Pay US Import Duty Twice After Cruising Outside US?

[EllesBelles]

Here's a common scenario. You take your Argentinian or Canadian-built Antares into the US, pay the duty, then sail outside the USA, then bring the boat back into the USA.
Do you have to pay US import duty a second time?

I read this on McClary, Swift & Co. – Customs Brokerage Services
"Liability for Duties on Re-Importation Dutiable merchandise imported and afterwards exported, even though duty thereon may have been paid on the first importation, is liable to duty on every subsequent importation into the Customs territory of the United States (19CFR141.2)
Therefore, a foreign manufactured boat imported into the U.S. may be subject to duty, even if that boat was previously registered in the U.S"

[weavis]

Originally Posted by EllesBelles

Here's a common scenario. You take your Argentinian or Canadian-built Antares into the US, pay the duty, then sail outside the USA, then bring the boat back into the USA.
Do you have to pay US import duty a second time?

I read this on McClary, Swift & Co. – Customs Brokerage Services
"Liability for Duties on Re-Importation Dutiable merchandise imported and afterwards exported, even though duty thereon may have been paid on the first importation, is liable to duty on every subsequent importation into the Customs territory of the United States (19CFR141.2)
Therefore, a foreign manufactured boat imported into the U.S. may be subject to duty, even if that boat was previously registered in the U.S"

Well thats what happens in the EU if you register it outside and then bring it back....

[Vasco]

No duty on Canadian built boats.

[travellerw]

Yup no duty between Canada and the US on boats (Free trade)..

In Canada... Duty and GST is paid only once on a given vessel. So if its paid once through the boats life, you will never need to pay it again.

[Canibul]

How do you "export" a foreign built boat that has had the import duty in the US paid? Our UK built catamaran was imported to the US and has spent the last 25 years USCG documented. We brought it to the Turks and Caicos Islands, and just paid the import duty here so we can sail in our home waters. But no place in any of that did we "export" anything. We're still USCG documented, and the import duty for the TCI has been paid. I know of an Island Trader currently in the US that has both the Bahamian and the TCI import duties paid. That's good for the life of the boat, as far as I know.

[Zanshin]

A similar situation exists for boats in the EU, if you take VAT-paid goods (i.e. a sailboat) out of the EU for more than 3 years, they lose VAT-Paid status and you'd have to pay it again upon re-import.

[svlamorocha]

Originally Posted by EllesBelles

Here's a common scenario. You take your Argentinian or Canadian-built Antares into the US, pay the duty, then sail outside the USA, then bring the boat back into the USA.
Do you have to pay US import duty a second time?

That is an interesting issue indeed. My short answer, worth what you paid for it, is "no", subject to a few caveats.

Let´s talk theory first. I assume you are a US resident, the boat is registered ("documented" in US dialect) in the US, you did not get a cruising license or claim a duty exemption based on where the boat was made or on a promise of future reexport (as in temporary import or "drawback") and you paid duty. A summary of my current understanding is that you do not need to pay duty again provided:

a) The boat was taken abroad for noncommercial use by a US resident and returned by the same person;

b) Either you declared the boat when clearing out using CBP form 4455, (see http://forms.cbp.gov/pdf/CBP_Form_4455.pdf ; when you file this they would probably check that you have paid the duty!) or the boat is USCG registered and the USCG registration did not change while the boat was outside the US (in which case I have no idea who/when would check that duty was paid) .

c) The boat was not modified while away from the US.

Originally Posted by EllesBelles

I read this on McClary, Swift & Co. – Customs Brokerage Services

"Liability for Duties on Re-Importation Dutiable merchandise imported and afterwards exported, even though duty thereon may have been paid on the first importation, is liable to duty on every subsequent importation into the Customs territory of the United States .." (19CFR141.2)

I am afraid the quote from 19CFR 141.2 is incomplete (I added points and closing quotation marks in your text to mark that). If you look at the statute (see 19 CFR 141.2 - Liability for duties on reimportation. | LII / Legal Information Institute) you will see that it keeps going as follows:

".., but this does not apply to the following:
(a) (SNIP - wording for personal/household effects);
(b) (SNIP - wording for tools of trade, etc));
(c) Automobiles and other vehicles taken abroad for noncommercial use (see § 148.32 of this chapter);"

A boat is a vehicle and there you have your exemption.

If you want the detail of how this works go to § 148.32 (see 19 CFR 148.32 - Vehicles, aircraft, boats, teams and saddle horses taken abroad. | LII / Legal Information Institute) that says:

"§ 148.32 Vehicles, aircraft, boats, teams and saddle horses taken abroad.
(a) Admission free of duty. Automobiles and .. .. boats.. , together with their accessories, taken abroad for noncommercial use and returned by a returning resident will be admitted free of duty upon being satisfactorily identified.
(b) Identification of articles taken abroad. Upon the request of the owner or his agent, the port director will cause any article described in paragraph (a) of this section to be examined before it is taken abroad, and will issue a certificate of registration therefor on CBP Form 4455. On the return of the article, the certificate may be accepted as satisfactory identification of the described article for the purpose of admitting the article free of duty. In lieu of CBP Form 4455, the following may be accepted as satisfactory identification of such articles taken abroad:
(1) (SNIP - wording for cars)
(2) (SNIP - wording for aircraft) ; and
(3) For a pleasure boat, the yacht license or motorboat identification certificate.
(c) (SNIP - wording for repairs, alterations, etc while abroad)

I understand that the text in the McClary, Swift & Co site (not from CFR) that says "Therefore, a foreign manufactured boat imported into the U.S. may be subject to duty, even if that boat was previously registered in the U.S", uses the word "may" to refer to a myriad of cases that are not covered in my assumptions. For example: boats sold away from the US after duty is paid, boats sold in the US after duty is paid to someone who is not a US resident, who does not file the 4455 from when leaving the US and then sells to boat outside the US to a US resident who brings it back.

Now let´s worry about practice. It seems that because of the wording of the statute that refers to "the yacht license or motorboat identification certificate" so far they have taken a USCG registration certificate as proof that you are eligible for the exemption, even though a USCG reg certificate does not prove payment of duty. I went through this the other way when I tried to import my US-built but foreign-flagged boat back in to the US when I had no evidence that the initial export to the first buyer had not benefited from drawback, etc and they kept insisting on the USCG registration that was irrelevant. That said, a few things I have read suggest to me there may be an uptick in enforcement based on something other than checking USCG registration..

Cheers

Charlie

[svlamorocha]

Originally Posted by Canibul

How do you "export" a foreign built boat that has had the import duty in the US paid? Our UK built catamaran was imported to the US and has spent the last 25 years USCG documented. We brought it to the Turks and Caicos Islands, and just paid the import duty here so we can sail in our home waters. But no place in any of that did we "export" anything. We're still USCG documented, and the import duty for the TCI has been paid. (snip) That's good for the life of the boat, as far as I know.

I am not so sure that you can count on that boat not to be subject to US duty again, regardless of other circumstances. See 19 CFR § 141.2 (or my post upthread); you will find some specific exceptions to a general rule that says that duty is payable again the next time the boat goes back.

I do suspect that with careful planning and structuring it may be possible to avoid a second payment even if the boat is sold (as for example selling inside the US, or inserting a corporation that stays with the boat), but that is another story.

Cheers

C

[svlamorocha]

Originally Posted by EllesBelles

Here's a common scenario. You take your Argentinian or Canadian-built Antares into the US, pay the duty, then sail outside the USA, then bring the boat back into the USA.
Do you have to pay US import duty a second time?

Also note that Argentine boats with the relevant Generalized System of Preferences paperwork that proves a certain % made there could be imported into the US free of duty until March 2012. I understand that Argentina´s exemption was suspended because of the bond default that affected some folks in the US. That said, I understand that the suspension does not need to affect the § 148.32 exemption on future reentries of boats first imported before the suspension.

C

[EllesBelles]

You're really knowledgeable, Charlie.
I talked to a maritime lawyer in Miami today. He told me a few interesting things:
1) the import duty is actually 1.7% not 1.5% because there are other fees, (e.g.for the port), on top of the official 1.5%
2) assuming the boat is subject to this import duty (and the foreign owner never paid it), if the owner is in the US under a cruising permit, the foreign owner sell the boat, or even list the boat for sale, or work with an agent or broker in the US to sell his boat, until he pays the import duty
3) the only way around this is if the foreign seller places a disclaimer on the listing that says that the boat is not for sale in US waters to US citizens.
4) for the boat sale to take place outside US waters, the boat should actually be brought into a foreign port, not just 3 miles offshore.