Sales tax on documented vessel

[Devoted Sun]

I bought Californian in Cape Coral, florida in Feb,2019. sent in the documentation paperwork and received the new documents in March,2020 due to issues with the correct wording on the bill of sale. I live in New Jersey ( for now, retire in a few years, maybe next ) claimed my home port as Manasquan, NJ as I intended to bring it up but the Okeechobee was too risky at that time, so I put it on land storage in Moore Haven, where it has been since.
Now for my question:Where do I pay sales tax? I contacted Lee county tax in Florida and they said see USCG? they don't do this. Do I pay tax in Florida, or New Jersey?
Worth a mention this is a 1979, I LOVE it ! Can't wait to spend the rest of my years saving turtles after 40 years as a machinist, finally doing something good with my life.
thanks all

 

[Tomas]

I would suggest registering the boat in FL using the bill of sale rather than the documentation. Not sure what the penalty will be for late registration, but probably less than you would pay in New Jersey. When you register the boat request registration as an antique vessel, at least thirty years old with original engines. My memory is fuzzy, but think my annual registration fee on a 40 foot antique boat is about $6. My residence at the time it was registered as an antique boat was Utah, the boat is kept in MS (they do not require a state registration on a documented vessel). Living out of state is not a problem.

 

[Comodave]

You should pay sales tax where you are going to have the boat stored and or used. But where did you leave it? If you left it in Florida for a year, you probably owe Florida sales tax. Most states have a grace period that allows you to get the boat out of the state if you live in another state. If you have kept it in Florida for a year that is longer than the grace period. Good news is that if you pay sales tax in one state and then bring it into another state the new state usually gives you credit for the sales tax you already paid. You should check with the states involved and see exactly what their rules are. But in the end if you are keeping it in NJ then you will probably have to register it in NJ. Most states make you register documented boats because they want the money. You just do not display the state registration numbers on the hull, usually just a sticker with the year of expiration goes on the hull.

 

[GregBrannon]

You owe a state sales tax, possibly multiple states. There's a lot of info on the web about what Florida requires and when they require it, but I didn't look for NJ. I'm not a lawyer, you don't necessarily need one, but you do need the help of others who understand the requirements for both states. Those collecting the taxes don't always know the right answer either, or you may get different answer on different days. You'll get advice here, but I recommend you use the advice you get here as a guide, not THE answer.

Good luck!

Greg.

 

[RickyD]

My opinion would be that you would pay the tax in the county from which you purchased the boat not where you intend to keep it. If I buy a TV in California I can't say I'm going to pay Arizona taxes because that is where I'm going to keep it. Now my first cruiser was purchased offshore and lived for a time in Mexico so I did not have to pay California taxes. Aquarius was owned by a Colorado LLC that I purchased, so again, I did not pay California taxes.

 

[Comodave]

We have bought several boats and moved them across state lines. We paid taxes generally in the state we were moving the boat to. If we got the boat out of the selling state in the grace period. We bought a boat in Washington and they had a 3 month grace period that you could get another 3 month extension if you filed for the extension. We kept it there for 5 months and then moved it to California. California at the time had a law that if the boat didn’t come into California in the first 90 days then no sales tax, with a bunch of qualifications. So we didn’t have to pay Washington sales tax, got the California tax waiver since the boat was out of California for the first 90 days and Arizona tried to get us to pay tax on the boat since it was home ported in Tucson. We proved that the boat had never come into Arizona and then didn’t have to pay Arizona sales tax. We never paid any sales tax on that boat.

You need to check with the states involved and find out in writing what the exact rules are.

Our current boat was in Virginia when we bought it and we live in Michigan now. We kept the boat in Virginia for about 8 months after we bought it before we brought it back to Michigan. We paid 2% Virginia sales tax. When we registered the boat in Michigan we showed that we paid Virginia 2%. Michigan has a 6% sales tax so we had to pay Michigan 4% sales tax.

 

[DavidM]

The general principle which is echoed by others above is that you have X days to move a boat out of the state where you bought it, otherwise you pay that state's sales taxes. X varies with the state but is usually 90 days.

The federal govrnment has nothing to do with sales taxes and where you live also has nothing to do with it. Sales tax is based on where you keep and use the boat.

Someone said you may owe multiple sales tax to various states. All states recognize what you have paid to other states and give you credit for that. So if you paid sales tax in Florida at most you might have to pay a fraction of a percent or so to another state when you move it there but only if they have a higher sales/use tax rate than Florida.

Bottom line: almost certainly you need to pay Florida's sales tax.

David

 

[HiDHo]

Check NJ sales tax requirements. Example: You buy your boat out of state and store it out of the water, six months later register it in Florida, no sales tax collected.
See if NJ has a six month rule.
Documentation only is concerned if you have a lien holder. Not concerned about state sales taxes and registrations, etc.

 

[Devoted Sun]

As always, this forum is full of great people to guide us. This is my third boat over 28' but the first two were in NJ with standard registration and titling.
Thanks so much and I post my results to maybe help someone else.

 

[Captain Max]

I bought Californian in Cape Coral, florida in Feb,2019. sent in the documentation paperwork and received the new documents in March,2020 due to issues with the correct wording on the bill of sale. I live in New Jersey ( for now, retire in a few years, maybe next ) claimed my home port as Manasquan, NJ as I intended to bring it up but the Okeechobee was too risky at that time, so I put it on land storage in Moore Haven, where it has been since.
Now for my question:Where do I pay sales tax? I contacted Lee county tax in Florida and they said see USCG? they don't do this. Do I pay tax in Florida, or New Jersey?
Worth a mention this is a 1979, I LOVE it ! Can't wait to spend the rest of my years saving turtles after 40 years as a machinist, finally doing something good with my life.
thanks all

Unless you bought it through a Florida Yacht Broker who gave you a 90 day sales tax exemption to get it out of Florida, sales tax was immediately due.

 

[PM]

Its been a long time since I bought my boat but I honestly don't remember if anyone hit me up for sales tax. I imagine so but then I can't be sure. I'm guessing I paid it when I registered it in Wisconsin several years after I bought it. I didn't realize I had to have a state registration decal on the stern as well as my official documentation stuff.

I only caught it when I had a courtesy exam done by a Coast Guard Auxilliary fellow. He said I needed the state stamp.

pete

 

[guy with a boat]

Worth a mention this is a 1979, I LOVE it ! Can't wait to spend the rest of my years saving turtles after 40 years as a machinist, finally doing something good with my life.
thanks all

I have no idea about your tax question, other than to say you might wish you had done the homework way earlier in the process.

That aside, you have a great looking boat. Congratulations and have a wonderful time with it.

 

[markpierce]

California "hit me up" for user fees (around $25,000) in June 2011 after importing the newly-documented Coot in May. Back then it was income-deductible (reducing tax on income) for federal tax purposes. No such luck now.

 

[ctjstr]

I bought Californian in Cape Coral, florida in Feb,2019. sent in the documentation paperwork and received the new documents in March,2020 due to issues with the correct wording on the bill of sale. I live in New Jersey ( for now, retire in a few years, maybe next ) claimed my home port as Manasquan, NJ as I intended to bring it up but the Okeechobee was too risky at that time, so I put it on land storage in Moore Haven, where it has been since.
Now for my question:Where do I pay sales tax? I contacted Lee county tax in Florida and they said see USCG? they don't do this. Do I pay tax in Florida, or New Jersey?
Worth a mention this is a 1979, I LOVE it ! Can't wait to spend the rest of my years saving turtles after 40 years as a machinist, finally doing something good with my life.
thanks all

This sounds EXACTLY like one of my old "conflict of laws" law school exam questions. No idea of the answer, but hope you get it right.

 

[Kapn]

I’ve also heard about the timeline for paying the tax being suspended if the boat is put into a yard for service and it’s not available for use. There are so many loopholes and so many ways to get a fine, at this point I’d say to consult a tax expert who deals with the marine industry.

 

[slowgoesit]

See Attached. 2nd paragraph under "What is Taxable". You owe Florida 6%.

 

[Woodland Hills]

What does documentation have to do with owing tax? All USCG documentation is is a form of title. You still have to register your boat and pay tax on the purchase. By overstaying your grace period you just added penalties.

Our boat is documented and we still have to register it somewhere. We also would have owed sales/use tax if it had not been the sole asset of an LLC which we purchased. That’s the only way to legally avoid tax on the purchase of a boat: buying the LLC that owns the boat means that the owner of the boat never changes. The LLC still owns the boat, but the owner of the LLC changes.

If your new boat is 30 years old you are probably eligible for Florida antique registration. We pay $40 a year for a 63’ boat......

 

[denverd0n]

I’ve also heard about the timeline for paying the tax being suspended if the boat is put into a yard for service and it’s not available for use.

That is true, but the exception only applies during the period that the boat is being serviced or modified. Simple storage, whether on the hard or in the water, does NOT qualify for the exception.

 

[MYTraveler]

You need to talk to a lawyer who knows the law of each jurisdiction that might seek to impose tax (sounds like that is just FL and NJ in your case). Typically, the "second" jurisdiction will give credit for any tax paid to the first, and sometimes, the second jurisdiction will not be able to tax you if you keep the boat out of its jurisdiction for a period of time while actively using the boat elsewhere and paying any tax due. In my case (with three successive boats), that legitimately meant (and the state agreed, after extensive audit in which I produced airline ticket, restaurant, provisioning, etc. receipts, the ship's log, demonstration of offshore delivery, etc.) no state tax as the boat was used extensively in Mexico (which doesn't tax in my circumstances) for over a year. If you are not a lawyer (who is willing to become expert in these matters), you will need a lawyer to legitimately avoid (not evade) or minimize taxes. If there is enough money involved, you can count on an audit.

 

[Shrew]

My opinion would be that you would pay the tax in the county from which you purchased the boat not where you intend to keep it.

While you're entitled to your opinion, it is incorrect. There is a difference between Sales Tax and Use Tax. The scope of the discussion was SALES tax. You only pay sales tax in one state. It is usually where the boat LIVES. Not where YOU live and not where the boat was purchased.

I live in NH, where there is no sales tax. If I buy a vehicle in Mass. and register it in NH, I don't pay sales tax to the state of Ma. The same applies to boats. I've kept boats in both CT and RI. RI doesn't have a sales tax on boats. If I buy a boat in CT and register and store it in RI, I don't pay sales tax to the State of CT.

Please consider familiarizing yourself with the process before offering a legal 'Opinion'.

 

[Captain Max]

While you're entitled to your opinion, it is incorrect. There is a difference between Sales Tax and Use Tax. The scope of the discussion was SALES tax. You only pay sales tax in one state. It is usually where the boat LIVES. Not where YOU live and not where the boat was purchased.

I live in NH, where there is no sales tax. If I buy a vehicle in Mass. and register it in NH, I don't pay sales tax to the state of Ma. The same applies to boats. I've kept boats in both CT and RI. RI doesn't have a sales tax on boats. If I buy a boat in CT and register and store it in RI, I don't pay sales tax to the State of CT.

Please consider familiarizing yourself with the process before offering a legal 'Opinion'.

Let me be clear about Florida Sales Tax laws: Unless you purchase a vessel through a Florida broker or Dealer, who provided you with exemption papers which you signed and had notarized , which are then immediately mailed to the Florida Dept of Revenue in Tallahassee-SALES TAX (6% plus discretionary taxes) in some counties. The tax is capped at $18k)is immediately due. If you bought from an individual you are required go to the sales tax office in the county where the boat was purchased, and provide Bills of Sale to prove the value.
Of course thousands of vessels are bought and sold in Florida from individuals without doing this, but those vessels usually get the hell out of Dodge, and certainly don’t call attention to themselves. Being that Florida has no State income tax, the Sales Tax is a major source of revenue, you can be assured somebody from the DOR is reading these posts, and will soon come after the vessel for the original tax plus penalties. Period.

 

[Chrisjs]

Given the current Covid situation it may be quite some time before you can realistically bring the vessel to NJ on its own bottom.
The longer it stays in Fl, the more you will owe in penalty fees. Sales tax in FL appears to be 6% of price with $8K max. NJ sales tax rate is lower (3.5%, half of the regular 7% rate for boats) but the max is higher at $20K. Would guess because sales tax rate is actually lower in NJ the penalty will be lower as well (??). Also, the Covid situation may allow some wiggle room in terms of why you are late paying in NJ.
Another thought here is that it might be better to truck the boat up from Moorepark to NJ. You will avoid any on-the-water tax issues and probably save money, not to mention time. You might even get to use the boat this year!!

 

[Captain Max]

Correction and update to my earlier post: Lucky you because when Rick Scott let go all of the states field agents who chased down scofflaws, none have been rehired, so carry on. That, and the few desk agents they still have are not allowed to go on the internet to see all the out of state dealers bragging on Ebay about how many cars, motorhomes, and boats they’ve sold in Florida without collecting any sales tax. Another thing I like about Florida-pretty much anything goes.

 

[Devoted Sun]

this is the email i got from the Lee county Florida tax office:

Thank you for contacting our office. For questions on paying sales tax and transfer of documented vessel, please contact the United States Coast Guard National Vessel Documentation
792 T J Jackson Drive
Falling Waters, West Virginia 25419
Email: nvdc.w.webmaster@uscg.mil
Phone Number: (800)-799-8362
Website: http://www.st.nmfs.noaa.gov/st1/CoastGuard/index.html

I did do my homework, and I thought the same thing, what will documentation have to do with sales tax, but this is from the tax collector???
It is clear I will need representation, but I am not trying to avoid paying, I just did what I was told, this was my mistake, but I am new to documentation, I should have just registered and titled in jersey. this was my mistake. Big boo-boo.

 

[Chrisjs]

Best advice from a non-lawyer (thank God) is get out of Dodge as fast as you can. Go North young(er) man to NJ and do not look back. Deal with the problem in NJ.

 

[Chrisjs]

Better advice, just keep going (North) till you get to RI - no sales tax on boats!!

 

[Leatherneck]

this is the email i got from the Lee county Florida tax office:

Thank you for contacting our office. For questions on paying sales tax and transfer of documented vessel, please contact the United States Coast Guard National Vessel Documentation
792 T J Jackson Drive
Falling Waters, West Virginia 25419
Email: nvdc.w.webmaster@uscg.mil
Phone Number: (800)-799-8362
Website: http://www.st.nmfs.noaa.gov/st1/CoastGuard/index.html

I did do my homework, and I thought the same thing, what will documentation have to do with sales tax, but this is from the tax collector???
It is clear I will need representation, but I am not trying to avoid paying, I just did what I was told, this was my mistake, but I am new to documentation, I should have just registered and titled in jersey. this was my mistake. Big boo-boo.

The COUNTY revenue office probably didn't know any better. Boat taxes are collected by the STATE revenue office in Tallahasee.

 

[Porgy]

I haven’t had the pleasure of dealing with taxes in Florida but, had heard advice that the tax collector in Fernandina Beach knows their stuff because that’s the first stop in the state. Apparently one of the few places that heard of a sojourner permit, but that’s a whole other thing. You may wish to call them.

Even though NJ reduced their boat taxes as noted above, they are known for being ruthless so it would be wise to call them to see if they offer an out of state credit. They may but wouldn’t be surprised if they don’t. Each state can interpret sales/use/excise tax the way they want. Searches on the NJ website haven’t been helpful and sounded like you have to visit an actual DMV to even see the application.

 

[Woodland Hills]

Correction and update to my earlier post: Lucky you because when Rick Scott let go all of the states field agents who chased down scofflaws, none have been rehired, so carry on. That, and the few desk agents they still have are not allowed to go on the internet to see all the out of state dealers bragging on Ebay about how many cars, motorhomes, and boats they’ve sold in Florida without collecting any sales tax. Another thing I like about Florida-pretty much anything goes.

Could that be a reason why there is so little money for public health? You know, starve the beast?

 

[live2fish]

If you purchased the boat in FL you have a short period to move the boat from FL to prevent paying the FL sales tax of 6% of the sale price up to $18,000. When you purchased the boat you should have been given the option of paying in FL or purchasing an extension to keep the boat in FL for, I believe, up to six months. This would happen if you purchased the boat from through a broker. If it was a private purchase then it is your responsibility to work with FL to pay the sales tax or purchase an extension. If you would have taken the boat back to NJ you would have had the option to pay either the FL or NJ tax, whichever is less. Since the boat is stored in FL you probably should go ahead and pay the sales tax there. You can document the boat anywhere and that is a separate action. If you used a broker they can assist with this. If not, see if you can find a friendly FL broker that will guide you through it.