It's not as simple as just picking someplace to register the boat. Most states will insist that you register it with them if you stay a specified amount of time (90 days in Florida). At that time they will usually want you to pay sales/use tax, normally with a credit for any sales/use tax you have already paid elsewhere. Many also have a time limit where -- if you have owned and used it for X number of months elsewhere (6 months for Florida) -- you are now exempt from paying any additional sales/use tax. So where the boat ends up spending time is most likely where you are going to have to register it, and pay tax.

I also have to say that Florida into the Great Lakes and back to the Chesapeake, in the time frame you are talking about, is pretty ambitious. That's not going to be a leisurely sail with plenty of time for sight-seeing.

Good luck, whatever you do.

 

Give a call to http://amrl.com/attorney/catherine-kent/

will be worth every penny

 

Document in R.I. Then leave the country. No tax

 

Don't know about Virginia but I'm pretty sure that North Carolina, South Carolina and Georgia all have personal property taxes on boats. If you have 18k in Florida Sales Tax, you're personal property tax in other states will be substantial. This needs to be researched thoroughly to find the lowest tax alternative. Maybe those in Virginia and Maryland will chime in. Please update when you have done more in depth research.

 

Quick answer and knowledge is via...a net search
No reason for chafe

 

Virginia sales tax is 2%. Maryland is 5% with a cap of $15k. If you have your boat in either state for over 90 days you are liable for the sales tax. I don’t believe MD has personal property tax on boats under 100 ft. Virginia does, however, there are locations like Colonial Beach and Hampton that have reduced their rate to basically zero. Being on the Potomac, I had a choice of the two states and picked Colonial Beach, VA because it was cheaper (and convenient).
Terry

 

There are states that require you in certain circumstances to "make up the difference" if you mess up the timing.

 

I believe Delaware has no sales tax.

 

Watch out some get you on a "use tax"

 

Terry L properly stated "use tax" for Virginia.

 

So I have these questions about "sales taxes" and boats.

Who is responsible to collect and pay them to the state? When we buy something the vendor collects and then pays the state. Presumably the buyer is actually responsible. So the car dealer collects and pays the sales tax... I presume in the state where the sale took place and not where the buyer lives.

I suspect boat sellers are not charging and paying the taxes at least in some cases. And there is no way of knowing if taxes have been paid... unless there are records on file. Registration often means showing proof that taxes have been paid. And they have laws about this. If you bought a boat in Mexico and they did not collect tax.... and you moor it in New Jersey... NJ may expect you to register the boat and show proof that taxes have been paid. If they have not... NJ can access taxes and deny registration etc and make it unlawful to keep the boat in NJ. How is this actually and practically enforced? And how would NJ determine what the applicable tax should be? The amount in the location at the time the boat was purchased? Or taxes on its present value? Who would determine that? Documented vessels don't require proof of paid taxes. If a boat was documented and moored offshore for years and then "repatriated" to the States... does it require state registration and taxes be paid?

What is the insurance implication of this? Would this matter for an insurance claim?

It seems like a simple national approach is needed since boats regularly move between states.

 

There is no national standard.

Each state has its own (or no)

sales tax
use tax (if sales tax wasn't due / paid)
property taxes (ongoing)
and registration requirement, which may not have any relationship to the above three
and none of which pertain to federal documentation, which in principle is just titling and US residents only.

The current owner is of course responsible, and verifying the paperwork is in order is a critical part of the sales contract and transfer process, often aided by a documentation firm, deposit held in escrow etc.

For new boats moneys are collected and handled by the selling company, separate topic.

The jurisdiction can be chosen, reg / taxes payment deferred as with here, but within the framework of each jurisdiction the boat stays in in those early months after the transfer is completed.

Nothing to do with where the owner lives, like all property related taxes, where the boat is for how long is the determining factor. But some pricey boats are owned by Deleware or Wyoming etc corporations for tax avoidance.

Colorado I know you can register without the boat going near the state, like Vermont for RVs, commonly used as a transition jurisdiction by auction / charity sellers where paperwork is messy.

Some states DMV, others fish and wildlife, some county-level even local town/city level may get involved.

As I said above some states if you (the boat) stays too long, if their rate is say 14%, and you only paid 4% in the previous state, you have to pay the difference, another 10%.

Insurance may care if you are really blatantly illegal, but usually not.

Yes the taxing authority seizes your boat, so of course you need to keep all the paperwork BoS and receipts to prove that taxes are not owed, opposite to criminal burden of proof.

Fuel receipts, moorings & marinas, GPS logs, all can be relevant.

It seems like a simple national approach is needed since boats regularly move between states.

The way our federal/state system works is a mess, but bureaucrats and CPAs and lawyers are well employed and no one cares about inconveniencing "yacht" owners.

Heading overseas may simplify these issues, but of course other complications then arise.

 

I understand Rhode Island is pretty good but don't know the details on qualifying, if it ends up parked long-term in Florida anyway likely not worth the hassle.

The lawyer I linked to has been getting raving referrals across many forums for years now, really worth while for any complexities, do not rely on internet advice except for general background.

 

...do not rely on internet advice except for general background.

I would agree completely with not relying on internet advice. On the other hand, most states post all of the relevant statutes online nowadays. Many of them have summaries that explain your obligation very clearly and succinctly.

If you go to the official state information, on their website, then there is no reason that you cannot rely on that. Some people may find some of the legalese difficult to understand, in which case they should probably hire an attorney to explain it to them. Most people, I think, if they read through it slowly and carefully, can understand these laws for themselves. In the end, it really is not all that complicated.

For Florida, here are two sites that summarize the laws concerning sales/use tax, and registration of boats:
http://dor.myflorida.com/dor/forms/current/gt800005.pdf
https://www.flhsmv.gov/motor-vehicles-tags-titles/vessels/vessel-titling-registrations/

And if you want to read the underlying laws:
Statutes & Constitution :View Statutes : Online Sunshine
Statutes & Constitution :View Statutes : Online Sunshine

 

Can a boat dealer sell a boat, not collect and pay tax on the sale pushing this off the the buyer? I am selling you this boat in RI but if you take it to NJ you will be responsible for NJ taxes... thank you very much!

 

I purchased my boat in Maryland, and the dealer collected and paid N.j. sales tax on my behalf.

I wasn't home for more than a few days when I received a call from the N.J. Tax division asking if I paid the tax. I had the receipt and Number. So I was good. Also, if you paid a lower tax to another state, and go to register in N.J. they will want the difference.

 

Transfer of ownership can take place in international waters too, but only helpful for some edge cases.

 

The question is the best place to KEEP the boat... And that may not be close to where you live or where you like to sail.

 

If you are trying to figure a way for not paying any tax....that won’t work. Every state has its eligibility for it considers residence.

Figure out where you vote....and that’s your state of residence.

 

If you are trying to figure a way for not paying any tax....that won't work. Every state has its eligibility for it considers residence.

Figure out where you vote....and that's your state of residence.

Nope, as clearly stated above, taxes on property are based on where the property "resides" not the owner.

Plenty of well off people pay for registrations, sales / use / property taxes in many states every year.

It would be easy to not pay any such taxes at all in the state where you the owner are legally domiciled, just don't own any property there.

 

I want to remain legal and pay sales tax on my boat. I just don’t want to pay so doggone much of it! And although I live in Michigan, the boat will be berthed along the Atlantic seaboard somewhere. (Never understood pulling a perfectly good sailboat out of the water for six months every year.) Anyway, I will likely keep the boat in a low tax state. And that’s what I’m looking for now.

 

When you find a low tax state let me know.

We leave our boat in the water 3 out of 4 winters as it doesn’t freeze often here.
That’s why the Chesapeake is first stopover on the bird flyway. There is open water

That doesn’t mean it’s warm enough to use. Even those who go out year round winterize their engines and water systems. Our sailing season is 9 months.

The tax rates should be easy to find. Let us know what you come up with

 

These get complicated, but it's amazing how little people know about the rules.

As a generalization, no municipality can tax any property or transaction that is not either physically inside their borders or took place inside their boarders. That's simple justice. You can't take other people's stuff, just because you want it. The government needs some right, define by nexus within their borders.

You can't assess sales tax on anything but a sale.

Many state's have a use tax, which is simply intended to close the loophole of closing a sale outside their borders, just to avoid the sales tax, then bringing the asset back in.

Most states allow for an exemption of sales tax, if you remove the property soon enough. Some define soon very specifically, others do not.

The timeframe for which sales or use tax apply, will depend on your state of residence. For example, while a state may give a grace period for out of state residents to remove the asset from their waters, they may have zero grace period for their own residents.

The location you choose to register or document your vessel has Zero, Nothing, None, Nada, whatsoever, to do with where you owe taxes.

RI has no sales tax on boats. However, the sale has to actually take place in RI and to avoid owing another State's Use tax, the boat needs to stay in RI and only cruise for short periods to other jurisdictions. John Kerry was caught trying to beat this system. He bought his 110ft sailboat in RI, but took it out to Nantucket (Massachusetts) for the summer. He paid Mass pretty quickly, when the story ran on the front page.

 

This was asked above.

Ultimately, the buyer has the responsibility to pay all sales and use taxes.

Retailers have a responsibility to "collect" these taxes on behalf of the State, if they are operating inside the state's borders. You may have seen retailers whose front doors are chained by the State, for failure to turn over the sales tax It's considered stealing, as it was never their money, so their is zero tolerance. They were just the middleman. Failing to pay your own income taxes is failure to comply and, by comparison, has much more leeway.

This is why out of state mail order (online) retailers don't assess sales tax, unless they actually have a presence in your state. You technically owe it either way.

This is becoming a huge issue in the age of Amazon. State's never bothered tracking down the pennies on mail order. Now that retail is moving online, they are getting much more aggressive.

 

This was asked above.

Ultimately, the buyer has the responsibility to pay all sales and use taxes.

Retailers have a responsibility to "collect" these taxes on behalf of the State, if they are operating inside the state's borders. You may have seen retailers whose front doors are chained by the State, for failure to turn over the sales tax It's considered stealing, as it was never their money, so their is zero tolerance. They were just the middleman. Failing to pay your own income taxes is failure to comply and, by comparison, has much more leeway.

This is why out of state mail order (online) retailers don't assess sales tax, unless they actually have a presence in your state. You technically owe it either way.

This is becoming a huge issue in the age of Amazon. State's never bothered tracking down the pennies on mail order. Now that retail is moving online, they are getting much more aggressive.

Thanks Minni..

So for clarification. The boat's owner is responsible for paying tax on a boat in their waters. So what is the tax?

Let's say the NEW boat was $100k and the state where the transaction took place had a 5% tax... but the owner moved the boat to a where there was a 10% tax. If I understand you Owner had to pay $10K to the state where the boat is moored.

But how is this actually enforced? I suppose to register you need to show proof you paid sales tax. If the seller collected $5K you would technically need to show a you paid the tax at time of purchase... I suppose with a bill of sale. They would say.... to register this boat you need to pay us $5K more in sales tax. Do they get the other $5k for the state where the transaction took place?

Let's say the boat was move to a different state and not registered. How is this enforced? Is the state tax authority looking for reg stickers? And how do they know how much time the boat has been in their waters? Who measuring the time?

What if someone buys a used boat? What's the deal with the taxes? Presumably the taxes have been paid once. And the value is less than new as the sale reflects.

What if a used boat is bought in the Caribe.... $40K (was $140K new 25 yrs ago) and brought to NJ... no tax was charged or collected.... what is the tax owed? What if there is no original bill of sale?

How is all this practically enforced?

 

It seems as if every time a boat is sold sales tax is collected and paid.

That sounds like a lot of tax collection possibly.

 

Hey,

It's not just boats, it also cars, and basically anything that needs to be registered.

Use NY for example. If I buy a car (new, used, it doesn't matter) and register it in NY, I have to pay NY sales tax. The same car can be sold many times, NY gets sales tax each time the car is sold. The tax amount is based on the sale price. if I buy a car in state from a dealer, the dealer will usually collect sales tax (and register the car with DMV). If I buy a car out of state they usually don't collect sales tax (they probably don't know the tax rate, they can't register it in the owner's state, etc.).

Same thing with boats. I bought my boat in CT. I needed to register it in NY. To do that I had to pay NY sales tax on the selling price. I needed to show my bill or sale at the DMV and then pay NY the tax amount. In order to get a mooring in my harbor I need to be local resident and the town needs to see my NY registration (or federal documentation) before issuing the mooring permit. No sales tax, the no registration, no registration then no mooring. If I sell my boat to someone else in my harbor he will have to register it again and pay more sales tax.

Barry

 

In MA these circumstances serve to discover boats where the 6.25% use tax may be due.

You cannot get a mooring permit without proof of tax paid.

Harbormasters and DOR agents scour marina slips for vessels where the tax may not have been paid.

DOR agents scour the sales records of vendors in other states and the Fed documentation database for sales involving a state resident where a use tax has not been paid.

If MA finds any evidence of a potential use tax due, the DOR sends the owner a demand notice for the tax amount and interest and penalties from the date of purchase. It's up to you to prove them wrong.

I once paid MA a use tax for a boat I hadn't owned for four years, and I was living in MN. I paid because I knew someday I would return to MA.

Sent from my SM-G965U using Tapatalk

 

I believe (as a couple of others have stated) the answer to your question is RI. Many States defer sales tax until registration. You must register the boat in RI and keep it registered there for a period of time. After a period of time you may re-register it in another State or just use USCG documentation if you plan to keep moving. Think of it like buying a used car, if you never register it, you might never pay sales tax.

People do this all the time. Is it right? Up to you.

As a person who generally knows a little about a lot of things and is often wrong, I would suggest you contact a pro.

 

This is mis-leading at best. Registration has nothing to do with where one owes sales or use tax. Only where the boat is moored. The above is a good description of tax evasion, not tax avoidance. The former is illegal.

Failure to pay, is fined. Intentionally deceiving authorites, by pretending your boat is elsewhere, is criminal.

You can not just register your boat in RI and avoid owing another State's taxes, unless it's actually in RI.

If you move it later, the new State will impose a Use Tax, if they have one. Most do.

 

USCG documentation does not require proof of sales tax paid. If a boat is not "permanently" in one location... why pay continually change registration?

What about someone who sells half the boat to a partner? Does the partner pay tax on 1/2 the boat at what value?

 

Sander, Many States ( mine is one) require you to annually register a documented vessel. Sales tax is checked when you 1st register.

If you move around, each state will have it's limitations on how long you can stay in their waters before they either require you to register with them, or extract a use tax from you. This takes some rather good research.

If you sell a share of your vessel to a private individual and the title and registration remains in your name then who's to know?
However, if the individual wants to be named on the title and the registration, or if you place it under an LLC, that will likely generate some fees and perhaps a tax on that portion of the sale.