Maine Use Tax heads up.

RichH · Jun 30, 2010

Sounds like the state of Maine is asking for very nasty class action lawsuits, multiple restraining orders, etc. etc. etc. and an immense loss of revenue from 'the filthy rich' who would have traveled to Maine during the summer time.

I am (now was) planning to travel to the Canadian maritimes next summer .... I guess to avoid unnecessary hassles, Ill simply bypass Maine entirely.

One can only imagine, when long distance cruising, arriving in Maine, having the slobbering jack-booted 'revenuers' show up and demanding inane proofs of ownership, paid taxes, etc. Who in their RIGHT MIND carries such tax records when traveling?

Id also bet the farm that there will develop 'reciprocal' enforcements by other states where Maine citizens travel to, especially targeting 'revenue enforcement' on those Maine registered boats - as such insanity usually becomes duplicated and enhanced when there is any opportunity to gain 'revenue'. Maine has just announced to the world that there are many Maine boats that have probably not paid "their fair share" of sales taxes ..... an ample opportunity and 'probable cause' for other hungry for revenue states to investigate for the purposes of 'seeking revenue'.
Maine registered boats inevitably will become 'special revenue targets' when traveling to other states, just like boats registered in states that have NO or very little sales taxes, etc. on boats.

Stu Jackson · Jun 30, 2010

RichH said:
One can only imagine, when long distance cruising, arriving in Maine, having the slobbering jack-booted 'revenuers' show up and demanding inane proofs of ownership, paid taxes, etc. Who in their RIGHT MIND carries such tax records when traveling?

Remind ya of 1776?

Steve Dion · Jun 30, 2010

Stu:

I thought that this started on December 16, 1773?

Dan Johnson · Jun 30, 2010

Maryland DNR Activities Heads-Up...

You guys in Maine aren't alone in having your marine DNR come looking for revenue. Two weeks ago the Maryland DNR paid a waterbourne visit to every marina on the Northeast River here in Maryland.

As reported to me, in our 72 slip club marina they went from boat to boat writing down the registration numbers (or noting the lack thereof) of every boat in every slip. When questioned, they wouldn't explain themselves so we can only guess what's coming next.

As a courtesy to all of you that have a boat in Maryland waters but not registered in Maryland, here is what the state says about that:

How do I know if my vessel must be registered in Maryland?
Your vessel, whether commercial or recreational, must be registered in Maryland if it is:

Equipped with any kind of primary or auxiliary mechanical propulsion; and

Used in Maryland most in a calendar year.
Note: US Coast Guard documented vessels using Maryland waters are NOT exempt from the vessel excise tax. When used principally in Maryland, documented vessels must display a documented use decal.

If your vessel was purchased in Maryland and will use Maryland waters a majority of the calendar year, you are liable for vessel excise tax and must register the vessel within 30 days of purchase to avoid assessment of penalty and interest.

If your vessel was purchased elsewhere or previously registered in another jurisdiction, is now in Maryland waters, and will use Maryland waters more than any other single jurisdiction during the calendar year, you are liable for vessel excise tax and must register the vessel within 30 days of entering Maryland waters.

If your vessel is duly registered in another jurisdiction but remains in Maryland waters more than 90 days in a calendar year, you may be liable for vessel excise tax unless you can prove principal use in another jurisdiction.

What is "principal use?"
§8-701(p) of the State Boat Act

“State of principal use” means the jurisdiction on whose waters a vessel is used or to be used most during a calendar year, which is the period from January 1 through December 31.

“Use” means to operate, navigate, or employ a vessel. A vessel is in use whenever it is upon the water, whether it is moving, anchored, or tied up to any manner of dock or buoy. A vessel is also in use if it is kept in any structure in readiness for use.

When must I apply?
Vessel excise tax must be paid within 30 days of Maryland tax liability to avoid the assessment of penalty (10% of vessel excise tax due) and interest (1.5% per month).

Note how their "in use" designation didn't miss a single method of keeping a boat on the waterfront. Expect this sort of thing in other states as well.

RichH · Jul 1, 2010

What Dan states is absolutely true .... and there is more to it.

I bought my present boat in another state and shipped it to Maryland. It was being worked on in a boatyard and the work took ~40 days, wasnt even in the water. When I went to the Maryland TAX office to pay my 'use tax' I got hit with severe penalties and interest ... because the boat was IN Maryland beyond 30 days and it did not matter that the boat was on the hard, never was in Maryland WATERS.

The same rules apply to most 'vehicles'. So if you break down along the highway in most states with your car or truck or airplane (or horse/donkey or bicycle), etc. and the repairs, etc. last more than that states 'grace period' you have to pay the 'differential' taxes (plus penalties and interest).
What a country!!!!!

kloudie1 · Jul 1, 2010

In Louisiana, as usual, a few donkeys called attention to the issue.. Basically folks were buying NEW boats and documenting them and so not registering in Louisiana.. SO they were skipping out on a 4.5% sales tax .. Those were the folks that caused the problem.. the ones who were skipping out on the sales taxes..Mostly high end power boats, but also some fishing vessels and sailing vessels. on a $200K-$300K vessel, that skipping of taxes can be enough to tweak the W&F folks..and rightfully so..I do believe in paying ones taxes. The state’s response was very heavy handed and handled in a way that allowed the new law to be passed without alerting the people who would be affected..until after it was passed. Our ”use” tax is very reasonable, something like $60 every four years for a 34 foot boat (scaled for size).. but we didn’t have a clue until we got a nastygram from the W&F dept, a couple of months after the law was passed

kenn · Jul 1, 2010

RichH said:
... When I went to the Maryland TAX office to pay my 'use tax' I got hit with severe penalties and interest ... because the boat was IN Maryland beyond 30 days and it did not matter that the boat was on the hard, never was in Maryland WATERS.

The same rules apply to most 'vehicles'. So if you break down along the highway in most states with your car or truck or airplane (or horse/donkey or bicycle), etc. and the repairs, etc. last more than that states 'grace period' you have to pay the 'differential' taxes (plus penalties and interest).

Whew. When your boat was on the hard in MD, what sort of repairs were happening? If you're painting brightwork or similar, I can see the state still considering that the boat's "ready for use", but, if the shaft's out or the bottom's stripped, it's hardly "ready for use"... How does one go about fighting that?

Also, out of interest, how much is the 'use tax' in MD? Do all states have this tax, at similar amounts? Wouldn't paying use tax in one state count as proof of use there? Just wondering...

(We have some crazy taxes here in Canada, but nothing like that... boats ain't property, they're vehicles. You pay sales tax at purchase, a ONE-TIME fee to register (federal), taxes on fuel and service, taxes on fees for insurance/mooring/clubs/locks/etc, ... and that's about it.)

RobertLangdirect · Jul 1, 2010

Does someone have an address of the office of the gov'nor in Maine? I offer, if yes, post it here and let's have everyone send a letter saying, more or less, "upon hearing that you will charge me a 5% usage fee, I have decided to change my Maine vacation plans to another state that is not so tax-crazy.

While I regret the economic impact to the people of Maine, perhaps this will wake them up and have them take notice that a business friendly environment is more valuable than the heavy-handed tax that you try to impose."

RichH · Jul 1, 2010

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

The boat was being re-commissioned after truck transport.
AT that time the grace period in MD was 30 days.
The 'excise use tax' in MD is 6% .... in other states its a 'sales tax'

Eg. If you buy a boat in one state that has 2% sales tax move that boat into MD for principal use or exceed the 'grace period', .... MD is 6% ....then you owe MD 4%, even if you bought it elsewhere.

Stu Jackson · Jul 1, 2010

That's an interesting link, Rich. I checked on California, and it says:

Notes: Local Sales and Use Tax also apply

What this means is the state gets ya, and then your county gets ya, too!

We pay property tax on our boat to the county in which it's berthed. In my case, Alameda County, who have a nasty reputation of continuing to ding you for property taxes even if you move your boat out of the county. They are extremely hard to get rid of.

I do not know, however, if it's the same for those other SF Bay boaters in Solano, San Francisco or Marin Counties.

RichH · Jul 1, 2010

Sadly, many NE states/counties are also proposing personal property taxes on boats, etc. and this is in ***addition*** to the sales/use taxes already applied. For example in some counties in VA you have to fork over up to 4% PP tax on your boat/car/truck/airplane, etc. ...... YEARLY!

Maine Sail · Jul 1, 2010

RobertLangdirect said:
Does someone have an address of the office of the gov'nor in Maine? I offer, if yes, post it here and let's have everyone send a letter saying, more or less, "upon hearing that you will charge me a 5% usage fee, I have decided to change my Maine vacation plans to another state that is not so tax-crazy.

While I regret the economic impact to the people of Maine, perhaps this will wake them up and have them take notice that a business friendly environment is more valuable than the heavy-handed tax that you try to impose."

Won't help, this state is too far gone. If we didn't live in such a sweet location, with the best US cruising waters just steps from our front door, we'd have been out of here long ago... You want to know how dumb I am? I moved here from NH.....

Sailing has me by the you know what's and NH has nothing on Maine except LOWER TAXES...

BobM · Jul 1, 2010

ME probably learned a lesson from FL

Roger Long said:
As I read the press release, as long as you paid more than 2% sales tax in your home state, you won't own anything in Maine. If you didn't pay sales tax in your home state and don't bring the boat to Maine for more than 30 days the first year, you won't own anything if you bring it to Maine later. This isn't quite consistent with the email but she said she was replying in a hurry. I'll be talking with her Monday and will clarify this.

When my parents moved to Florida fifteen years ago it had a controversial law requiring them to pay FL sales tax on vehicles they had owned for years. If I recall correctly, after a few years they removed it and had to pay it all back.

Rick486 · Jul 2, 2010

BobM said:
When my parents moved to Florida fifteen years ago it had a controversial law requiring them to pay FL sales tax on vehicles they had owned for years. If I recall correctly, after a few years they removed it and had to pay it all back.

I copied this off the Maine state web site http://www.mainerec.com/boating2.asp?Category=70&PageNum=70

SALES TAX
The first time any owner of a watercraft registers the watercraft, the owner must (1) show proof that a 6% sales tax or use tax has been paid, or (2) pay the sales/use tax due to the Registration Agent at the time the registration is issued. Sales/use tax paid to another jurisdiction will be credited toward the Maine sales/use tax due. A watercraft purchased, registered and used by the present owner outside of Maine for at least a year is not subject to sales/use tax as long as the owner was a resident of the other state at the time of purchase.

It seems to say that so long as the boat has been owned and used for at least a year outside of Maine, you are in the clear. Am I reading this correctly?

Maine Sail · Jul 2, 2010

Roger Long said:
Looks like they haven't gotten around to changing it to reflect the recent reduction in tax for boats from 5% to 2%.

Heck Roger they're so incompetent they never changed the sales tax rate from 6% to 5% a change which occurred years ago. 2%, yeah right, I'll believe that when I see it. My brother just bought a new boat thee weeks ago and registered it Monday of this week. He paid 5% NOT 2%....

Cayennita · Jul 2, 2010

When I lived in Marblehead, MA, I used to take my boat up to Booth Bay Harbor to participate in the Gulf of Maine Ocean Racing Series. Included races out of the Booth Bay Yacht Club and also the Monhegan Island race. The boat stayed up there for more than 30 days. I guess that the out of state participation will come to a screeching halt.
Many years later I cruised in my 51 footer from the Virgin Islands to maine and back south. I spent more than 30 days up there with my wife since there is so many beautiful places to visit. I guess many cruisers will now cut their time up there and eat less lobster.