Join Date: Jul 2002
Thanked 4 Times in 4 Posts
Rep Power: 14
Minimizing Taxes; Hailing Port
KC, I offer you two add''l thoughts:
First, these questions frequently pop up on BB''s like this one and the inquirer implies (as you seem to) that they have not discussed the specifics of their issue with their local tax authority. There''s no way asking questions is going to make you liable for tax, and I think you''ll find they won''t even ask your name. Were I you, I would present my circumstances in full to the taxing authority in each of the States you mentioned (altho'' it would seem RI and MA are your two most likely candidates for hailing ports). Their views are at least as compelling as any advice we can give you here.
Second, Jeff''s clear summary omits a reference to an annual registration & renewal process, which IME most states have now instituted for documented vessels and which they use to deal with just the multi-state use issue you describe. The decal/sticker/registration process is to enable a given state to ID the nature of the use tax applied to the individual vessel (which otherwise they may have no knowledge of, given the USCG documentation process stands outside state tax data bases). The absence of a sticker/decal is how a 2nd state (e.g. Mass) can know to challenge your presence in their waters re: tax liability. When applying for the sticker/decal, questions are asked about taxes paid and it''s at that point that any use tax is assessed that was not paid to the level required by the 2nd state (e.g. MA) but not collected by the state where the boat was purchased (e.g. RI).
Given the above, my questions in your situation to each taxing authority would be:
"I''m buying and keeping my boat in another State:
1. If visiting your state during boating season, how long may I be in your waters before incurring use tax liability?
2. Is this period cummulative or does your grace period start over should I exit and then re-enter your state waters? (e.g. if transiting to ME and returning later the same season, as verified by dockage receipts, fuel purchases, etc.)
3. If in your waters in excess of that period, what use tax is due? (This will require you to presume where the sale will be consummated, e.g. RI).
4. Do you use a decal/sticker system for documented vessels if the boat is predominantly kept in your waters? If so, how does it work & what is the annual fee?
Depending on your actual use, I can imagine you being able to keep the boat in RI and never be liable for tax when transiting thru other states'' waters for short periods EXCEPT when you use MA waters. I think you''ll ultimately be liable whenever you are in those waters because you are a MA resident and liable for other state taxes in MA. How well MA enforces might be a practical matter for you, but is likely to be more successfully enforced if they use a sticker/decal system.
BUT that''s just my take on it; you''d be far better off hearing what the folks who administer the tax system have to say.