Anything wrong with this boat registration plan?

[RBCurtis]

I am a U.S. citizen and a legal resident of Canada.

I am in the process of purchasing a boat in Florida, and would like the option of keeping the boat in Florida when not in use. I have no intention of ever taking the boat to Canada.

I would like to legally avoid sales/use tax on the boat.

My plan:

* Register the boat in Canada, via the Canadian Register of Vessels
* Do NOT register the boat in the U.S.
* Do NOT license the boat in any state or Canadian province

Florida's rules say that foreign-flagged vessels are except from Florida Use Tax, so it seems that I should be able to cruise in Florida, including leaving the boat in a marina if I so choose, and never be obligated to pay the Use Tax in Florida.

Anything wrong with this plan???

[gonesail]

nothing wrong with it .. but according to the online documentation: Depending on the jurisdiction in which your cruising application is submitted .. U.S. Customs may require your vessel to clear through a foreign port before issuing the license.

[RBCurtis]

Thanks for the reply. I think you're right.

In reading the Florida rules more carefully, I think I'd have to do the following, to legally avoid the Florida Sales/Use Tax:

* At the time of sale, sign the affidavit confirming that I am a non-resident and that I will remove the boat from Florida within 90 days

* Complete the registration process with Canada and obtain Canadian registration documents

* Sail the boat to a port outside of Florida within the 90 days and obtain proof that identifies the boat, such as a dock or fuel receipt

* Send proof that the boat left Florida to Florida Revenue, within 10 days of leaving Florida (this step completes the requirements for tax exemption at the point of sale)

* When returning to Florida, the boat will be exempt from Use Tax as a foreign-flagged vessel. Optionally, I can also obtain the Cruising License to simplify entry and departure from the U.S.

Does this sound right?

[AndrewA2]

I think you will find you need to actually leave the country, and to show that you did, you will need to land at an overseas port to get their documentation. Only THEN return to the US via one of the clearing ports. Once you have cleared you will be under a touring permit (im tired, forget the proper name) where you will have to leave again after a set number of months. rinse and repeat

[jmschmidt]

If you are a US citizen it doesn't matter where you live. I would document the boat with the National Maritime Center (USCG) and be done with it. This does not effect the tax situation. States with various taxes applicable to boats will get their pound of flesh depending on a number of variables. Don't state "register" a USCG documented vessel, it will in validate you documentation. You still have to notify state tax authorities of the vessel's location in the state and pay taxes thereon.

[SVHarmonie]

Originally Posted by jmschmidt

Don't state "register" a USCG documented vessel, it will in validate you documentation.

This is totally WRONG.

Some states (Florida among them) REQUIRE you to register your boat with the state if the boat is in the state and it matters not if you are Documented, or where you live. Complying with such a state requirement does NOT "invalidate" your Documentation. In Florida's case this is the how they make sure that appropriate tases are paid on the boat.

Other states (for example California) do not register documented boats and have other mechanisms for tax collection.

I suspect the writer of the above is confused because if you are Documented you must not also display state registration numbers on the bow. The state CAN require you to display a valid registration sticker, however.

None of this applies to foreign flagged vessels...

[Montanan]

Originally Posted by RBCurtis

Thanks for the reply. I think you're right.

In reading the Florida rules more carefully, I think I'd have to do the following, to legally avoid the Florida Sales/Use Tax:

* At the time of sale, sign the affidavit confirming that I am a non-resident and that I will remove the boat from Florida within 90 days

* Complete the registration process with Canada and obtain Canadian registration documents

* Sail the boat to a port outside of Florida within the 90 days and obtain proof that identifies the boat, such as a dock or fuel receipt

And keep the boat out of Florida for six months before returning to Florida waters.

* Send proof that the boat left Florida to Florida Revenue, within 10 days of leaving Florida (this step completes the requirements for tax exemption at the point of sale)

* When returning to Florida, the boat will be exempt from Use Tax as a foreign-flagged vessel. Optionally, I can also obtain the Cruising License to simplify entry and departure from the U.S.

Does this sound right?

See above.

Reference: https://floridarevenue.com/Forms_lib...t/gt800005.pdf

Foreign-Flagged Vessels

Foreign-flagged vessels or boats holding a valid “License to Cruise in the Waters of the United States” issued by the United States Customs Service pursuant to 19 Code of Federal Regulations 4.94 are not subject to Florida use tax.

The license to cruise in the waters of the USA is for up to one year. a cruising permit will be renewed only if at least 15 days have elapsed since the previous permit expired or was surrendered and the vessel arrives in the U.S. from a foreign port or place. Traveling outside U.S. waters while a cruising permit is effective does not satisfy the 15-day requirement. Hence, vessel owners must plan their cruising itinerary a bit more carefully as the renewal date approaches. So you will need to say go to the Bahamas to establish that you have arrived from a foreign port or place before applying for a new license to cruise.

[Dsanduril]

Originally Posted by RBCurtis

Thanks for the reply. I think you're right.

In reading the Florida rules more carefully, I think I'd have to do the following, to legally avoid the Florida Sales/Use Tax:

* At the time of sale, sign the affidavit confirming that I am a non-resident and that I will remove the boat from Florida within 90 days

....

Note that to use this exemption the boat must be bought through a registered broker/dealer. Private boat sales that do not involve a registered broker/dealer require immediate payment of use tax, there is no exemption or time delay.

[Montanan]

Originally Posted by AndrewA2

I think you will find you need to actually leave the country, and to show that you did, you will need to land at an overseas port to get their documentation. Only THEN return to the US via one of the clearing ports. Once you have cleared you will be under a touring permit (im tired, forget the proper name) where you will have to leave again after a set number of months. rinse and repeat

One has to first arrive from a foreign port or place and clear through Customs and Border Patrol to obtain a License to cruise the waters of the USA and that is issued for a specific period of time, up to a year, which period of time the Border Patrol agent will establish and then one has to leave the waters of the USA, and to have returned the permit at time of departure [or it could expire after the vessel has departed the waters of the USA] and then one has to remain out of the waters for 15 days before arriving from the foreign port or place in order to apply for a new license to cruise the waters of the USA.

[Montanan]

Originally Posted by Dsanduril

Note that to use this exemption the boat must be bought through a registered broker/dealer. Private boat sales that do not involve a registered broker/dealer require immediate payment of use tax, there is no exemption or time delay.

Correct. If the purchaser is a non-resident of Florida and the boat is purchased through a registered dealer. The affidavit is completed and the temporary waiver is availed by the broker processing the documents and the boat departs promptly from Florida.

As to a private sale [not a registered dealer].

If you are planning to buy a boat in Florida or have plans to bring one into Florida, the Florida Department of Revenue reminds you that tax compliance is an important aspect of boat ownership.

What is Taxable?

Sales and Use Tax

All boats sold, delivered, used, or stored in Florida are subject to Florida’s sales and use tax, plus any applicable discretionary sales surtax, unless exempt. Florida boat dealers and brokers are required to collect tax from the purchaser at the time of sale or delivery.

When a boat is sold by someone other than a registered boat dealer or a boat is brought into Florida for use in Florida, Florida use tax is due. The “use” part of Florida’s sales and use tax provides uniform taxation of items. Florida’s six percent (6%) use tax, plus any applicable discretionary sales
surtax, is due on a boat used or stored in Florida when:
• The boat is purchased from a person who is not a registered boat dealer and the sale or delivery of the boat occurs in Florida;
• The boat is purchased in another state, territory of the United States, or District of Columbia and is brought into Florida within six (6) months of the purchase date; or
• The boat is purchased in a foreign country and is brought into Florida at any time.

When the purchaser does not pay Florida sales and use tax to the seller for a boat purchase, any sales and use tax, plus any applicable discretionary sales surtax, is paid to the county tax collector, licensed private tag agency, or the Department of Highway Safety and Motor Vehicles when registering the boat in Florida.

Discretionary Sales Surtax
Most counties impose a local option discretionary sales surtax. The surtax is due when the boat is delivered by the dealer or broker to a county that imposes a surtax. The surtax is also due when the boat is purchased from an individual and the boat is used in a county imposing a surtax.
Discretionary sales surtax applies to the first $5,000 of the purchase price. Current discretionary sales surtax rates for all counties are listed on Form DR-15DSS, Discretionary Sales Surtax Information, posted on our website at floridarevenue.com/forms.

When is Tax Due?

Unless exempt, a boat must be titled or registered in Florida with any county tax collector, licensed private tag agency, or the Department of Highway Safety and Motor Vehicles:
• Within 30 days of the purchase date or the date the boat entered Florida; or
• Within 90 days after the boat enters Florida, when the boat is documented, licensed, titled, or registered in another state.
Florida use tax, plus any applicable discretionary sales surtax, due on a boat purchased in Florida or brought into Florida within six (6) months of the date of purchase, is paid at the time of licensing, titling, or registering the boat in Florida.


In addition to the exemption for non-resident purchasers that remove the boat from Florida there is the Foreign Flag vessel exemption.

Foreign-Flagged Vessels
Foreign-flagged vessels or boats holding a valid “License to Cruise in the Waters of the United States” issued by the United States Customs Service pursuant to 19 Code of Federal Regulations 4.94 are not subject to Florida use tax.

[wannacat]

I'm a Canadian that did exactly what your asking 10 years ago. I purchased a boat in Florida. However, I did an offshore closing by going with the broker out over 3 miles offshore. That's where we signed the paperwork and had a portable GPS on the salon table with a copy of that mornings paper, we took a picture with them side by side to prove where we were at the time of signing if ever required to show that. We then returned to shore. I went to US Customs and asked for a US Cruising Permit. They said I needed to provide the original Canadian Registration papers, which I didn't have yet. [That can take2-4 weeks] But I had 90 days to provide them and the boat could stay in Florida meanwhile. I went home and awaited my Canadian Registration. The only catch is you have to submit an original copy in person, you cannot fax or scan it to them. Someone else can take it into the office for you as your representative? But once I had my Canadian Registration in hand I flew back to Florida and submitted it. They then gave me a 1 year cruising permit from that date and I was able to leave the boat there and go home returning in 7 months to go cruising. So then you are required to leave the US within that year and get your passport stamped or have a Bahamian Cruising permit to show when you return to the US to verify you've been out and then you can get another 1 year permit. We've done this for 10 years now. There's just a couple of catches. You can't leave and return with a permit that is still valid and get another years extension. So before you leave Florida you have to go back to the US Customs office and have them cancel your existing permit. Your then given 48 hours to leave, weekends or holidays don't count in that time. Then after 7 days you can have a new 1 year permit issued. One other glitch, the year that your Canadian Registration expires, the US won't give you a permit past that expiration date. So before you leave Canada you have to get a hold of Transport Canada and have a new registration issued to have in hand. Allow 4-6 weeks for that also. The first time this happened to me the Customs wouldn't give me my permit but said I had 90 days to get it to them. I went home and couriered it down once I received it and a Florida resident friend of mine took it into the Customs office and they issued my boat another 1 year permit from that date. A little bit of time and trouble but if you just remember how to navigate the rules and cross your t's, dot your I's it's easy. Any other concerns you can PM me. Good luck with it.

[Sand crab]

Just document the boat and leave Florida before the time is up. Docs are cheap and no sales tax if you leave before the time is up. You only have to go to the next state. And no cruising permit hassles. I think you are making this too hard.

[AndrewA2]

Originally Posted by Montanan

See above.

Reference: https://floridarevenue.com/Forms_lib...t/gt800005.pdf

Foreign-Flagged Vessels

Foreign-flagged vessels or boats holding a valid “License to Cruise in the Waters of the United States” issued by the United States Customs Service pursuant to 19 Code of Federal Regulations 4.94 are not subject to Florida use tax.

The license to cruise in the waters of the USA is for up to one year. a cruising permit will be renewed only if at least 15 days have elapsed since the previous permit expired or was surrendered and the vessel arrives in the U.S. from a foreign port or place. Traveling outside U.S. waters while a cruising permit is effective does not satisfy the 15-day requirement. Hence, vessel owners must plan their cruising itinerary a bit more carefully as the renewal date approaches. So you will need to say go to the Bahamas to establish that you have arrived from a foreign port or place before applying for a new license to cruise.

Can you help clarify something for me:
Does that mean that the cruising permit is valid for the time it has been issued for? In other words, if you leave the US (ie head to the Bahamas) before the permit expires, when you come back to the US before the expiration date,the permit is still valid ?
I assume that is correct, but cant find a solid answer

[Dsanduril]

Here's a press release from CBP that specifically addresses multiple entries for people with cruising licenses. It's from the PNW so is addressing Canadians who come back and forth across the border over the course of a year.

U.S. Customs and Border Protection (CBP), Office of Field Operations announces new procedures that are coming to the inspection process for foreign flagged private boats. These procedures will be in addition to the reporting process currently in place. All operators of pleasure boats must report to CBP immediately upon arriving into the United States from a foreign port, place or location; or if they had contact with another vessel outside the U.S.; or if they have received merchandise outside the U.S. territorial waters. Foreign flagged pleasure boats must also make a formal vessel entry on CBP form 1300 within 48 hours after making their immigration entry at a port of entry and pay applicable fees. At the time of entry boaters may request a cruising license from the applicable CBP port director.

“The cruising license will greatly facilitate multiple entries during the year and avoid additional fees for boaters,” said Bellingham Port Director Diana Sandoval.

A cruising license may be available to boats departing from Canada and arriving in the Puget Sound area. A cruising license may exempt foreign flagged pleasure boats (from certain countries) from having to undergo formal CBP entrance and clearance procedures, except at the first CBP port of entry each and every year. Cruising licenses are normally valid for one year.

The operator of a foreign flagged or undocumented foreign pleasure boat without a valid U.S. cruising license must obtain CBP clearance before leaving a port, place or location in the U.S. to depart foreign or must obtain a permit-to-proceed if traveling to another port, place or location within the U.S.

The master, or operator of a foreign flagged boat not traveling under a cruising license will be required to file a formal entry and clearance each time they enter the United States, file the appropriate paperwork, and pay the applicable fees.

Foreign flagged boats traveling under a cruising license would not be required to purchase a CBP decal, which is currently $27.50, for the year.

For questions, please contact the Small Boat Reporting Line at 1-800-562-5943.

there's also the wording of the license itself:

...shall be permitted to arrive at and depart from the United States and to cruise in the waters of the Customs port of

(Name of port or ports)
without entering and clearing...

Since you can't get a license until after you arrive, the wording that you can "arrive and depart" would seem to indicate that subsequent arrivals over the term of the license only require the report to the vessel movement center. Note that a cruising license is for the vessel, not the people. Immigration status is an entirely separate matter.

[rhubstuff]

Yeah, there's a certain pleasure in "beating the system," but I am amazed at the trouble people go to in order to avoid paying various boating-related taxes and fees, while expecting that waterways, bridges, aids to navigation, marinas, docks, and other maritime infrastructure are kept in good condition, happy that the rest of us are paying for the things that make their cruising lifestyle safe and pleasurable.