How does state Sale tax work? - SailNet Community
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post #1 of 20 Old 07-18-2011 Thread Starter
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How does state Sale tax work?

Do you must pay sale tax for your boat in your home state in where legally reside?

Delaware has no sale tax and NC has a fix sale tax for boat This is tempting. I am sure the states must have their way to prevent loss of revenue.


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post #2 of 20 Old 07-18-2011
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Talk to someone that understands tax accounting per say. Yes, some states still will and can get you. Altho in some cases, if you can keep the boat out of the home state for 6 months or so, you "might" get away with out paying ST. On the other hand, some like Washington or washtaxington as it is sometimes known as, you may not pay a sales tax per say, but a use tax for bringing in the boat if nothing was paid in the beginning. So buying the boat in Del, with no ST, will cause you to pay the 7.5-9.5% ST depending upon where in Wst you reside in. Or if you paid say 5% in NC< then you pay the difference. It can get really confusing, and better to ask if you can the state you reside in vs web answers, ie mine for example, might have some truths, or non truths etc. Along with some of ea!

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Sales tax is due in the state where you buy the boat unless you can meet whatever exemption policy they might have. In that case you would pay the tax where the boat ends up living.

Keep in mind that most states also have a use tax which is the same percentage as the sales tax. It is also a onetime event and they use that to get you if you bring a boat into their state and haven’t paid the full amount of their sales tax elsewhere.

As an illustration, here is one of the many varied scenarios that can occur. You buy a boat in a state that has a 5% sales tax, claim the exemption and then move the boat to a state that has an 8% sales/use tax. You then pay the 8%. In case you don’t qualify for the exemption then you pay the 5% sales tax and after moving the boat pay the remaining 3% to the second state.

All states are different as to tax amount; exemption criteria, etc so really can’t give a specific answer without knowing the two states involved.

In the old days you could put Delaware on the back of the boat and never pay anything. Those days are pretty much gone.

Keep in mind that even if you federally document the boat, the states are on the lookout for you. Bridge tenders in FL get bounties for reporting traffic. Marinas in MD are charged with supplying slip holder information to the state, etc.

The key to the whole thing is the reciprocity between the states. The bummer would be if you were to buy a boat in an 8% state, not qualify for the exemption, pay the 8% tax then take it to a 5% state. Generally you wouldn’t have to pay anymore but you would be out the 3%.

Some states use counties to collect tax. Some use DMV and some have separate agencies. It’s pretty complicated.
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Oops, looks like Marty already answered you while I was typing.
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post #5 of 20 Old 07-19-2011 Thread Starter
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It looks like the loop pole has been closed years ago. Oh well, there goes my $11,000 at the minimum. I need another mortgage to pay the sale tax. . May be it is not so bad if I think like a Canadian.

I need to create a new LLC and take the depreciation and all the operation expenses. ........... LOL. I pay way too much taxes as now. If Obama has his way, we will pay even more. It looks we are slowly but surely become a Social States, just like communist countries 50 years ago.


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post #6 of 20 Old 07-19-2011
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Again, this is a do not quote me, BUT, I believe "IF", and it may take some paperwork on the buyers part.......but, IF you buy a boat where the ST is larger, ie above example of 8%, you live in the 5% state, you can petition to get the difference back.

I'm sure I am like all of us, we do not want to pay any more tax than we have to. Not sure that the ST on a boat is worth trying to avoid per say...... but, I do feel it is worth talking to your states equal to my states "Dept Of Revenue" to figure out the how and why I will pay the ST. I know washtaxington was trying to get UT out of folks if they brought there boat into our state to have work done, if they were here longer than 90 days. Even if it was only here, on the hard, under cover etc being worked. SOme exemptions were passed by the legislature to cover some of this. BUT, I live in a state that has an ST only, we have no IncomeTax other than federal. So my state may be a bit more aggressive, or equal than some. But in this time, ALL govt agency's are going to try and get what they feel is owed to cover any deficit or lack of income vs years past.

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post #7 of 20 Old 07-19-2011
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i bought my boat in florida,which is a title state and was informed that being a non citizen i needed to have it registered in south carolina where i was taking the boat[no problems enroute even though the fla registration was long exspired]in south carolina [a non title state] i was told i need a noterized bill of sale so i ended up registering the boat and paid the sales tax in tennessee which is my home state and all i needed was the signed title[not noterized,within the year i reregistered the boat in south carolina but no sales tax because i already owned the boat,so each state has its own way of doing things
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I bought my USCG Documented boat in MD and paid no MD tax. I registered the boat in my home state of VA and paid 2% sales tax. 3 years later I moved the boat back into MD and paid MD 3% "sales and use tax", which was the difference between MD's 5% tax and the 2% I could prove was paid to VA.

Many, Many states have such a scheme where you'll owe the tax if you move your property into their waters.

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Basically, if you keep the boat in any one place, you're going to pay somebody something. Whether it's a sales tax, use tax or property tax, or a registration fee if not Federally documented (which is a one time fee, while state registrations are generally yearly).

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State Sales Tax: Another way for the politicos to take money out of your pocket and spend it on stupid ideas...
Some states have sales tax on everything. Some have property tax and some have income tax and some have a combination of all three... Plus the fees for every little bit of paper that you are required to own a house, run a business, buy food, clothing and all the other things that you really do need to survive in today's world.

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