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m000ve0ver 07-27-2004 08:43 PM

Registration and Sales Tax
 
Can''t seem to find straight answers anywhere. Any help or advice is appreciated.

My story:

I live in California. I bought a boat from a private party in Maryland. The hand-over was in Virginia. The boat is now stored and will be stored in Virginia for a while.

Sooooo, It is not USCG documented. It has MD state registration.

I plan to USCG document since I will be using it up and down the east coast before slowly migrating towards Panama and home. Probably 3 years on the east coast.

My questions:

How should I choose my hailing port when I document?
Any advantages or disadvantages of using CA over VA?

Do I need to pay sales tax to MD or VA?
Or can I get out of it and not pay any?

Thank you,

Gene :^)

RichH 07-27-2004 09:51 PM

Registration and Sales Tax
 
Federal Documentation has absolutely NO bearing on sales/usage taxes owed to ''states''.

Most state''s tax clock starts running the second that you take possession (or enter their territorial waters). Most states will allow only a limited amount of ''visitation'' time (ie.: 30, 60, etc. days) as a grace period for visitation or fitting out, etc. and if you exceed this limit you may/will owe taxes, interest and penalties. The principal here for tax purposes is "area of principal usage". Documentation status has NO bearing with states who want their taxes paid if you keep your boat there over a certain time limit. You have to check each and every state that you visit/stay and be sure that you dont exceed the grace period.

If you paid sales/use taxes in Virginia, then you are probably OK vs. assessed taxes for Virginia (only). If not paid and are due, your ''tax clock'' has probably already been running for some time.

Beware.
If you buy a boat in a state that has a lower tax rate than the state to where you move the boat for a long term stay .... guess what? you owe the state with the higher tax rate the *difference* not paid to the state where you bought the boat.
Every damn state is different. Those states that are ''socialist peoples republics'', eg.: MA, NY, MD, CA etc. are the worst and usually have the shortest ''grace'' periods.

Local municpalities (especially in the socialistic northeast) are also beginning to consider to enter into the opportunistic taxation of ''rich boat owners'' and are considering to assess boats as personal property and other such taxation methods of the ''rich''.

dsprygada 07-28-2004 04:11 AM

Registration and Sales Tax
 
Hey Gene.
I just ran into the very same situation as the previous post, but mine was in Florida. They have a use tax that coincidentially is the same as there sales tax. If you paid tax in another state you are covered. But if the tax you paid is less than their 6% sales tax / use tax amount, you must pay the difference, providing you are there longer than 30 days. Only way around it from my understanding is to set up a corporation in a tax free state and have the corp. purchase the boat. There were some threads on other forums (sorry I can''t remember where) It''ll still cost you several thousand to set up the corporation. Pay the piper I guess!

Dave

dsprygada 07-28-2004 04:32 AM

Registration and Sales Tax
 
Gene,
One more folloy up. When I was checking this issue I talked to the Tax Revenue Dept. for the state of FL. He stated that Florida laws were changed to allow Florida broker / dealers to be more competitive. They do not have to charge sales tax provided you sign an affidavit stating that you will remove the boat within I believe 10 days. You must show them receipts to this effect (gas bill, dock rental, etc). But you can only be in Fl waters for 30 days per year after that. In a private seller transaction, sales MUST BE PAID, irregardless of your intentions to leave.

You might want to check that state''s tax laws directly. A lot of good information here, but like myself, I wanted to here it straight from the horses mouth. Tax evasion (at least in their eyes) is not a pretty thing. Good Luck.

Dave

WHOOSH 08-02-2004 02:12 AM

Registration and Sales Tax
 
Gene, here are a couple of guidelines I''d suggest you follow...

1. Do NOT register it in CA until the boat returns to CA. They will assess you an annual personal property tax and, each year, you will have to seek a cancellation of the assessment. Better to avoid the hassle in the first place.
2. Each state does their sales & use taxes slightly different. With some time before you must commit, why not talk with a local (county, most likely) tax assessor in each State? Spell out your plans & sked, which after all are a bit unique, and ask them how their law will apply to your circumstances. Imagine a sequence of when the boat will be where (within the U.S.) as part of the picture you give them. Follow up with Q''s that seem relevant, based on their answers. Then sit back and assess options and risks.

I see this topic on BB''s all the time and RARELY has someone approached the people who, ultimately, have the answers. Asking for info isn''t the same as commiting to it, so why not start there? I''ve done this in CA, MD, FL, NC and VA and have yet to find an office that didn''t have the basic rules in a brochure, answered all my questions, and left me with my options. Seems like that would suit your needs, as well.

Jack


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