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  #11  
Old 01-15-2010
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Quote:
Originally Posted by sailpower View Post
The dollars you are talking about saving are so small, why not just be legal?

MD and most states will credit what you have paid elsewhere.

Good luck.
I agree, so long as I know MD will not make me pay 5% in addition to PA's 6%. You confirmed that, so I am good to go.
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  #12  
Old 01-15-2010
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You do need to be careful how you register your boat. I live in PA and have a documented vessel that is registered and kept in Maryland. I pay a small amount for a Maryland use sticker every two years. I also paid sales tax to the state of Maryland when I bought it.

The state of PA came after me a year or so later wanting a 6% "Use Fee" plus penalty and interest.

I had to prove to them with letters from the marinas in MD and my insurance paperwork showing where I kept it. I did not have to pay the Fee, but they warned me that if the boat was ever in the state of PA for more than 24 hours they would come after me again.

That warning was from the tax people stating the 24 hour part, but I could never find that in writing elsewhere. The boat registration paperwork says you owe it after 30 days. I think the issue is residency.

They did not care what amount of tax I had paid to the state of MD.

This is what PA says about taxes paid to another jurisdiction (taken from the back of the application). The sticking point for the exemption is your state of residence.

7. Boat purchased out of state and registered, by a nonresident applicant for registration solely for use in Pennsylvania as a tourist or vacationer. (Exemption is not permitted if applicant is a resident of Pennsylvania or it boat was originally purchased in Pennsylvania.)

Now, here is the part I would be worried about. Maryland does not recognize taxes paid to jurisdictions that don't reciprocate. This is a quote from the Maryland regulations.

§8-716(f) of the State Boat Act allows reciprocity credit for excise or sales tax previously paid to another jurisdiction if:

The vessel was formerly titled or numbered in another jurisdiction; or

The vessel was formerly federally documented and principally used in another jurisdiction; and

The present owner paid a sales or excise tax on the vessel to the other jurisdiction (proof required – validated receipt, etc.); and

The jurisdiction to which the tax was paid would allow an equivalent exemption or credit for vessel excise tax formerly paid to the State of Maryland.


That last item might keep you from getting credit for PAs tax monies when you go to MD. I would get something in writing before I made any assumptions.

I just took the easy way out an vowed to keep out of PA. The Delaware River is lousy sailing compared to the Chesapeake anyway. If you are buying an expensive boat, not getting this right could cost you a lot of money.


Don't forget that the same thing applies to your dingy if you use a motor on it. Maryland is big on enforcement of dingy registration.
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  #13  
Old 01-15-2010
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Wow, my worst fears potentially confirmed - pay 6% to PA and then a year later have to pay 5% to MD. Ouch! For the boats I am looking at, this is big money. This is exactly why I asked this question.

Does anyone else here have experience with moving a boat from PA to MD? Did MD exempt you from their excise tax because you paid 6% to PA?

Meanwhile, I'll try to figure out whom to contact in MD to get a written answer to my question.
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  #14  
Old 01-15-2010
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Quote:
Originally Posted by RhythmDoctor View Post
Wow, my worst fears potentially confirmed - pay 6% to PA and then a year later have to pay 5% to MD. Ouch! For the boats I am looking at, this is big money. This is exactly why I asked this question.

Does anyone else here have experience with moving a boat from PA to MD? Did MD exempt you from their excise tax because you paid 6% to PA?

Meanwhile, I'll try to figure out whom to contact in MD to get a written answer to my question.
Annapolis Maryland
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  #15  
Old 01-15-2010
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Quote:
Originally Posted by HerbDB View Post
...Now, here is the part I would be worried about. Maryland does not recognize taxes paid to jurisdictions that don't reciprocate. This is a quote from the Maryland regulations.

§8-716(f) of the State Boat Act allows reciprocity credit for excise or sales tax previously paid to another jurisdiction if:

The vessel was formerly titled or numbered in another jurisdiction; or

The vessel was formerly federally documented and principally used in another jurisdiction; and

The present owner paid a sales or excise tax on the vessel to the other jurisdiction (proof required – validated receipt, etc.); and

The jurisdiction to which the tax was paid would allow an equivalent exemption or credit for vessel excise tax formerly paid to the State of Maryland.

That last item might keep you from getting credit for PAs tax monies when you go to MD. I would get something in writing before I made any assumptions...
The placement of "or" and "and" makes this extraordinarily complicated. My reading of this says that you either need to comply with the first item or comply with all of the rest of the items. Since the first item is simply "The vessel was formerly titled or numbered in another jurisdiction," if I title the boat in PA then I should be able to move it back to MD at a later date. The rest of the stuff is irrelevant because I would have complied with everything before the "or." But a convoluted argument could be made that the conjunctions are grouped differently.

Sheesh! This is ridiculous!

What is even more scary is the "12 minute rule" which leads the boat owner to be guilty until proven innocent, and meanwhile ties up your boat with a lien that takes forever and massive lawyer $$$ to get out of:

Boating Law - Boat Tax - Read This Before You Go To A Hearing!

All I want to do is pay my tax to just one state. It's enough to make one want to just Federalize all this stuff. Where's Article I Section 8 when we need it?

Last edited by TakeFive; 01-15-2010 at 10:07 PM.
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  #16  
Old 01-15-2010
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send an inquiry to the 'boating law' people. They might give you the answer pro bono.
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  #17  
Old 01-16-2010
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Its a funny thing, but most states have a "department of motor vehicles" and a "tax department" and whatever they are called, they usually can be found on the web. They also usually post FAQs that tell you what is subject to registration and tax, and usually treat a boat as a "motor vehicle" as long as there is a primary or auxiliary engine permanently installed on it.

Most states require local registration after some period ranging from 90-180 days, and if you sign a marina contract for a period longer than that, you can bet the local tax authorities will take that as proof that you need to register the boat there.

Do your homework, check the states where you think you might keep the boat.

And don't even think about offshore titling for it. That would make the boat a "foreigner" and you'd have to get a US Cruising Permit for it--and take the boat out of the US at least once per year. That's just where the fun would begin.
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  #18  
Old 01-16-2010
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Quote:
Originally Posted by hellosailor View Post
Its a funny thing, but most states have a "department of motor vehicles" and a "tax department" and whatever they are called, they usually can be found on the web. They also usually post FAQs that tell you what is subject to registration and tax, and usually treat a boat as a "motor vehicle" as long as there is a primary or auxiliary engine permanently installed on it...
I've lived in several states and registered boats in two, so I'm somewhat familiar. NJ does boats through DMV. PA has a separate Fish & Boat Commission. MD seems to use DNR. (Some of my terminology may not be exactly correct.)

Ideally it should be as simple as you say it is. But PA has a bad reputation of refusing reciprocity with many surrounding states, and this is a reason why it is so muddy. Like someone else mentioned, Maryland law seems to offer reciprocity to states that offer reciprocity to them. That may seem to be a "finger in the eye" of Pennsylvania residents. And Maryland also seems to be a bit hostile because Delaware is such a magnet for big ticket items because they have no sales tax. So MD ramps up their enforcement against everyone, but mainly because they want to pick up people who use DL as a shelter but actually use their boats in MD.
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  #19  
Old 01-17-2010
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I have created a new thread to continue this discussion. (Click here)
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  #20  
Old 01-18-2010
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MD and PA vessel tax

Typically, MD and PA have a reciprocal relationship. The reality is that reciprocity is done on a "state by state basis" and although the answer rarely "officially" changes the practical ease of taking the exemption can vary based upon the relationship between the vessel tax enforcement administrators. I have heard of one state bureaucrat giving a different state's bureaucrat a hard time over reciprocity and an individual taxpayer has been caught in the middle. Remember that it is all about money and which state keeps the tax dollar. Budgets are tight all over. There is an organization which tries to smooth over some of these common issues and you may find their site useful. It is the National Association of State Boating Law Administrators.

As for PA and MD in particular, they have always had a good relationship. This can be a real blessing on one hand but on the other it is a huge problem for the vessel owner. When the vessel tax officials are "too chummy" they have one another on speed dial. If you escape tax in one state they call their compatriot who often goes for penalty and interest.

You should also consider whether your vessel may be a good candidate for offshore flagging. It is not as expensive as people think. Depending upon a number of circumstances, the break point for cost savings is usually with a purchase price in the $150,000 to $200,000 range. There is info available on a site that I am not allowed to post due to forum rules.

Since you have two threads I will post the answer in both.

Todd Lochner
Proctor in Admiralty
Lochner Law Firm, P.C.
30 C West Street Phone: (443) 716-4400
Annapolis, Maryland 21401 Fax: (443) 716-4405
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