Sales Tax / User Fees

Roger Long · Apr 27, 2011

There has been a horrible situation here in Maine that effects boaters from states that do not have sales tax on boats. It's a stunning abuse of governmental power that would have been front page news except that it primarily effects out of state boaters. Some RI boat owners have told me they will never visit the state again by either boat or car or do business here after what they have been put through even though they didn't owe any tax. Last I heard, there was a formal boycott in the works.

Oops. My blood pressure is hitting the red line just thinking about it. I'd better stop and let you do a search for the old threads before something in my plumbing lets go.

Bottom line, if you are from a state that doesn't collect sales tax on boats and want to cruise in Maine, don't rent marina slips or moorings and stay out of major yachting centers and away from dockside restaurants where the Maine tax compliance drones will be eating taxpayer funded lobster rolls and writing down boat registration numbers. They have been subpoenaing marina records and you wouldn't believe what they have put people through under threat of having liens placed on their boat if they can't produce records of detail that no recreational boat owner would ever kee..... Ah, oh, I've got to go lie down.[FONT=&quot]
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Don S/V ILLusion · Apr 27, 2011

I suspect with the need to raise revenue, this will only increase the demand for boat taxes as the vast majority of people (those who are smart enough to not own a boat) couldn't care less about us. To the point, I have seen no such spreadsheet anywhere and I would caution you to not place too much value on one if you should find it. There are far too many conditions and complexities on which taxes are based to have some neat summary.

gpd955 · Apr 27, 2011

In NJ, boats that operate/base in the state for more than 180 consecutive days do not have to register.

Boats and marine equipment that do not have to be registered

Those not based in New Jersey or operating for less than 180 consecutive days
Foreign vessels
U.S. public vessels
Ship's lifeboats
Non-motorized vessels used exclusively on small lakes and ponds on private property
Racing vessels with New Jersey State Marine Police permit
Non-motorized inflatable devices, surfboards, racing shells, dinghies, canoes and kayaks
Non-motorized vessels less than 12 feet in length

Reg fees range from $12/year for boats <16ft to $250/year for > 65ft. I pay $52 for my C310. The only tax you pay is the sales tax related to the purchase and title and doc fees if you are transferring title or buying new in the state. That doesn't mean that in todays climate, additional fees/taxes won't appear one day.

http://www.state.nj.us/mvc/Vehicle/VehicleBoats.htm

I looked at the DEP Fish and Wildlife site and it only appears that you have to have licenses for shellfishing in NJ and there's something about a $2 striper bonus. I think the "Resident Senior Clam License " is an interesting one. Seems kind of discriminatory if you are an elderly clam! Don't know much about fishing but I know of no one who has a license to do so in saltwater.

http://www.state.nj.us/dep/fgw/marinelicenses.htm

Roger Long said:
It's a stunning abuse of governmental power

That never happens. :stirthepot:

Rich Stidger · Apr 27, 2011

Back in the 80's and early 90's, Connecticut pulled this same stunt. They hired college kids to cruise the docks and marinas and collect registration numbers. They were targeting anyone in or out of state that was avoiding paying their tax. They drove a lot of out-of-state residents like me out of the state.

And in the more recent past, maybe 10 years ago, Massachusetts sent letters to all of the federally documented boats owned by Massachusetts residents and sent them letters asking them to prove that they paid the sales tax on their boats.

Well, the bottom line is that nobody, including myself, likes to have the tax man's hand in their pocket, but the tax rules are clear as to who needs to pay. These states are simply enforcing their own tax rules. However, I don't know what proof that Maine was demanding from visiting yachts, but proof of non-Maine home dockage should be easy with a marina receipt, and proof of how long you were in Maine waters should be easy with fuel or other dockage/mooring receipts.

If you really want to beat the sales tax you need to meet certain requirements and have your yacht owned by a personal Delaware corporation.

Tim R. · Apr 27, 2011

Rich Stidger said:
If you really want to beat the sales tax you need to meet certain requirements and have your yacht owned by a personal Delaware corporation.

Which could cost as much or more to setup than the actual tax.

Roger Long · Apr 27, 2011

Rich Stidger said:
proof of non-Maine home dockage should be easy with a marina receipt, and proof of how long you were in Maine waters should be easy with fuel or other dockage/mooring receipts.

Nope. I've seen the correspondence. Fellow owned the boat 10 years. Was in Maine for a bit less than a month on a cruise. Got home to find the letter saying that his boat had been seen in Maine and Use Tax might be due. The location of the sighting was given as at the beginning of his cruise so they hadn't even waited to see if he was staying in the state for the required 30 days to trigger the tax. He sent back Marina or fuel dock receipts from NH showing that he had been in Maine less than 30 days.

The CRU (Compliance Review Unit), based in Holton, (no wonder they are looking for excuses to go eat lobster rolls at taxpayer expense) sent back a letter requiring him to provide receipts and paperwork showing a continuous record of the boat's location for the entire period of his ownership plus bill of sale, etc., etc. Who could do that?

The letter went on to state that, unless he could provide paperwork to their satisfaction, a lien would be placed on the vessel. They didn't bother to tell him that, if you don't bring your boat to Maine for over 30 days in the first year of ownership, no tax is due thereafter, even if you haven't paid sales tax in your state. They could therefore only reasonably ask for proof of the first year.

Innocent until proven guilty does not apply because taxation is a civil, not a criminal matter. They therefore can ask you to prove the negative, that your boat wasn't in Maine more than 30 days in the first year. The only explanation I can see for the wording of the letters and other things I have learned is that there has been an ongoing attempt to scare people into paying taxes they don't actually owe. There may be another explanation so I won't make that as a claim but I can't think what that explanation might me.

They went after international yachts as well. One year, there were a half dozen mega yachts on moorings in S.W. Harbor and I saw them all over the coast. The next year, I saw just one. A marina told me that the tax people chased them away.

If you come to Maine from a non-sales tax state, keep a low profile.

Rich Stidger · Apr 27, 2011

Tim R. said:
Which could cost as much or more to setup than the actual tax.

Actually, Tim, the cost of setting up a Delaware corporation is under $300, whereas the sales tax on a new or used vessel could easily be $10K+. Yearly corporation taxes and maintenance is about $200.

gpd955 · Apr 27, 2011

Roger Long said:
Nope. I've seen the correspondence. Fellow owned the boat 10 years. Was in Maine for a bit less than a month on a cruise. Got home to find the letter saying that his boat had been seen in Maine and Use Tax might be due. The location of the sighting was given as at the beginning of his cruise so they hadn't even waited to see if he was staying in the state for the required 30 days to trigger the tax. He sent back Marina or fuel dock receipts from NH showing that he had been in Maine less than 30 days.

How much is this "tax"?? Is it based on boat size/value/type? Would it be something that an individual accused of being subject to it could contest and make it worth the fight??

Stu Jackson · Apr 27, 2011

gpd955 said:
How much is this "tax"?? Is it based on boat size/value/type? Would it be something that an individual accused of being subject to it could contest and make it worth the fight??

Whether it is $$-wise or not, how'd YOU like to pay taxes for no return?

A thousand little cuts end up being a big time wound.

Roger Long · Apr 27, 2011

gpd955 said:
How much is this "tax"??

5% of the purchase price. However, if you are a non-resident and buy a boat in Maine and then keep it here, the tax is only 2%. If you buy a boat out of state and pay sales tax of less than 5%, you have to pay the difference to Maine if you bring the boat here more than 30 days in the first year of ownership.

Roger Long · Apr 27, 2011

All U Get said:
Does it have to be continous?

If they interpret it the same way they do for aircraft, no.

I think the law says that it just has to be kept out of the state for a year to not be subject to the tax and the tax people get to decide what it means to be "in" the state. They decided, prior to a change in the law and some clarification for aircraft, that 20 landings constituted being present in the state. This led to some absurd situations like a fellow who stopped in Maine to buy fuel (paying some tax and leaving other money here) while traveling back and forth to Canada getting a six figure tax bill. The CRU people just looked at the sales receipts they collected from airports. You can bet he's not stopping and spending any money in Maine anymore.

There are some links on this page that I collected when I was thinking of writing an article on the issue. I was getting so discouraged about the state of my state that I gave up writing it.

http://www.cruisingonstrider.us/CruisingLinks.htm

There was a huge flap with aircraft that led to a full scale boycott sponsored by AOPA. The owner of a sawmill who had been flying up weekly to check on it got so angry that he simply laid off 14 employees, closed the mill, and took everything he owned out of state. If the boat situations I found out about are similar, he may not have owed the tax at all. The letters that go out say you may owe the tax, prove that you don't or send the money.

Tim R. · Apr 27, 2011

Rich Stidger said:
Actually, Tim, the cost of setting up a Delaware corporation is under $300, whereas the sales tax on a new or used vessel could easily be $10K+. Yearly corporation taxes and maintenance is about $200.

Thanks Rich, I did some research on this and came up with much higher figures. Can you document that figure?

I paid the tax on my most recent boat purchase and it was 5 figures. Not fun but I see no alternative. I also realize that I technically do not pay property taxes on my waterfront home.

RichH · Apr 27, 2011

State by state listing of 'taxes' on boats, including 'grace periods', ' maximum 'transient' times, etc. .... BUT doesnt include local and county plundering by additional 'personal property' nor 'ad valorem' taxes .... as in Virginia, etc.

http://www.boatus.com/gov/StatetaxRegistration.asp

Im pretty sure the kingdom of France had such theft-by-government published schedules just before Louis XVI went to the guillotine.

Tim R. · Apr 27, 2011

Roger Long said:
6% of the purchase price. However, if you are a non-resident and buy a boat in Maine and then keep it here, the tax is only 2%. If you buy a boat out of state and pay sales tax of less than 6%, you have to pay the difference to Maine if you bring the boat here more than 30 days in the first year of ownership.

Roger, I did not know about the out of state option but if you live in state the tax rate is 5%.

Roger Long · Apr 27, 2011

Tim R. said:
the tax rate is 5%.

Oh, right. I was looking back at the links I collected and saw 6% so I changed it. I looked at the Boat US site and it says 5%. I've changed it back again.

This site has it wrong:

http://www.mainerec.com/boating2.asp?Category=70&PageNum=70

gpd955 · Apr 27, 2011

Stu Jackson said:
Whether it is $$-wise or not, how'd YOU like to pay taxes for no return?

A thousand little cuts end up being a big time wound.

I wasn't trying to be smart or anything, just curious as to how much the tax was....like is it a flat fee or is it calculated on boat value or size, etc. ....and if it was something that a class-action or something that an individual would be able to fight on his/her own.

RichH · Apr 27, 2011

The tax man usually can calculate what you owe based on several methods. 1. Straight % based on recent sale history, 2. Straight % based on long time ago sale but corrected for the rate of inflation, 3. Fair market value as determined by the tax man based on recent sales of 'like' boats with 'like' equipment and 'equivalent' apparent condition. 4. assessed value as determined by an appraiser; the second two methods will always be in error giving the advantage to the tax man and if the appraiser of item 4 is not an 'independent' and is paid by the tax man expect that value to be grossly and purposely inflated also.

I travel with copies of my original tax receipts just in case I need to keep the avaricious tax collectors at bay. Its also good to keep copies of the BoatUS tax 'spreadsheet' on the variable tax and 'grace periods for transient' on board at all times as most 'officers', etc. seemingly dont have the specific knowledge nor integrity of the existing laws, especially concering other states. As the economy worsens or stays depressed & stagnated, I would surmise that 'forced boarding intrusions' for the sole purpose of seeking 'revenue' will undoubtedly continue or be on the sharp increase.