Yesterday I received a mailing from NY State Dept. of Taxation and Finance. It stated that they had reviewed the purchase of my boat (they used the boat name, but no other info like NYS regi # - odd?) and they could not verify that I had paid appropriate sales and use taxes. I purchased my boat new 15 years ago and paid the dealer who then paid the state an amount of money almost equal to what the boat I traded in had cost me! They gave me two choices. Pay the tax or document why I did not have to pay the tax when I bought the boat. Proving I paid it was not an option! I was suspicious as to how I came to get this letter, so I called the marina that my boat was at until this summer. They told me that sales tax people with a court document had come to the marina last year and walked up and down the docks making notes. The marina said that the tax people had been to another marina in the area as well. Luckily I have all the paperwork from my purchase and can prove the tax was paid. The tax person I spoke to did not know my hull number which is odd because it's on my NYS registration, and if they walked the docks you would have thought that they would record that! If I had sold the boat recently I might have disposed of old records for a boat I no longer owned. A scary thought! I also wondered if there was any statute of limitations on this stuff?
Sales tax warning
- Thread starter northptsailor
- Start date
not when it comes to them scraping the bottom of the barrel to build revenue... its good you had your records or otherwise you would be signing a ck and send it in ....this is now napoleonic in nature......
I'm not sure I would ever trust a broker/dealer to pay my tax obligation. NY may be different than states in which I have purchased but my experience is that the new titles were issued to me only upon payment of the applicable tax.
New car or boat dealers are required to collect and pay taxes. If the tax is not paid, they are on the hook for the money. The letter I received told me to respond to the "casual sale tax file service", which indicates that for some reason they decided that I had purchased the boat used. Then I would have had to pay the tax. But as I asked the tax person I spoke to, "how did the boat get registered in New York without paying the tax? She had no answer.
The P.O. of the boat we purchased this past July, said that he had received a letter from the government also stating that they had no record of his paying taxes on the boat. He purchased it in 2011 and four years later they are looking for payment; luckily for him he had kept good records. Our accountant told us that here in Canada, the gov't has hired several accountants to go back in tax files as they are trying to get more $$$!
I understand that is the case with automobiles as you are buying from the owner (dealer) who has the tax liability. The distinction is the boat broker has no such liability unless by state statute.
If you have any reference, it would be interesting to see how NY created that obligation.
Frankly, I wouldn't trust a broker to satisfy MY obligation or that of the seller.
Boy do I smell SCAM! Anyone can forge documents, put on a business casual suit and tie and say "Hi, I am from the Franchise Tax Board". I am sure you did the right thing and went to your local tax bureau and determined that letter was indeed legitimate?
I am sure the letter I got did come from the New York Sales Tax people. I have had run in's with them involving my business before.
Because they don't have to worry about things like false arrest or harassment they can just "shotgun" letters like this hoping they will get lucky. As my accountant once told me, the sales tax people are worse then the IRS, they say you are guilty - and you must prove you are not! I believe they did no home work at all on this. I think they just send out hundreds of letters like the one I got and hope to hit someone who can't prove he paid the tax. And yes, you are right, they do operate in a sleazy way!
Because they don't have to worry about things like false arrest or harassment they can just "shotgun" letters like this hoping they will get lucky. As my accountant once told me, the sales tax people are worse then the IRS, they say you are guilty - and you must prove you are not! I believe they did no home work at all on this. I think they just send out hundreds of letters like the one I got and hope to hit someone who can't prove he paid the tax. And yes, you are right, they do operate in a sleazy way!
Something does not add up here.
States necessarily have records showing whether the sales/use tax was paid. I cannot locate any State registration agency that will issue registrations or annual renewals (to say nothing of original title) unless the owner has shown the sales/use tax was paid.
Since you are registered, that means New York DMV has already received proof that that the sales//use tax was paid because New York DMV cannot and will not issue New York registration or title documents unless and until DMV has been given proof its sales/use taxes were paid.
Put another way - if New York DMV (or any other state registrar) issues you registration or title documents, that means DMV already has proof the tax was paid. And that means either the letter writer never looked and if so should be called to account.
Start with the head of the Department that issued this letter, get answers, and do let the rest of us know what happens next.
Charles
States necessarily have records showing whether the sales/use tax was paid. I cannot locate any State registration agency that will issue registrations or annual renewals (to say nothing of original title) unless the owner has shown the sales/use tax was paid.
Since you are registered, that means New York DMV has already received proof that that the sales//use tax was paid because New York DMV cannot and will not issue New York registration or title documents unless and until DMV has been given proof its sales/use taxes were paid.
Put another way - if New York DMV (or any other state registrar) issues you registration or title documents, that means DMV already has proof the tax was paid. And that means either the letter writer never looked and if so should be called to account.
Start with the head of the Department that issued this letter, get answers, and do let the rest of us know what happens next.
Charles
Wouldn't documenting why you did not have to pay the tax include showing that you paid it?
I have been dunned by CT sales tax enforcers for my boat registered in NY. Of course, I had paid NY taxes so I didn't have to pay. But yes there are sales tax agents walking the docks and I'm sure they don't look for hull registration numbers.
Canada's great but I sure don't like the combined GST and sales tax. Got to add up to well more than the transactional taxes in most of our states and cities.
New boats yea, but Minnesota has no sales tax on used boats. When we bought Kestrel from a dealer in Texas we were VERY happy to learn that some rich bored dentist had owned her for 4 weeks before looking for new toy.
I think Charles is correct. In WA, we can't register a boat without evidence that we have paid sales tax on the boat, or we pay it before getting a registration. Sounds like a scam to me or a revenue dept that has some serious problems. If it was me, I would be talking to my state representatives and state senator.
It always is good to be a constituent who they know (because I donate to their campaigns)
It always is good to be a constituent who they know (because I donate to their campaigns)
I posted my experience with the NYS tax people to let people know what was going on in New York. To be clear, I purchased my boat new from a dealer not a broker. The dealer is required to collect NY tax on sales. I know that because I have a tax certificate for my business and I have to file quarterly with the state. Every dollar of income I report must be taxed or explained why no tax was collected. You can't tell the dealer of your new boat that you will take care of the tax, because he is responsible for it. My hope is that anyone reading my post will realize that keeping records on major purchases, at least in New York, is a high priority, even after you no longer own the boat.
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In Louisiana, if you buy new or used from a dealer, taxes are due. If you buy new out of state, you must pay taxes when you bring it in state. Get this, if you buy used thru a broker you must pay taxes on the value of the boat & motor. Same if you buy used thru a broker from out of state, you pay taxes when you bring the boat into the stae. If you buy used from a private/individual, you do not have to pay taxes on the boat or motor; it is considered a "casual or private" sale.
If you buy a power boat from an individual, you don't pay taxes on the boat or motor; however, you must pay taxes on the used value of the trailer to the Dept of Motor Vehicles and trailer license transfer fees. In any event, you must have local and state tax dept. officials sign off that taxes were paid or exempt on an official form that must be presented to the State Wildlife & Fisheries Department before they will issue boat registration numbers, certificate, and decals. USCG documented vessels have to comply with the same regulations.
If you buy a power boat from an individual, you don't pay taxes on the boat or motor; however, you must pay taxes on the used value of the trailer to the Dept of Motor Vehicles and trailer license transfer fees. In any event, you must have local and state tax dept. officials sign off that taxes were paid or exempt on an official form that must be presented to the State Wildlife & Fisheries Department before they will issue boat registration numbers, certificate, and decals. USCG documented vessels have to comply with the same regulations.
Contact your local state rep and have a heart to heart conversation. They are the only people who have the power to stop such nonsense. The chances of someone not paying sales tax on a major new purchase is pretty slim. What is even more crazy is how many of us keep any kind of records for vehicles that have been sold - particularly fro transactions going back 30+ years?
This document may be of help:
http://www.tax.ny.gov/pdf/publications/general/pub131.pdf
This document may be of help:
http://www.tax.ny.gov/pdf/publications/general/pub131.pdf
In 2001 I purchased a used sailboat through a broker and was told that I was responsible for paying the tax. In order to register it I had to declare how much I paid for the boat. The NY DMV accepted a copy of the USCG Bill of Sale (for documentation) and one of the DMV forms that I completed stating the sale price. Because of the age of the boat the boat was not titled. The DMV issued a transferable registration.
In 2013 I purchased another used sailboat through a broker. This the broker was required to collect the sales tax and forward it to the Tax Department. The Broker also took care of the registration and title. NY must of have figured out that not every boat purchaser was being completely honest about the purchase price and hence the taxes being paid.
It is also relatively easy to scam the system. Registration numbers stay with the boat through multiple owners. Thus there is no need to get new numbers from the DMV. The dated registration sticker that must be displayed on the boat does show any information that readily connects it to a particular boat. The easy scam is to register a small dingy and use the dingy's sticker on the bigger boat. All is good until the local authorities or CG board you and ask for a registration or until you try to sell the vessel.
it looks like to me you would be better off not doing anything as to pull this off ...there is a lot of proof of wrong doing in that maneuver