Boat Sales Tax - To Pay or Not to Pay?

LyleRussell · #1 08-28-2007

Yes I know this has been discussed ad nauseum but this is one of those questions that we have to be sure about. I want to do this legally but not pay any unecessary taxes. Especially as I get nothing for my $5-6000.

I am buying a 40' boat in Rhode Island so I can legitimaly register her there and avoid sales tax. I live in Pennsylvania but the boat will never be in PA so the 6% there can be avoided. She will summer at Onset Beach in Mass, perhaps 2 months a year. Winter storage will be in Maryland, probably at Rock Hall. I could store her in RI if it would save taxes but that is not ideal for me.

Should I pay the tax? Which state?

Again I want to emphasize, I want to do this legally.

NOLAsailing · #2 08-28-2007

Register the boat in the state where it will primarily be berthed. You pay taxes only to the state that you register the boat with.

How old is the boat? Some states do not require taxes to be paid on boats that are a specific age or older. For example, if the boat is 10 years old, no sales tax is due in Louisiana.

labatt · #3 08-28-2007

My guess is you will owe Maryland sales tax if you store the boat there. I'm fairly sure that, if you live outside the state, your boat would have to be in Mass. for over 90 days before you would owe sales tax. Maryland, I believe, has the same requirement. MD does have a slight difference - if you buy the boat in Maryland and keep it on the hard for a period of time, you can sign a statement to that effect and you don't have to pay sales tax until 90 days after its first launch (or something along those lines), if the boat is still in MD. If RI doesn't charge sales tax, I'd store it there over the winter. The two "gotchas" for New York I found in my research on the subject were:

1) If you live in NY and bring it into the state (period) you will owe sales tax.

2) If you keep it in another state, most states I looked at have a 90 day policy - if it's in the state for longer than 90 days, you owe that state sales tax (or proof you paid tax in an equal or greater amount in another state). So if you leave it in the state for the winter, you'll owe tax.

By the way, if the boat is documented, the USCG will send the bill of sale to your state's tax department and they will find you. That's how I found out about #1 above.

eherlihy · #4 08-28-2007

In Boston Harbor, I believe that the Tax Man may come after you if you stay for more than 4 weeks...

I would suggest that you pay the tax to which ever state has the lowest rate (MA or MD). Then, if you are assessed, by the other state, and can prove that you paid, you will likely only have to pay the difference. MA has a 5% sales tax by the way.

Ed

k1vsk · #5 08-28-2007

Why do you think that a boat bought but never used in RI, just potentially stored there, can be "legitimitely" registered there?
This is not as straight-forward as you might think and it makes much more sense to ask (what various state tax regulations would apply) the respective state(s).

hellosailor · #6 08-28-2007

You would have to check the laws in Mass and Maryland. In *some* states, registration is not required and sales tax is not an issue, if the boat is not stored IN the navigable waters of the state. If Maryland follows similar terms, you could haul the boat there and legally avoid registration and tax requirements. (IF). Otherwise, most states require registration and sales tax for any motor vehicle in-state for 30+ days. 30/60/90, again it varies with the state, so you'd need to check Mass. rules. Once you sign a marina or mooring contract "for the season" with out-of-state registration, that may also go directly to state tax authorities, who will then demand you register the boat in state--and pay taxes on it--unless you can demonstrate a reason not to.

Rhode Island sounds like plain tax evasion--and that's illegal, since neither you nor the boat will ever "reside" there.

TrueBlue · #7 08-28-2007

AFAIK, similarly to automobile State property taxes, a boat's annual tax status depends upon where it is registered and stored/used for most of the year.

Any boat purchased in RI is exempt from State sales tax. Unlike autos, boats are also exempt from annual property, or luxury taxes as well.

k1vsk · #8 08-28-2007

Quote:

Originally Posted by TrueBlue

AFAIK, similarly to automobile State property taxes, a boat's annual tax status depends upon where it is registered and stored/used for most of the year.

Any boat purchased in RI is exempt from State sales tax. Unlike autos, boats are also exempt from annual property, or luxury taxes as well.

The above is true BUT only if the boat stays there. Again, there is too much misinformation around so if, as you said, you want to do it legally, the only reliable information can be ontained from the respective state tax counsel.

Sapperwhite · #9 08-28-2007

I would stay out of Maryland. There have been quite a few suits lost to the DNR regarding the Maryland Excise Tax. If you buy a boat, bring it here with the intention of being "out of dodge" before the timeframe to be taxed, but then something happens and you have to prolong your visit to or wonderful state...you pay. It doesn't matter if the boat is in the water or out, if the boats in Maryland wet or dry, the boats in Maryland.

The tax must be paid within 30 days of entry into Maryland, with 1.5% penalty for every late month. So, you come and stay for 6 months because of an unexpected illness or major repair. That'll be 5% initially, then 7.5% more for penalties on your extended visit. So thats 12.5% of fair market value on your $100,000 boat.....that'll be $12,500 , thanks for visiting Maryland, "Y'all come back now, ya hear"!

http://www.boatinglaw.com/document.cfm/maryland
http://findarticles.com/p/articles/m...6/ai_n13257785

And here's your tax form......you'll need it
http://www.dnr.state.md.us/download/DNRB-240.pdf

sailingdog · #10 08-28-2007

LOL... well said... I bought my boat in MD...but got the heck out of dodge before the clock started ticking.

Quote:

Originally Posted by Sapperwhite

I would stay out of Maryland. There have been quite a few suits lost to the DNR regarding the Maryland Excise Tax. If you buy a boat, bring it here with the intention of being "out of dodge" before the timeframe to be taxed, but then something happens and you have to prolong your visit to or wonderful state...you pay. It doesn't matter if the boat is in the water or out, if the boats in Maryland wet or dry, the boats in Maryland.

The tax must be paid within 30 days of entry into Maryland, with 1.5% penalty for every late month. So, you come and stay for 6 months because of an unexpected illness or major repair. That'll be 5% initially, then 7.5% more for penalties on your extended visit. So thats 12.5% of fair market value on your $100,000 boat.....that'll be $12,500 , thanks for visiting Maryland, "Y'all come back now, ya hear"!

http://www.boatinglaw.com/document.cfm/maryland
http://findarticles.com/p/articles/m...6/ai_n13257785

And here's your tax form......you'll need it
http://www.dnr.state.md.us/download/DNRB-240.pdf