Hello everyone... So I have a question about boat sales tax and hope that someone here might have been through this difficulty before. Last year I purchased a 2000 Hunter 340 in San Diego CA for $81,000. At the time I did not pay any sales tax but I did get my boat registered with the USCG. When I asked my broker about sales tax he told me not to worry about it, that I would get a bill sometime later and that it would take 9-10 months for them to get around to figuring out all the numbers. Well here it is over a year later and I finally get a bill (while I'm in Iraq on deployment mind you) for $8,000... which seems a bit high even for California sales tax. This also includes a "late fee" of $711.00, although as this is the first bill I have gotten I don't see how I could be late, but somehow I am being charged this anyway. My questions are these: 1) Is the approximate number of $7,300 about right for sales tax on a $81,000 boat purchased in CA? (I realize that the late fee brings it up to $8,000 but without that is this about right?) 2) Do I have to pay sales tax to CA if I am not a resident there? I purchased the boat in CA but as I'm military I was wondering if there is a special clause that exempts me from sales tax... or do I have to pay the sales tax simply because it was purchased there regardless of where I'm considered a resident? 3) How do I fight the late fee, if this is the first notice I've gotten? 4) Does CA have some sort of yearly fee I must pay them, such as a registration fee on a car, and can I avoid this by registering in my home state of Tennessee? Thanks for all your help.. -Levin
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I would ask your accountant for his advise. Just because the government bureaucracy decides you owe a bill doesn't make it right. As I understand it, you would owe the sales tax to the state you reside in not where you purchased it. Another thought, what jurisdiction does the state of California have over the resident of a different state?
When I
purchased my boat last november, I had the boat documented and did not pay sales tax at that time. However I still had to register the boat with the DMV here in NY and that is where I paid the sales tax....it was about 3 months later that all the paper work came back from the documentation. Ask your accountant to be sure! Good luck
purchased my boat last november, I had the boat documented and did not pay sales tax at that time. However I still had to register the boat with the DMV here in NY and that is where I paid the sales tax....it was about 3 months later that all the paper work came back from the documentation. Ask your accountant to be sure! Good luck
registering your boat in Delaware
Check out registering your boat in Delaware. A lot of boaters do
Check out registering your boat in Delaware. A lot of boaters do
I Think Your Stuck With It
Boats are required to be registered where they are (actually where they are principly used) sales tax will be collected wherever they are sold. I have not heard of a state giving a break to GIs on sales tax except when it is to be registered in another state, that state will want it's sales tax when it is registered. I would ask for a break on the late fee you stand a pretty good chance I think asking from Iraq. Automobiles are a different story as far as registration goes, most states allow military members to maintain a vehicle registration and a drivers license in their home state. There is a three state rule however you cannot have registration in one license in a second and reside in a third. Enjoy your deployment though it is no fun while you are there you will be glad you had the experience when you get home. Getting much sailing in over there?
Boats are required to be registered where they are (actually where they are principly used) sales tax will be collected wherever they are sold. I have not heard of a state giving a break to GIs on sales tax except when it is to be registered in another state, that state will want it's sales tax when it is registered. I would ask for a break on the late fee you stand a pretty good chance I think asking from Iraq. Automobiles are a different story as far as registration goes, most states allow military members to maintain a vehicle registration and a drivers license in their home state. There is a three state rule however you cannot have registration in one license in a second and reside in a third. Enjoy your deployment though it is no fun while you are there you will be glad you had the experience when you get home. Getting much sailing in over there?
Location of principal usage .....
Almost all states demand sales tax if the boat is kept wthin their boundaries/jurisdiction beyond their 'grace' period ... and no matter if the boat is bought there, just visiting, or just passing through on a truck, etc. Go to the Boat US website and follow the links to the list of state's grace period. This also means that if you change the location of the boat from one state to another you can socked with another tax bill if you exceed the 'grace' period and the state you are now located in has a higher tax % than where you first bought the boat. This all becomes clear if you acknowldege that the sole 'purpose' of citizens is to be simply nothing more than prey species to pay taxes to 'governments'. By owning a boat you will now find out what it means when you hear "sock it to the rich".
Almost all states demand sales tax if the boat is kept wthin their boundaries/jurisdiction beyond their 'grace' period ... and no matter if the boat is bought there, just visiting, or just passing through on a truck, etc. Go to the Boat US website and follow the links to the list of state's grace period. This also means that if you change the location of the boat from one state to another you can socked with another tax bill if you exceed the 'grace' period and the state you are now located in has a higher tax % than where you first bought the boat. This all becomes clear if you acknowldege that the sole 'purpose' of citizens is to be simply nothing more than prey species to pay taxes to 'governments'. By owning a boat you will now find out what it means when you hear "sock it to the rich".
Taxes
Levin, Back in the 70s I was stationed in CA as a non CA resident. For autos there was a form that got you out of paying CA sales taxes on cars even though you had CA tags. Not sure what the rules are now but worth checking. Good luck with the taxes and Iraq. Les
Levin, Back in the 70s I was stationed in CA as a non CA resident. For autos there was a form that got you out of paying CA sales taxes on cars even though you had CA tags. Not sure what the rules are now but worth checking. Good luck with the taxes and Iraq. Les
Also
be prepared for your yearly property tax bill. They will catch up with you and charge you for all past years. A H340 will run about $6-700.00/year. The broker should have informed you about all of these fees/taxes! I also would have thought that the broker should have collected and paid sales taxes on the transaction. I don't know if your eliglble for any type of exemption for military service, hope so! Good luck in your deployment, be safe! Dwain 98 H340 San Diego
be prepared for your yearly property tax bill. They will catch up with you and charge you for all past years. A H340 will run about $6-700.00/year. The broker should have informed you about all of these fees/taxes! I also would have thought that the broker should have collected and paid sales taxes on the transaction. I don't know if your eliglble for any type of exemption for military service, hope so! Good luck in your deployment, be safe! Dwain 98 H340 San Diego
Taxes
Levin, There is an exemption for military for the property tax, as long as your are not a resident of the State of California. I also believe that it extends to the sales tax as well. To get the exemption on the property tax, you need to list your home port as one in your state of residence, and not a home port in California. The county assessor will send every boat kept in its county a tax bill. And when assessor sends you a property tax bill there is a place on the form to sign off as an out-of-state resident that is stationed in California in the military. The property tax is then waived. As for the sales tax, the rate varies by county, but it is 7.75% to 8.25% (same as the sales tax in stores), depending on where you keep your boat. However, if you register it out of state, there should be no tax. The sales tax is collected by the DMV if your boat is state registered, and the broker should have followed through better to arrange for the tax here if needed. I know when I bought my boat using a broker, he was very careful about making sure the State of California got their share, and my vessel is a documented boat! Good luck and keep up the good work!
Levin, There is an exemption for military for the property tax, as long as your are not a resident of the State of California. I also believe that it extends to the sales tax as well. To get the exemption on the property tax, you need to list your home port as one in your state of residence, and not a home port in California. The county assessor will send every boat kept in its county a tax bill. And when assessor sends you a property tax bill there is a place on the form to sign off as an out-of-state resident that is stationed in California in the military. The property tax is then waived. As for the sales tax, the rate varies by county, but it is 7.75% to 8.25% (same as the sales tax in stores), depending on where you keep your boat. However, if you register it out of state, there should be no tax. The sales tax is collected by the DMV if your boat is state registered, and the broker should have followed through better to arrange for the tax here if needed. I know when I bought my boat using a broker, he was very careful about making sure the State of California got their share, and my vessel is a documented boat! Good luck and keep up the good work!
You're likely liable
From your description, it sounds like you took delivery of the boat in California, and it remains in CA, although you intend to move it to Tennessee in the future. If that's true, you probably owe the tax to CA. The rate sounds high though. In California the tax rate varies by city and county. In San Dego County, the rate is 7.75% of the amount of the sale. So for a sale amount of $81K, the tax would be $6278. How did the California Board of Equalization determine the amount of the sale? Did you provide them the sale documents? When you buy thru a broker, the broker is not required to collect the sales tax from you, although he may choose to do so. If the broker doesn't, then you are responsible to file a return (a "use tax" return rather than "sales tax", although the rules are the same). The fact that the boat is documented is irrelevant as to whether you owe the tax. (Although, if it had been registered with California rather than documented with the USCG, the California DMV would have collected the tax when title was transferred, and you wouldn't be looking at penalties.) And yes, California also has an annual personal property tax, collected by the county the boat is in, based on a percentage of the boat's value. The rate of the property tax also varies based on where the boat is berthed, but is usually about 1.2% of value. San Diego County will catch up to you for the property tax from the change in USCG documentation. You owe the property tax for the year if you owned the boat on January 1 of any year, even though you may have later sold it or move it out of the county. If you move it out of the county, it is your responsibility to notify the county assessor of that fact, otherwise they can continue to collect the tax until they are notified. When you move the boat to TN, most states will give a credit for sales tax paid to another state, depending on how long the time lag before it is moved to the new state, so that you don't have to pay the sales or use tax twice to two states. You need to check with TN and see what they will do. There are provisions for relief from penalties for reasonable cause and circumstances beyond your control. Generally, ignorance of the law is not an excuse. Deployment overseas may be. I'm not aware of any exemption from the sales tax for that fact, though. Here are some publications from the California Board of Equalization: Info on vessels in general: http://www.boe.ca.gov/pdf/pub52.pdf Info on documented vessels: http://www.boe.ca.gov/pdf/pub79.pdf Info on penalties & interest: http://www.boe.ca.gov/pdf/pub75.pdf Application for penalty relief: http://www.boe.ca.gov/pdf/boe735.pdf Good luck! (BTW, I'm a California CPA.)
From your description, it sounds like you took delivery of the boat in California, and it remains in CA, although you intend to move it to Tennessee in the future. If that's true, you probably owe the tax to CA. The rate sounds high though. In California the tax rate varies by city and county. In San Dego County, the rate is 7.75% of the amount of the sale. So for a sale amount of $81K, the tax would be $6278. How did the California Board of Equalization determine the amount of the sale? Did you provide them the sale documents? When you buy thru a broker, the broker is not required to collect the sales tax from you, although he may choose to do so. If the broker doesn't, then you are responsible to file a return (a "use tax" return rather than "sales tax", although the rules are the same). The fact that the boat is documented is irrelevant as to whether you owe the tax. (Although, if it had been registered with California rather than documented with the USCG, the California DMV would have collected the tax when title was transferred, and you wouldn't be looking at penalties.) And yes, California also has an annual personal property tax, collected by the county the boat is in, based on a percentage of the boat's value. The rate of the property tax also varies based on where the boat is berthed, but is usually about 1.2% of value. San Diego County will catch up to you for the property tax from the change in USCG documentation. You owe the property tax for the year if you owned the boat on January 1 of any year, even though you may have later sold it or move it out of the county. If you move it out of the county, it is your responsibility to notify the county assessor of that fact, otherwise they can continue to collect the tax until they are notified. When you move the boat to TN, most states will give a credit for sales tax paid to another state, depending on how long the time lag before it is moved to the new state, so that you don't have to pay the sales or use tax twice to two states. You need to check with TN and see what they will do. There are provisions for relief from penalties for reasonable cause and circumstances beyond your control. Generally, ignorance of the law is not an excuse. Deployment overseas may be. I'm not aware of any exemption from the sales tax for that fact, though. Here are some publications from the California Board of Equalization: Info on vessels in general: http://www.boe.ca.gov/pdf/pub52.pdf Info on documented vessels: http://www.boe.ca.gov/pdf/pub79.pdf Info on penalties & interest: http://www.boe.ca.gov/pdf/pub75.pdf Application for penalty relief: http://www.boe.ca.gov/pdf/boe735.pdf Good luck! (BTW, I'm a California CPA.)
All I can say is, welcome to California.....
paying a sales tax plus yearly property tax is the main reason why I have not bought a bigger boat.
paying a sales tax plus yearly property tax is the main reason why I have not bought a bigger boat.
Taxes... sigh...
Thanks everyone for all your input... Like I said I bought the boat in about August of 2005 and I'm just now getting this bill. I'm not sure how they assessed the value of my boat but they must not be using $81,000 as what is worth or I would owe a fair bit less sales tax. Does anyone know how to petition the board if they are using a number other than $81,000 to charge me sales tax? Also when I registered my boat with the USCG I just kept the hailing port the same as it had been when the old owner had the boat... which means it still "Coronado CA". As I understand it when I went and researched the laws regarding the military and property taxes (not sales tax... I don't think there is a way around this) I believe I'm exempt from this, but does anyone know if I have to have a hailing port outside CA to get the exemption... and if so how do I get my hailing port officially changed? I think that's it for the questions... as always thanks everyone for all the help. -Levin
Thanks everyone for all your input... Like I said I bought the boat in about August of 2005 and I'm just now getting this bill. I'm not sure how they assessed the value of my boat but they must not be using $81,000 as what is worth or I would owe a fair bit less sales tax. Does anyone know how to petition the board if they are using a number other than $81,000 to charge me sales tax? Also when I registered my boat with the USCG I just kept the hailing port the same as it had been when the old owner had the boat... which means it still "Coronado CA". As I understand it when I went and researched the laws regarding the military and property taxes (not sales tax... I don't think there is a way around this) I believe I'm exempt from this, but does anyone know if I have to have a hailing port outside CA to get the exemption... and if so how do I get my hailing port officially changed? I think that's it for the questions... as always thanks everyone for all the help. -Levin
And more taxes...
When I bought my current boat, I bought it from a commander in the Navy who was stationed in Port Hueneme. He was the one that told me about the exemption from property taxes. According to him, he had to register the boat with a hailing port in his home state, and then had to be able to show he was not a California resident. You can change the hailing port with the USCG.
When I bought my current boat, I bought it from a commander in the Navy who was stationed in Port Hueneme. He was the one that told me about the exemption from property taxes. According to him, he had to register the boat with a hailing port in his home state, and then had to be able to show he was not a California resident. You can change the hailing port with the USCG.
The property tax is based on
where the boat is located. Hailing port is irrelevant. If there is no instruction in your billing to do otherwise to appeal the sales tax billing, I'd simply write a letter to the California Board of Equalization and send them copies of your purchase documents showing the purchase price, and tell them they've made an error in calculation, and what your figures show it should be. Explain that you're not a CA citizen, are deployed overseas, and that the broker didn't explain your responsibilities for sales tax when you bought the boat. And ask for them to waive the penalties. You can get an exclusion from property tax by declaring that the boat is to be taxed for property tax purposes at your home in TN for the period you're on active duty. The form for the declaration is BOE-261-D, which is not available on the BOE's website. You have to request it from them. Here's a letter from the CA Board of Equalization to county assessors on the subject of the tax on personal property for active duty military: http://www.boe.ca.gov/proptaxes/pdf/lta03036.pdf
where the boat is located. Hailing port is irrelevant. If there is no instruction in your billing to do otherwise to appeal the sales tax billing, I'd simply write a letter to the California Board of Equalization and send them copies of your purchase documents showing the purchase price, and tell them they've made an error in calculation, and what your figures show it should be. Explain that you're not a CA citizen, are deployed overseas, and that the broker didn't explain your responsibilities for sales tax when you bought the boat. And ask for them to waive the penalties. You can get an exclusion from property tax by declaring that the boat is to be taxed for property tax purposes at your home in TN for the period you're on active duty. The form for the declaration is BOE-261-D, which is not available on the BOE's website. You have to request it from them. Here's a letter from the CA Board of Equalization to county assessors on the subject of the tax on personal property for active duty military: http://www.boe.ca.gov/proptaxes/pdf/lta03036.pdf
Death and taxes...
Thanks again everyone... And a special thanks to Pete... all those links were a big help. I think I have it figured out now. I will have to pay the $6,278 in sales tax, but hopefully after I petition the board perhaps that will be all I'll have to pay. Like I said thanks for all the info and help figuring this all out. Take care, -Levin
Thanks again everyone... And a special thanks to Pete... all those links were a big help. I think I have it figured out now. I will have to pay the $6,278 in sales tax, but hopefully after I petition the board perhaps that will be all I'll have to pay. Like I said thanks for all the info and help figuring this all out. Take care, -Levin
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