Hello, I've been told by friends that there is a a sales tax due on the boat I just bought and also an annual property tax. The boat is Coast Guard documented and no one has asked for any sales tax or valuation for any property taxes. So far, I am ignoring the whole thing. (2 months). Anyone in California aware of how this all works? Is it up to me to beg the County assessor to bill me and to send the sales tax to Sacramento? or am I committing some crime by doing nothing????????? Seems to me the procedure could be a bit clearer--especially since I do not need to go through DMV with the Coast Guard bill of sale. Thanks!
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We have a sales tax in Washington...
that the state mafia collects whenever you sign over the title on a transaction. The mafia also requires tabs which they base on the value of the boat. You can take the chance on ignoring both, just like you can with your car, but the enforcement knuckle draggers will find you.
that the state mafia collects whenever you sign over the title on a transaction. The mafia also requires tabs which they base on the value of the boat. You can take the chance on ignoring both, just like you can with your car, but the enforcement knuckle draggers will find you.
As Maine goes
Here the Coast Guard sends the town assesor(maybe through the state) a printout of all the documented boats in town. State laws are different, but at least this much can be counted on. Pay your taxes, haven't you hear your state is broke.
Here the Coast Guard sends the town assesor(maybe through the state) a printout of all the documented boats in town. State laws are different, but at least this much can be counted on. Pay your taxes, haven't you hear your state is broke.
You Owe, You Owe, Etc.
Yes, the sales tax is due and there will be a penalty if not paid within a certain time. They lay the responsibility on you, so you get zero consideration for them not notifying you. Same for property tax. The county assessor has people who walk the docks and see that all the boats are on the rolls. BTW, the tax is due where the boat is kept, not where your residence address is. If you are not residing in LA County, be prepared for some confusion and billings from your resident county as well. All you need to do is provide them proof of the boats morring location. Good luck! Rick D.
Yes, the sales tax is due and there will be a penalty if not paid within a certain time. They lay the responsibility on you, so you get zero consideration for them not notifying you. Same for property tax. The county assessor has people who walk the docks and see that all the boats are on the rolls. BTW, the tax is due where the boat is kept, not where your residence address is. If you are not residing in LA County, be prepared for some confusion and billings from your resident county as well. All you need to do is provide them proof of the boats morring location. Good luck! Rick D.
IOIOIO
Thanks for the replies so far--I know that I owe, I owe! So where does one go to pay? DMV ?
Thanks for the replies so far--I know that I owe, I owe! So where does one go to pay? DMV ?
CT taxes
FYI CT taxes are as follows for a state registered boat. A 6% sales tax on purchase and $150 per year registration fee to the DMV. There is no town tax yet… I purchased the boat about 5 years ago and just got an audit on it. Luckily I had the DMV receipts still so I was ok! Dave
FYI CT taxes are as follows for a state registered boat. A 6% sales tax on purchase and $150 per year registration fee to the DMV. There is no town tax yet… I purchased the boat about 5 years ago and just got an audit on it. Luckily I had the DMV receipts still so I was ok! Dave
Sales and Property Tax
Having just been through this myself, the CA State Board of Equalization (responsible for CA sales or use tax) gets a copy of documentation activity for all of CA from the US Coast Guard. They will send you a questionaire regarding purchase price, etc. They may also check with the seller. If the seller's info and your info varies by a significant amount, an audit may be triggered. I think the SBE only gets the report from the USCG once per year so it may take them a year or so to catch up with you. Rest assured that they WILL catch up with you! They will send you a bill and give you some period of time to pay after which, some penalty will be due. As far as personal property tax, the county assessor gets reports from the marina management and, as Rick stated, from their dock walkers regarding which boats are where. If your boat is documented, they will note the name & hailing port and find out from the USCG ownership info and send you a notice of "Escaped Assessment" along with a valuation. You have 60 days to request an informal hearing if you think the valuation is too high. In my county, past year's property tax can be paid via installments but the current year's tax must be paid when due. My county's assessor was also very willing to work with me on a fair valuation, generally going with the NADA used boat values as their guide. Escaped assessments have no penalty. This is from personal experience in Alameda county just this month. I found that both the SBE and the Alameda county assessor to be very reasonable but the key is communication. For example, the county assessor lowered my boat's valuation by several thousand dollars for both years I owed property tax saving me hundreds of dollars. I had to request an informal hearing but they did lower it. If you are a legal liveaboard in CA you are also eligible for a "homeowner's exemption" which will lower the property tax valuation by $7,000 if the boat is your primary residence. Your county may be different. I would just wait and take care of sales tax & property taxes when they catch up with you. Meanwhile, budget & plan for when they do. I hope that helps. I have included a link to the CA State Board of Equalization's FAQ on use tax for boats, etc.
Having just been through this myself, the CA State Board of Equalization (responsible for CA sales or use tax) gets a copy of documentation activity for all of CA from the US Coast Guard. They will send you a questionaire regarding purchase price, etc. They may also check with the seller. If the seller's info and your info varies by a significant amount, an audit may be triggered. I think the SBE only gets the report from the USCG once per year so it may take them a year or so to catch up with you. Rest assured that they WILL catch up with you! They will send you a bill and give you some period of time to pay after which, some penalty will be due. As far as personal property tax, the county assessor gets reports from the marina management and, as Rick stated, from their dock walkers regarding which boats are where. If your boat is documented, they will note the name & hailing port and find out from the USCG ownership info and send you a notice of "Escaped Assessment" along with a valuation. You have 60 days to request an informal hearing if you think the valuation is too high. In my county, past year's property tax can be paid via installments but the current year's tax must be paid when due. My county's assessor was also very willing to work with me on a fair valuation, generally going with the NADA used boat values as their guide. Escaped assessments have no penalty. This is from personal experience in Alameda county just this month. I found that both the SBE and the Alameda county assessor to be very reasonable but the key is communication. For example, the county assessor lowered my boat's valuation by several thousand dollars for both years I owed property tax saving me hundreds of dollars. I had to request an informal hearing but they did lower it. If you are a legal liveaboard in CA you are also eligible for a "homeowner's exemption" which will lower the property tax valuation by $7,000 if the boat is your primary residence. Your county may be different. I would just wait and take care of sales tax & property taxes when they catch up with you. Meanwhile, budget & plan for when they do. I hope that helps. I have included a link to the CA State Board of Equalization's FAQ on use tax for boats, etc.
Problem solved! Thanks!
Thanks again for the GREAT information -- The problem is solved and I now understand the process.
Thanks again for the GREAT information -- The problem is solved and I now understand the process.
CA procedure is not common, USCG not helping...
Most States on the Atlantic coast have standardized their procedures to reflect what happens with cars. When you go to do your registration on a boat you've just purchased, you pay your sales tax on the purchase in that transaction. California's procedures are surprisingly informal, and it isn't helped by the fact that USCG doesn't put the purchase price of the vessel on their title documents, making them useless for state transactions. The previous owner of my boat provided me with his Federal title and I couldn't use it, having to wait until they could dig up their state title...
Most States on the Atlantic coast have standardized their procedures to reflect what happens with cars. When you go to do your registration on a boat you've just purchased, you pay your sales tax on the purchase in that transaction. California's procedures are surprisingly informal, and it isn't helped by the fact that USCG doesn't put the purchase price of the vessel on their title documents, making them useless for state transactions. The previous owner of my boat provided me with his Federal title and I couldn't use it, having to wait until they could dig up their state title...
A Little More
And just a little more good news on the property tax... The owner of the vessel on January 1st is the responsible party for property taxes in California. Los Angeles County uses the assessed book value in figuring the tax, which may or may not correspond to your purchase price. You will receive a bill for 1% of the book value, regardless of what you paid. And this will be due August 31st.
And just a little more good news on the property tax... The owner of the vessel on January 1st is the responsible party for property taxes in California. Los Angeles County uses the assessed book value in figuring the tax, which may or may not correspond to your purchase price. You will receive a bill for 1% of the book value, regardless of what you paid. And this will be due August 31st.
None in RI
Since 1995 there has been none on boats in RI. This was done to enhance the large boat building business in the state. But I would suggest that you call the Tax Dept. (you don't need to identify yourself) in CA and inquire how it is done. Then let your conscience decide.
Since 1995 there has been none on boats in RI. This was done to enhance the large boat building business in the state. But I would suggest that you call the Tax Dept. (you don't need to identify yourself) in CA and inquire how it is done. Then let your conscience decide.
HOW YOU PAY THE CA SALES TAX
On your 2004 California income tax return (form 540) at line 51 on page 2 under "Step 9a" is a line that says "use tax". This is where you can list and pay the amount that would be "sales tax" if you had bought the boat from a dealer or broker, or had to go thru DMV for registration. Also, under Section 1139 of the California Revenue & Taxation Code, it is clearly the taxpayer's (boat owner's) responsibility to inform the county if the boat is moved from the county that had been taxing it for property tax purposes to somewhere else. Under the law, they don't have to delete you from the tax rolls until you notify them. Most counties work with you on this if you can prove when & where you moved it, if you didn't notify them, but LA county is known to be one of the worst to deal with on boat property taxes. Tell your CPA about the boat purchase when he/she does your taxes, and they can take care of it. Keep in mind as well that the interest you pay on the boat loan is likely deductible, if the boat has berths, a head, and galley. Peter H., CPA Stockton, CA
On your 2004 California income tax return (form 540) at line 51 on page 2 under "Step 9a" is a line that says "use tax". This is where you can list and pay the amount that would be "sales tax" if you had bought the boat from a dealer or broker, or had to go thru DMV for registration. Also, under Section 1139 of the California Revenue & Taxation Code, it is clearly the taxpayer's (boat owner's) responsibility to inform the county if the boat is moved from the county that had been taxing it for property tax purposes to somewhere else. Under the law, they don't have to delete you from the tax rolls until you notify them. Most counties work with you on this if you can prove when & where you moved it, if you didn't notify them, but LA county is known to be one of the worst to deal with on boat property taxes. Tell your CPA about the boat purchase when he/she does your taxes, and they can take care of it. Keep in mind as well that the interest you pay on the boat loan is likely deductible, if the boat has berths, a head, and galley. Peter H., CPA Stockton, CA
Careful in not informing the tax collectors...
if they find out years later that you have had the boat without paying taxes.... you will have to pay penalty taxes too. abe
if they find out years later that you have had the boat without paying taxes.... you will have to pay penalty taxes too. abe
in MD it is 5% use tax, but no property tax. And as everyone knows...you can deduct the loan interest, as long as it meets IRS rules on a second residence.
Tax Collectors - Not Always The Bad Guy
A number of years ago I was one of those guys working for a County Tax Collector who went looking for boat owners delinquent on their boat taxes. One day I talked to an elderly couple who had regularly paid boat taxes for quite a few years. When I asked why they had quit they said the boat had been destroyed four years earlier and produced insurance documents to prove it. They said they were honest people who always paid their taxes and since the county was still sending bills they thought it was their duty to pay but had decided they had done so long enough. I quickly initiated a refund for all the years they unnecessarily paid boat taxes. They were very happy I came to visit. My experience is that probably sooner rather than later the system will alert the State and the County Assessor that you are now the owner.
A number of years ago I was one of those guys working for a County Tax Collector who went looking for boat owners delinquent on their boat taxes. One day I talked to an elderly couple who had regularly paid boat taxes for quite a few years. When I asked why they had quit they said the boat had been destroyed four years earlier and produced insurance documents to prove it. They said they were honest people who always paid their taxes and since the county was still sending bills they thought it was their duty to pay but had decided they had done so long enough. I quickly initiated a refund for all the years they unnecessarily paid boat taxes. They were very happy I came to visit. My experience is that probably sooner rather than later the system will alert the State and the County Assessor that you are now the owner.
BTW
On a sales transaction in Washington you pay whatever jurisdiction sales tax rate you purchased the boat. So, for lucky me it was 8.75% of the sale price, or about $10,000. Plus, I got to pay $765 for boat tabs, good for one year, regardless whether it is a documented boat. According to the county tax assessor's office 100% of the boat tab fees goes into the state's general fund. This means about zero percent of the fees collected goes towards waterway improvements. The general fund helps to pay for roadway improvements, community transit, new highways, etc. Oh, and the state keeps closing down their parks because of cost reductions. So, some of the parks in the San Juan Island group can no longer be visited (lawfully) because the state decided it could no longer cover the cost to keep them open. Yup! Sounds like a state mafia to me. Bud
On a sales transaction in Washington you pay whatever jurisdiction sales tax rate you purchased the boat. So, for lucky me it was 8.75% of the sale price, or about $10,000. Plus, I got to pay $765 for boat tabs, good for one year, regardless whether it is a documented boat. According to the county tax assessor's office 100% of the boat tab fees goes into the state's general fund. This means about zero percent of the fees collected goes towards waterway improvements. The general fund helps to pay for roadway improvements, community transit, new highways, etc. Oh, and the state keeps closing down their parks because of cost reductions. So, some of the parks in the San Juan Island group can no longer be visited (lawfully) because the state decided it could no longer cover the cost to keep them open. Yup! Sounds like a state mafia to me. Bud
MD Correction:
Unless it was changed in the last two years, MD is a 5% "Excise" Tax. The important difference is that an "Excise" Tax is Fed. Tax DEDUCTIBLE, unlike a "Sales or Use" tax.
Unless it was changed in the last two years, MD is a 5% "Excise" Tax. The important difference is that an "Excise" Tax is Fed. Tax DEDUCTIBLE, unlike a "Sales or Use" tax.
MD Tax
I am sitting here looking at my settlement sheet for Maryland Tax on the boat I bought this last spring. Clearly it says "Tax (Maryland 5%). I'm going to check further, but I am fairly certain this is a Maryland Sales Tax, not fed excise tax and not tax deductable.
I am sitting here looking at my settlement sheet for Maryland Tax on the boat I bought this last spring. Clearly it says "Tax (Maryland 5%). I'm going to check further, but I am fairly certain this is a Maryland Sales Tax, not fed excise tax and not tax deductable.
agolden you say MD has a 5% use tax
is that a one time fee just like a sales tax? If that's an annual use tax like most states then on a $100,000 boat that would be $5000 a year *yks
is that a one time fee just like a sales tax? If that's an annual use tax like most states then on a $100,000 boat that would be $5000 a year *yks
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