Watch out for the tax man in South Carolina

[Alan]

Large yachts that summered in Charleston, S.C., have begun their seasonal southern migration, partially to avoid large tax bills that would arrive if they were to linger in South Carolina waters.
Yachts registered out of state don't get a bill unless they're in Charleston County waters for 180 days, so lots of those big boats get moved to places such as Florida, which has no property tax on boats, The Post and Courier newspaper reported.
"If those boats could stay, they'd be spending money and hiring people," Chuck Laughlin, of St. Barts Yachts at the Charleston City Marina, told the newspaper.
The laws involving property taxes on boats have been on the books for years, but local marina officials said enforcement has increased.
"It's definitely stepped up, and I think the stepped-up enforcement is running business out of town," said Robbie Freeman, manager of the Charleston City Marina. "I've never seen it this bad. We probably lost five or six customers this week."
Charleston County Auditor Peggy Moseley denies that there has been any sort of crackdown. Records from her office have previously shown, however, that until last year, when the issue was raised repeatedly at public meetings, no yacht worth $1 million or more had received a bill in Charleston County, the newspaper reported.
"What we've done is left after 179 days," said Charleston-area resident John Thomas, owner of a 50-foot boat worth about half a million dollars. "I'll take my $10,000 [that would be owed in taxes] and buy some fuel and stay in the Bahamas. If they would charge a reasonable fee - $1,000 or $2,000 - we would pay it and stay."

 

[Roger Long]

And Maine.

As reported earlier, Maine has been doing the same thing but focusing on boats that don't have sales tax in their home states. This has primarily effected RI boats (not that many boats in NH) and non US vessels.

Worse, the taxpayer supported drones in the tax compliance unit have been taking the position that proof of a vessel being in Maine for just a single day justifies their requiring the owner to that he didn't spend more than 30 days in Maine. I've seen the correspondence that one RI boater provided me with and you would not believe the paper chase they were putting him through to prove a negative. He spent hours on it and won't be coming back to spend money in our state any time soon. Could you prove where your boat has been every day that you've owned it? All this under threat of having the state slap a lien on his vessel if he can't document every day of his ownership.

The law says that no tax is owed after the first year of ownership if the boat is kept outside of Maine for under 30 days during that first year. For some reason, the tax compliance unit has been asking people for the complete location history of the boats that have been owned for years. Either they don't know their own rules or they are trying to scare people into paying taxes they don't actually owe.

The marinas have been hit hard. Last year, I saw big foreign yachts all over the coast on my three round trips to Canada. This year, hardly a one. The tax people scared most of them away. The few I saw were anchored in remote coves.

I'm sure a big factor in this is that the tax drones are able to get out of their cubicles and visit seaside resort towns and eat lobster rolls at taxpayer expense while they photograph boats and bow numbers. The foreign boats that are still coming have learned that they can avoid trouble by staying out of marinas and major harbors. The few visiting the state this season didn't leave nearly as much as they used to.

If you are from RI or a state that doesn't have sales tax, I suggest you do the same thing. Enjoy wild Maine and minimize the time you spend in major yachting centers. Above all, don't rent docks or moorings and leave a paper trail. Pay cash for fuel. The tax compliance unit has been using subpoenas to seize and review marina records.

I spent quite a bit of time on this issue and had meetings with the marina trade group but couldn't get any traction. They were concerned and appreciative of some of the documentation I obtained from RI boaters but stopped returning my phone calls and emails.

 

[kloudie1]

Apparently the "Innocent until proven guilty" tenet no longer is
a part of our heritage.. Louisiana did a play like that but has done no enforcement. Those few of us who are “boating literate” (maybe 5%) are the only folks who have complied. I think they got so much play from the friends at BP this year that they’ve not had to work.. I actually prefer that course of action!..

 

[Roger Long]

Apparently the "Innocent until proven guilty" tenet no longer is a part of our heritage..

The position of tax people that I've heard in similar cases, and what I presume the Maine drones would say, is that "Innocent until proven guilty" only applies to criminal law. Since tax is a civil matter the burden of proof is on the accused. It's similar to the lower standard of proof required in civil actions where "reasonable doubt" is not sufficient to get a defendant off the hook.

The police can't search your house for drugs without some evidence sufficient to obtain a warrant. However, the IRS can audit you by random selection.

 

[rpwillia]

All good reasons to vote today!

In Virginia where I voted today they had two new entitlements they wanted to add to the state constitution. You read these and they sound nice until you realize who they are targeting are already covered by something else. How many benefits do we need to pile on.

If we had fewer government workers and less entitlements we would not need as much government and have lower taxes and less of this fishing for dollars.

Vote out the incumbents!

 

[Alan]

I'm all for paying taxes and paying for programs that benefit society. The HUGE problem is the waste that is built in to the system. Estimates of more than 60% of taxes is just plain waste. Eliminate the waste and programs could be increased to the gain of all and still cost less. South Carolina's method of taxation in this program is a bad idea with no gain for anyone.

 

[JVB]

I pay South Carolina property taxes on my house. Why shouldn't someone with a floating house several times as expensive as mine pay property tax too ? I have no sympathy for someone who isn't willing to pay their share of cost for fire and police protection, etc. after living in the state for 180 days. I think a fair solution would be a property tax that is distributed to the various states in which the boat is docked on a prorated formula. As I understand it that's the way interstate truckers are taxed.

 

[Ray Bowles]

A true and legal case works out this way. Live in any state in the US. Buy a boat in Alabama, on the Mobile side of the Dog River. Pay the much lower tax rate on that boat because of where it sits. Re-register the boat every year for $30. Live aboard and go where ever you want and pay no taxes other than for food and fuel.
It makes for a good life without ever paying for any of the services you use. Somebody pays for all the water improvements, channel dredging, city docks etc. It just isn't you.
Then you try to fess up and register your boat in your home state and find out it is over &10,000 the first year and only $4,000 after that. Back to Alabama and the $30 a year.
I don't think drinking tea will do anything to correct this other than possibly getting Alabama to lower the $30 to maybe $5.
What is really fair?
Ray

 

[Rick Webb]

Pretty Simple, it Would Seem

If you don't like the way your state taxes you, get it changed or move. If you don't like the way another state taxes don't move there.

 

[rpwillia]

Actually it is probably much simpler that all that

99.9% of us don't mind paying our taxes as long as we have some say and feel that it is going to do good. When it is just arbitrary and we don't agree with how it is being spent we have a problem. Kind of like if someone in need asks you for money, or someone just walks up and tries to steal your wallet - there is a big difference.