printing the letter. YOU MUST PROVE WITH THRID PARTY EVIDENCE EVERY DAY THAT YOUR VESSEL IS IN BOTH STATES.
Furthermore, the MD, DNR has never actually taken the position that they can count time “in MD” from the moment you slip the mooring lines in another jurisdiction but the way the regulations are written they could take that position. I think the only reason they have not is because, as a matter of common sense, it is ludicrous, however; I never rule out the possibility that someday one of the state of MD’s attorneys will take such a position. I once heard an attorney for MD, state on the record that the comptroller of MD’s position is “Everything is taxable.” The result of taking the regulations to their absurd conclusion can be seen when a vessel slips its mooring lines in Bermuda and comes to MD. Theoretically, some attorney for the state could make the argument that all the time in the Atlantic counts as time in MD for the purposes of the tax. I am not sure that attorney would be able to do so with a straight face but stranger things have happened.
Proctor in Admiralty
Lochner Law Firm, P.C.
182 Duke of Gloucester Street Phone: (443) 716-4400
Annapolis, Maryland 21401 Fax: (443) 716-4405