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Boatswain
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Discussion Starter #1
I was thinking about Trucking companies and the common practice of registering equipment in tax free states like Maine and TN. I was at the marina last week and noticed a few boats from far away that have been there for quite some time. In the past I assumed they were transients, but now I am thinking that the boats are just registered out of state because of CT's high personal property taxes.

Do sailors use tax loopholes like this and what States are the cheapest for Registration/taxes?
 

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ASA and PSIA Instructor
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States have gotten quite good at finding a boat dodging their sales or use taxes. Harbor masters, Environment Protection police and other state agencies all get pulled into the process of identifying boats located in the state that have not paid the use tax. And given the state automatically applies interest and penalties that can quickly double or more the use tax in cases where you cannot prove that you did you don't owe it, its generally smart to be paying on time and avoiding the pain down the road.
 

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Learning the HARD way...
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I currently live in MA, but KEEP my boat in RI. RI has no tax on boats.
 

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I live in MA but keep my boat in Maine. Not for any tax related reason, I just like sailing in Maine. Maine is not a tax free state, you do have to pay a yearly excise tax. Slips and moorings are cheaper than the Boston area though.
 

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For years I lived in NJ as my primary residence, but kept the boat in NY, where I have a vacation home. When I bought a new boat in 2006, the dealer was in NY and they were required to ask if I owned a residence in NY. since I did, they had to charge NY sales tax, to a difference of some $2500. I am now registered in NY. Fortunately neither state has an annual property tax like CT.
 

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I was thinking about Trucking companies and the common practice of registering equipment in tax free states like Maine and TN. I was at the marina last week and noticed a few boats from far away that have been there for quite some time. In the past I assumed they were transients, but now I am thinking that the boats are just registered out of state because of CT's high personal property taxes.

Do sailors use tax loopholes like this and what States are the cheapest for Registration/taxes?
Most states require a boat owner to register their boat in the state in which it is kept. (in FL you are permitted to have your boat in the state for 90 days without registering it here). If you notice boats from "far away" you may be looking at the hailing port which does not have to be in the registered state.
 

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Currently there is no property tax on boats in ct. We pay an excessive registration fee as a use tax. W/ the budget problems here the gov. will figure a way to change that.
Jim
 

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I believe i paid around $127 for a 3 year registration, thats in NY ! No property taxes yet. I'd say thats cheap for registration. I'm up on Lake Ontario; i've yet to see someone get turned in for out of state registration. (my neighbors from florida, been here a year)
The first time i pulled out the border patrol and sheriff looked awful hard at the boat; they never said a word. I had florida registration back then. It helps that the marina gives them free slips. As they say, don't crap where you sleep.
Up here people pretty much mind there own business
 

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Boatswain
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Discussion Starter #12 (Edited)
Currently there is no property tax on boats in ct. We pay an excessive registration fee as a use tax. W/ the budget problems here the gov. will figure a way to change that.
Jim
The Personal Property tax gets paid to the Town. Just like on RVs or the motor vehicle tax. You register at DMV, they send the information to your home town and you receive a tax bill from the town every year.

I think there should be more competition between the State's on stuff like this... sort of a free market on taxes like they do when they are trying attract major companies to an area. He who offers the most incentives collects the taxes.

I will keep NY in mind... I can get to a marina on the Hudson just as fast as I can on LIS.
 

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HANUMAN
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The Personal Property tax gets paid to the Town. Just like on RVs or the motor vehicle tax. You register at DMV, they send the information to your home town and you receive a tax bill from the town every year.

I think there should be more competition between the State's on stuff like this... sort of a free market on taxes like they do when they are trying attract major companies to an area. He who offers the most incentives collects the taxes.

I will keep NY in mind... I can get to a marina on the Hudson just as fast as I can on LIS.
That is a town issue.

Boats are not taxed in my town, unless they are owned by a business. To the State of CT I pay my yearly registration fees for my boats and that is all. I guess we can all agree that it's a tax though.
 

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Daniel - Norsea 27
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In the past year I've had my boat, I've only paid sales tax for TN. It's been stored on a trailer while I do work. CA tried billing me a Use Tax because of the hailing port but since I bought/stored in TN, I haven't had to pay it. I'll be using lakes in KY for sailing. KY doesn't require registration for USCG Doc boats, but the county the marina is in tries to charge KY property tax on boats by sneaking in by boat to identify which is getting charged. I'm sure I'll eventually have to pay one of these taxes.
 

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The Personal Property tax gets paid to the Town. Just like on RVs or the motor vehicle tax. You register at DMV, they send the information to your home town and you receive a tax bill from the town every year.

I think there should be more competition between the State's on stuff like this... sort of a free market on taxes like they do when they are trying attract major companies to an area. He who offers the most incentives collects the taxes.

I will keep NY in mind... I can get to a marina on the Hudson just as fast as I can on LIS.
Maybe it depends on the Town, but we don't pay a personal property tax on our boat. Just the annual registration fee to the DMV.
 

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Be careful. Registration and sales/use tax are typically separate fees in most states.

Registration is typically the fee you pay to be able to keep your boat in a State's waters for more than a consecutive number of days they each define. I've heard if as few as 14 to as a many as 180 days.

Use tax is simply a substitute for sales tax, when you purchase out of state or from a vendor not required to collect sales tax. Again, many states will require that you pay Use Tax after keeping your boat there for a period of time. IF you paid sales tax to your home State, it is usually offset against what you owe the state you are moored in. Again, each state makes this offset rule themselves. Some do, some do not offset.

States get aggressive with these. They cross reference slip leases, registrations, USCG documentation addresses, etc. Getting caught is painful. If you just screw up, penalties and interest add up very quickly and many states passed laws that forbid their tax collectors from waiving them for any reason. If you do something deceptive, like register in a state and keep it elsewhere just to look like you don't owe, that is criminal. Wait until you see what they offer for a plea on that.

However, they will also make assumptions that aren't correct as well. I have an address outside RI, which I choose to use for my USCG documentation. That state sent me a use tax bill several years later. I had to send them copies of my bill of sale and all my summer and winter slip and storage contracts since i bought her to prove she has always been in RI. They accepted it and went away.
 

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AS others have posted each state is different as to taxes owed based on 'state of principal usage' not the 'residence state' of the owner.
State of 'principal use' is the defining element for taxation ... and that varies by definition for and by each state; and, is (now) the typical control of where you pay your taxes.
This not only apples to boats but also cars, trucks, and personal aircraft, etc.

Go to BoatUS - Government Affairs - State Boating Information Home ... then click on your state and the state that where you are interested in keep the boat ..... and then expect to pay the 'differential' or the difference in tax bill between your 'home state' and where you keep the boat as a worst case scenario.

Besides all that, many counties and local municipalities are applying additional taxes based on 'principal usage', usually as a personal property or property tax; and, if the boat is within that jurisdiction during a certain time of the year - usually January, etc.

Be careful as others have posted, if you dont completely know the tax liabilities for all these different states, cities, counties, etc., you can wind up owing a lot in interest and penalties.

... and to think that on of the chief reasons for the American Revolution was the objection to simple and insignificant taxes on tea and 'stamps' !!!!
 

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I live in NY. My boat lives in MD so I paid the MD tax. NY found out from the Coast Guard somehow that I have a federally documented boat so they asked for taxes. I wrote back saying that the boat had never been in NY, never would be in NY and in fact never even sailed through NY waters. They have left me alone since.
 
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