Tax Avoidance

[TheTeelSea]

Originally Posted by denverd0n

But I don't think we were talking about someone who is passing through. We're talking about someone who bought and used a boat in another state. Then decides to move the boat to Florida, to keep it there. Do they owe use tax? The answer is "no," if they used it for more than six months in the other state before they moved it to Florida.

Originally Posted by denverd0n

But I don't think we were talking about someone who is passing through. We're talking about someone who bought and used a boat in another state. Then decides to move the boat to Florida, to keep it there. Do they owe use tax? The answer is "no," if they used it for more than six months in the other state before they moved it to Florida.

You are wrong, in the way you are stating it!

You say; -- The answer is "no," if they used it for more than six months in the other state before they "moved it" to Florida. This is totally wrong and here is why!

We will say you live in FLA for 5 years, where there are taxes on purchases..ie cars trucks and so on. You go to Georgia and meet the seller "Bill" and you purchase a $50,000. sailboat for $1000. Now; you just park and keep the boat there in the state of Georgia for 6 mo. to 1 year. Now, you decide to take the boat back to FLA and you go down to city hall or where-ever to register the boat and they "MAY-ASK FOR"; the purchase and sale agreements or documents pertaining to the "purchase-of" this vessel. And you may get away with it especially, if the clerk you get is not on the ball. But, Later on some clerk starts to looks over and see's that not all the documents are present. Guess what; that's when the letter go's out to you stating YOU OWE US. You had not "registered" the boat in GA. so you have NO documentation the transaction that actually took place, other then your word and the seller's bill of sale. The state will say you purchased this with the intent to defraud, the state of its revenues. However; IF you were to register the boat in GA and park it at a friends house for the same time frame and because no sales tax in GA. Now.. you can move and take the boat to FLA. and pay no sales tax.. Because your just registering your vessel in FLA. that you owned in GA, and its already registered, but in a different state.

Boy I hope this clears up the confusion here!!

The bottom line is "Having documents is the evidence here!" and is the key to successful move to another state(s). No! documents.. You PAY.

I hope this clears up the dilemma here! It's not just the time.. its the documented prof in reference to the time that works for them.

Happy Winds at your back! Richard

[denverd0n]

I certainly hope that it clears up YOUR confusion. Personally, I was never confused.

[islandplanet]

The last thing you should do is rely on advice from well meaning people on the internet. What you should do is find written references from the taxing authorities and print them out for your records.

I had quite a fight over sales tax some years ago with the state. Although I legally did not owe a dime, the people who worked for the taxing agency didn't understand how their own rules were applied. I was forced to pay the tax, file an appeal, and wait two years to get my money back or risk my boat.

Thus my advice is to retain a copy of the rules that you're relying on to justify your course of action. Keep records of everything involving the boat. Assume that you will be audited and that the taxing agency will file a lien against your boat. Assume that the people who work for the taxing agency will not necessarily understand their own rules. Be prepared to fight or willing to fork over the cash even if you're not legally required to pay.

Some people find it's easier to simply pay the tax and move on than fight it. For me it was simply a matter of principal. I don't fault anyone for just "paying the ticket" though as it's an inordinate hassle.

[Doodles]

Originally Posted by islandplanet

The last thing you should do is rely on advice from well meaning people on the internet. What you should do is find written references from the taxing authorities and print them out for your records.

I had quite a fight over sales tax some years ago with the state. Although I legally did not owe a dime, the people who worked for the taxing agency didn't understand how their own rules were applied. I was forced to pay the tax, file an appeal, and wait two years to get my money back or risk my boat.

Thus my advice is to retain a copy of the rules that you're relying on to justify your course of action. Keep records of everything involving the boat. Assume that you will be audited and that the taxing agency will file a lien against your boat. Assume that the people who work for the taxing agency will not necessarily understand their own rules. Be prepared to fight or willing to fork over the cash even if you're not legally required to pay.

Some people find it's easier to simply pay the tax and move on than fight it. For me it was simply a matter of principal. I don't fault anyone for just "paying the ticket" though as it's an inordinate hassle.

Or why not hire a tax professional to handle the problem at the start and avoid all the drama. I'm a retired tax professional (CPA) and most problems can be avoided if handled correctly at the beginning.

I had some personal experience with my own boat. I bought it in Maryland and moved it within a few days to Virginia where my slip is located. The boat was documented and the hailing port was Maine. I wanted to keep the name and hailing port which was legal and that's what I did when we filed to re-document with the USCG. Some months later I get a bill from Maine for sales taxes. A quick letter to Maine explaining the situation almost took care of the problem, but Maine still wanted to see a copy of my receipt for sales taxes paid to Virginia. The receipt was on the boat in Virginia and I was in Thailand for six months. Another quick letter explaining that and offering to send the receipt when I returned to Virginia was all it took to satisfy Maine. When I returned I followed up with a copy of the receipt to Maine and ... case closed!

Most tax authorities just want to move cases along and if you give them the information they need it makes all the difference in the world. And don't be confrontational and a hard ass even though you may be on the right side of an issue. It will just make them not want to work with you to solve the problem. You become the file they put aside because they don't want to deal with you.

[islandplanet]

Doodles,

You don't get to the west coast much, do you?

Your assumption that I mishandled anything is totally off base. Luckily I had my proverbial ducks in a row and I was willing to take the case to an administrative law judge if it came down to it. In a nutshell, they wanted to retroactively apply rules that did not exist at the time the boat came into the state.

[Doodles]

Originally Posted by islandplanet

Doodles,

You don't get to the west coast much, do you?

Your assumption that I mishandled anything is totally off base. Luckily I had my proverbial ducks in a row and I was willing to take the case to an administrative law judge if it came down to it. In a nutshell, they wanted to retroactively apply rules that did not exist at the time the boat came into the state.

Sorry, my comments were really not aimed at you or anybody in particular. Your post just got me to thinking about the issue in general. Again, sorry not questioning how you handled anything. Glad things worked out for you.

I'm not in the business anymore but when I was I had plenty of California clients and they can be tough at times but my basic strategy and approach still worked. Of course nothing works in every case and sometimes you have to resort to stronger methods.

[TheTeelSea]

Originally Posted by Doodles

Sorry, my comments were really not aimed at you or anybody in particular. Your post just got me to thinking about the issue in general. Again, sorry not questioning how you handled anything. Glad things worked out for you.

I'm not in the business anymore but when I was I had plenty of California clients and they can be tough at times but my basic strategy and approach still worked. Of course nothing works in every case and sometimes you have to resort to stronger methods.

GOOD ONE!

Ya! In some cases you get little more with sugar.. then then you do with salt..
- However I never PEE in my sink!..

[s/v Beth]

I just paid a tax to a Pacific Western State yesterday. They slapped a leaving the state and closing my company tax on me. Because I had the boat in that state and left them, I had to pay.... If I was never going back I could have gotten out of it, but I cruise through occasionally and want to remain on good terms. Nothing like having your boat seized by a state because you owe a couple of hundred bucks.
And they know that too.
Hence the tax.

[David_Old_Jersey]

Originally Posted by islandplanet

The last thing you should do is rely on advice from well meaning people on the internet.

I 100% agree on the (not) relying part - but nonetheless internet a very good (and cheap!) way of getting into a ballpark (especially when a subject completely unknown) before dealing with a proffessional ($$$) - if for no other reason than it's cheaper to ask many of the basic (dumb?!)questions for free (even if answers yet to be confirmed) and to understand what information you will need to supply for own circumstances and intentions before getting meaningful advise from the proffessional (if you ask a poor question you may get a misleading answer, even if it is correct)......or simply to help rule a certain route out for being a PITA .

[Bill_E]

As Henry Gibson used to say "Verry Interesting!". I'm having thoughts about returning my boat to Florida so I'll recount the past, because it is applicable to this thread, and then see if anyone has any comments about my plans.

First, we purchased our Sunbeam 37 (Ziamar) in Florida (Fort Pierce) and for a variety of reasons, including making some modifications, we left her on the hard for about a year. If I recall, at the time Florida would allow one year in a boatyard for repairs. We had to send some receipts for marina storage and work to the Florida tax authorities. After a year, including a month or so in the water, we sailed to the Bahamas. We had to send the Florida tax authorities some proof that we had left the state and I think I sent them a copy of the Bahamas cruising permit. By the time we actually checked into the Bahamas, I'm pretty sure that we were a couple of days past the one year from date of purchase.

Immediately after purchasing her we applied for and eventually obtained USCG Documentation. As an aside, if you plan to sail outside the US I strongly recommend Documentation. You get a nice document from the USCG and it seems to be accepted by every authority that I've shown it to.

We are New Mexico residents and use Santa Fe as our hailing port although our actual residence is in a town about 25 miles from Santa Fe. We also own a home in Puerto Rico though spend less than 6 months a year here. There's no water in Santa Fe large enough to sail even a 10 ft sailboat. And, the nearest water, comfortable for a 37 foot boat is probably 500 miles or more from Santa Fe.

Now, we've been in Puerto Rico for several years. We sail around and have left Puerto Rican waters so I've never registered with the local natural resources department. I think that they'd charge me around $300 per year or so. But I've just avoided the hassle.

I am thinking of sailing her back to Florida. I'd like to find a reasonable marina where I can leave her on the hard for 4-6 months a year and be able to put her in the water, do some coastal liveaboard sailing and spend time in the Bahamas as well. I suspect that I'll have to pay Florida use tax and in the end, I'll probably try to find a tax professional that understands Florida tax on boats (not one who specializes in income tax). But it would be interesting to hear if anyone has an opinion, or better yet a scheme to minimize my tax liability in Florida. Their 6% could cause a bit of pain.

Bill

[denverd0n]

Time spent outside the U.S. does not count towards the 6 months requirement to be exempt from use tax, so I think you're going to have to pay. But, of course, consulting a professional is the best thing to do. In the meantime, here are the pertinent links...
http://dor.myflorida.com/dor/forms/2011/gt800005.pdf
Statutes & Constitution :View Statutes : Online Sunshine
Official Website Florida Department of Highway Safety and Motor Vehicles

[Bill_E]

Great! Thanks for the links. I'll be reading up on this when I have some patience. Takes a lot of concentration to read the arcane language of these documents...and simply using rum as a way to get by doesn't work very well for retaining the information.

But...Puerto Rico is the United States so I'm thinking that part is OK. The problem is that I may have to register locally or even head over to the Virgin Islands and register there, where the paperwork is a little simpler.

Bill

[denverd0n]

Originally Posted by Bill_E

But...Puerto Rico is the United States so I'm thinking that part is OK. The problem is that I may have to register locally or even head over to the Virgin Islands and register there, where the paperwork is a little simpler.

Statute 212.06 says, "it shall be presumed that tangible personal property used in another state, territory of the United States, or the District of Columbia for 6 months or longer before being imported into this state was not purchased for use in this state."

From that I would conclude that a boat registered and used in Puerto Rico or the USVI (both, obviously, territories of the U.S.) would not be required to pay the use tax. I would be sure to keep paperwork that could prove that it had been used (receipts for diesel, pump-outs, etc.) in those places and don't be surprised if you have to argue the point. That is, don't expect the clerk behind the counter at the local county tax office to know the subtleties of the law.

Good luck.