US Flagged but not duty paid going to Puerto Rico

[Bill O]

Originally Posted by crayiii

We have a US flagged boat and are US citizens but have not sailed to the US yet. We have every intention of paying whatever taxes we are required to pay since we plan to spend next hurricane season in the NE.

We are currently sailing North from the Caribbean and had planned on stopping in Puerto Rico next month before heading to the Bahamas.

My broker found out and insisted that we not make Puerto Rico our first US stop because they would make our life difficult.

This is a big bummer for us because we were really looking forward to the stop.

I'm looking for others with experience in this area. Should we skip Puerto Rico to avoid issues or have others been in this situation recently and had no issues?

I can see why the broker cautioned against landing in PR as it follows the same US import duty regulations as the mainland.
From my understanding of the regs, you are required to make a "formal entry" and pay US duty and Import taxes. Calculating duty and possibly EPA certification of engine, obtaining a customs agent could be a lengthy process in PR (here is a good link to what to expect in the process).

Not doing the formal entry could appear to be an attempt to dodge the taxes and bring the rath of the CBP on you w/various possible consequences.


Bill O.

[crayiii]

Originally Posted by Bill O

I can see why the broker cautioned against landing in PR as it follows the same US import duty regulations as the mainland.
From my understanding of the regs, you are required to make a "formal entry" and pay US duty and Import taxes. Calculating duty and possibly EPA certification of engine, obtaining a customs agent could be a lengthy process in PR (here is a good link to what to expect in the process).

Not doing the formal entry could appear to be an attempt to dodge the taxes and bring the rath of the CBP on you w/various possible consequences.


Bill O.

Yes, this is what I've been warned about. I was told that some people have been stuck I'm PR for many many months trying to work through the process.

[Bill O]

Can't see trying to get any government paper work in the Caribbean to be a speedy process (everything is on Carib. time).
Most likely you could enter into PR and no one would ask if you paid the import tax (fairly low risk level). If you had a sharp CBP agent when you entered the US to pay the duty, they could give you grief for not declaring it when you entered in PR (probably also low risk).

I'd probably head to BVI or Bahamas to avoid the hassles, then after winter, head to the mainland and declare/pay up. I'm sure many will tell you it can be done/they have done it, but if you get caught breaking the law, its on you. My similar analogy would be driving down the highway well above the speed limit to "keep up w/traffic". The police pull you over for speeding and ticket you. The fact is you were breaking the law by speeding and you got caught, others did not.

This is where you need to determine what risk level you are willing to do/chance.
Bill O.

[redneckrob]

I imported a previously French flagged, French built boat from Martinique 3 years ago. I highly recommend hiring an import agent for this, their cost is de minimis and worth every penny. I worked with Trey Howard S Reeder (Home - Howard S Reeder Inc) and had a great experience but I'm sure any of them are fine. The whole thing is both more complicated and easier than you think it is, and it's nearly impossible to even find the CBP office responsible let alone talk to someone who can help you.
The harder part is the EPA certification for the engines, not something I even realized was a thing. The easier part is that you can have this all done remotely at any time and you'll never even see an agent for the import duty part. They could do it now for you and you'll be all set when you arrive in PR or anywhere else. And they'll be able to tell you if you actually need it for PR or not. Again, well worth every penny and just foolishness to try to do it on your own in my opinion, and this is coming from someone who spent more than 20 years as a Coast Guard officer and tries to do everything on his own from paperwork to engine repair!

[boat driver]

You will need a value (bill of sale) or the survey value for the import tax. It will be based on the day the vessel arrives in a US customs port.
I would pay the tax unless you anticipate a large change of value between now and arrival in a US port- In which case the tax value would need to be again established via what expense (professional survey?) .

[sailcrazy]

FWIW...our Taiwan-made, US Flagged(and USCG Documented), has also never been in Conus waters. We bought her in Asia, documented her as Anchorage, Alaska ported (it's how we got our mail), and sailed her (via a freighter) here from Asia with a 4-yr stop in the Medd. We initially checked in at St Thomas. No questions were asked, and no explanations offered! We have sailed the NE Caribb for the past 5 seasons, spending the summer "hurricane" season on the hard here at Puerto Del Rey Marina, Fajardo, Puerto Rico. No questions asked, and no explanations offered! We always buy the decal, go through the Spanish Virgins and check in there, and then sail on to PR. The phone check in at Culibra has always been simple and easy-with the decal number. And since you are not "permanent" here in PR....only passing through, I can't imagine anyone would even notice...no "Q" Flag required (you'll have already checked in in Calibra) and no one to notice! PR is a beautiful place....would be a shame to miss it.

[Dsanduril]

Originally Posted by sailcrazy

...never been in Conus waters...

Unfortunately, if you been to PR you have been in US waters, and you owed import duty on your vessel. You got away with not paying it, but not sure I'd post it in public.

FWIW, USVI is considered outside the US customs territory so you can travel there without importing the vessel.

[CF32907]

If you are documented, you evidently transfered the document from another individual. What ever the case, you listed the owners address for the documentation, the documentation office gets paid by the states to notify them of purchases that are documented. The state will send you a nasty gram telling you that you owe them sales tax, it will also include the penalty for not paying the sales tax when purchased. They don't care if the boat is back in state or country, they just want the their tax. A make nice letter, with proper sales tax paid with letter of explanation will normally get you out of paying the penalty.
As far as duty, makes no difference where you bought it, duty is a one time tax, if the vessel was previously documented, the duty was paid, no worries there.
Iv'e had no bad experiences with clearing anywhere, stateside or in the Islands with no taxes paid anywhere. Just have your originals or copies of your original paperwork and tell them you are in transit to your hailing port.
I've had mine and possibly 30 other boats that I've taken down or brought up from the Caribbean for deliveries from new buyers.
Sales tax, the government does the same thing with Federal Registered aircraft, if you buy the plane out of state or out of country, the FAA notifies your state of the sale, and WA LA, a nasty gram, you owe us sales tax. It has happened to me, both with vessels and aircraft. Be humble, explain that since the (plane or boat) was federally registered, you did not know a tax was due since you did not have to go to your local tax tag office for registration, your so sorry, send in the proper tax, they will probably accept it.
Happy Sailing All....
Capt. Vince Rakstis, Ret. St.Petersburg, Fl.

[crayiii]

Originally Posted by CF32907

If you are documented, you evidently transfered the document from another individual. What ever the case, you listed the owners address for the documentation, the documentation office gets paid by the states to notify them of purchases that are documented. The state will send you a nasty gram telling you that you owe them sales tax, it will also include the penalty for not paying the sales tax when purchased. They don't care if the boat is back in state or country, they just want the their tax. A make nice letter, with proper sales tax paid with letter of explanation will normally get you out of paying the penalty.
As far as duty, makes no difference where you bought it, duty is a one time tax, if the vessel was previously documented, the duty was paid, no worries there.
Iv'e had no bad experiences with clearing anywhere, stateside or in the Islands with no taxes paid anywhere. Just have your originals or copies of your original paperwork and tell them you are in transit to your hailing port.
I've had mine and possibly 30 other boats that I've taken down or brought up from the Caribbean for deliveries from new buyers.
Sales tax, the government does the same thing with Federal Registered aircraft, if you buy the plane out of state or out of country, the FAA notifies your state of the sale, and WA LA, a nasty gram, you owe us sales tax. It has happened to me, both with vessels and aircraft. Be humble, explain that since the (plane or boat) was federally registered, you did not know a tax was due since you did not have to go to your local tax tag office for registration, your so sorry, send in the proper tax, they will probably accept it.
Happy Sailing All....
Capt. Vince Rakstis, Ret. St.Petersburg, Fl.

I understand and am all good with sales tax. I'm only looking at the import duty.

[redneckrob]

Originally Posted by CF32907

If you are documented, you evidently transfered the document from another individual. What ever the case, you listed the owners address for the documentation, the documentation office gets paid by the states to notify them of purchases that are documented. The state will send you a nasty gram telling you that you owe them sales tax, it will also include the penalty for not paying the sales tax when purchased. They don't care if the boat is back in state or country, they just want the their tax. A make nice letter, with proper sales tax paid with letter of explanation will normally get you out of paying the penalty.
As far as duty, makes no difference where you bought it, duty is a one time tax, if the vessel was previously documented, the duty was paid, no worries there.
Iv'e had no bad experiences with clearing anywhere, stateside or in the Islands with no taxes paid anywhere. Just have your originals or copies of your original paperwork and tell them you are in transit to your hailing port.
I've had mine and possibly 30 other boats that I've taken down or brought up from the Caribbean for deliveries from new buyers.
Sales tax, the government does the same thing with Federal Registered aircraft, if you buy the plane out of state or out of country, the FAA notifies your state of the sale, and WA LA, a nasty gram, you owe us sales tax. It has happened to me, both with vessels and aircraft. Be humble, explain that since the (plane or boat) was federally registered, you did not know a tax was due since you did not have to go to your local tax tag office for registration, your so sorry, send in the proper tax, they will probably accept it.
Happy Sailing All....
Capt. Vince Rakstis, Ret. St.Petersburg, Fl.

I'm sorry but this is just not accurate. I'm not aware of any state that charges sales tax on a Coast Guard documented boat that has never been in the waters of that state. If I had never brought my boat to Maryland, where I am a resident, for example, I would own no sales tax to Maryland. Florida has a very specific exemption for how many days you can spend in the state before you owe sales tax, and they do follow up on it, I know this from experience. But after showing that I followed the requirements I was not charged sales tax. Sales tax on boats is entirely based on where the boat is physically located, not the boat's owners.
I think you also misunderstood the OPs situation, this was a foreign vessel built in 2017 which had never paid federal import duty. Therefore import duty is due when it comes into the U.S., there's no prior duty payment to be "transferred" to a new owner.
To the OP, this is why you absolutely need the advice of a professional agent, the info you'll get here simply can't be trusted as accurate because the folks either don't understand your issue or simply don't know what they're talking about. My advice included!