Join Date: Feb 2012
Location: New Orleans Louisiana
Thanked 137 Times in 131 Posts
Rep Power: 6
Re: State Registration of Documented Vessels
There can be notices given when a documented vessel is re-registered, and states are getting a lot more sophisticated due to the lost revenue. People may complain, but honestly what has been going on in the marine industry for decades is really tax evasion, if not tax fraud. The fact states are cracking down when there are potentially millions of dollars at stake doesn't surprise me at all, though it is starting to effect boat prices.
For instance I just handled a case for two new owners that bought a 250,000 used sailboat out of Mississippi, about 2 years old. When they brought it to Louisiana and tried to register it, the state asked for proof of sales tax having been paid... But the original buyers never paid it (nominally bought in Virginia, documented in Mississippi), and Mississippi never became aware that the boat was in that state.
So my clients wound up with a $30,000 sales tax bill to make the boat legal. We of course immediately threatened to sue 1) the former owners, 2) the boat broker, 3) boat manufacturer. By the time it was all said and done the former owners refunded $25,000 and the broker $5,000.
Had the new owners known that the boat had never had sales tax paid, their offer price would have been oh, about $30,000 less than it was, since that was an immediate cost they would have had to pay (slightly more since the 30k couldn't be financed).
If you live in a state where registration is required be very careful to ask for sales tax records before buying a boat, or you may wind up paying them. Even if you don't live in one, more and more states are going to require it since it has been proven now to raise revenue, without requiring increased taxes, just better enforcement of laws on the books.
I you want to fight the $10 registration costs, go for it. I think you will loose. But the real justification from the states POV is not the fees from registration, but from people finally paying sales taxes they avoided the first time.