Fall-out from Sen. Kerry?

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Prospective

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This past weekend I had conversations with two different boat owners about letters they received from the MA department of revenue regarding sales taxes on boats.

Both people in two totally seperate conversations said they rec'd letters indicating they owed sales tax on boats that were registred to them. In each case the person was a MA resident who keeps there boat in RI. In one case the person has two boats and has had them for over ten years. They were looking for taxes plus interest and penalties that could have added up to over $20k

It appears that MA was scanning lists of documented vessels that have owners with MA addresses but never paid sales taxes. They were let "off the hook" after they proved the boats were berthed in RI. But one owner who used to store his boat on the hard over the winter in MA is now keeping it exclusively in RI. I have also elected to not store in MA partly because of this even though it is cheaper.

We all thought the timing was interesting given the recent publicity surrounding Sen. Kerry.
 
I live in MA and dock in RI. I got the letter this Spring, before the Kerry incident. Once I was able to prove that I purchased in RI and docked in RI, MA was happy and dropped the issue quickly.

- Ed
 
Guys: MA has two taxes on personal property: a sales tax on purchases made in the state by residents and a parallel "use" tax on personal property bought out of state with the intention of using it in MA. There is a presumption that if a MA resident purchased the boat out of state and kept it out of state for at least 6 months, it was not purchased with the intent to use it in MA. The longer it is out of state the easier it is to prove the lack of intention.

You'd be surprised how many people receive the letter and ante-up in spite of the fact that they may be entitled to the exemption. DOR won't tell you about the presumption and use scare tactics to collect a tax that may not be due.

Gene
 
quote:
Originally posted by Comogene

Guys: MA has two taxes on personal property: a sales tax on purchases made in the state by residents and a parallel "use" tax on personal property bought out of state with the intention of using it in MA. There is a presumption that if a MA resident purchased the boat out of state and kept it out of state for at least 6 months, it was not purchased with the intent to use it in MA. The longer it is out of state the easier it is to prove the lack of intention.

You'd be surprised how many people receive the letter and ante-up in spite of the fact that they may be entitled to the exemption. DOR won't tell you about the presumption and use scare tactics to collect a tax that may not be due.

Gene

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Interesting, all seems to jibe with my conversations. So if you live in MA but keep a new boat out of MA for 6mo you won't have to pay any sales/use tax? Seems too easy. And what about storage. What happens if you store in MA but berth in RI? Does it matter if you are a MA resident or not?
 
Ct has the same regulations. They also have a similar "loophole" if a boat is brought into the state for repair or maintenance work from Nov to April. My "ex-house" is in Ct but store the boat in Westerly.
 
Interesting question about storing in MA even if the boat is berthed in RI. I'm a MA resident, documented vessel, home marina is in RI for over 13 years and no letter. Don't want one either :) If the storage turns out to be a risk I'll winter in RI as well. Anyone know how the state views winter storage versus the summer dockage?

FYI, I purchased (this year) in connecticut and brought the boat to my home marina in RI. I had to fill out a state form (connecticut) stating that my home dock was RI and therefore not subject to state tax.
 
NY did a similar search for documented vessels owned by NYS residents that had a homeport in another state. i was told if the boat entered NY waters at ANY time in the future, I would owe tax and penalties.

The letters back and forth with the tax unit got so frustrating that I requested that the agent call me directly. he did, and that when I was threatened with the above notice.
 
quote:
Originally posted by TimHenn

Interesting question about storing in MA even if the boat is berthed in RI. I'm a MA resident, documented vessel, home marina is in RI for over 13 years and no letter. Don't want one either :) If the storage turns out to be a risk I'll winter in RI as well. Anyone know how the state views winter storage versus the summer dockage?

FYI, I purchased (this year) in connecticut and brought the boat to my home marina in RI. I had to fill out a state form (connecticut) stating that my home dock was RI and therefore not subject to state tax.

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Tim, I don't have an answer to you question but this is what the two folks I talked to were affraid of. So once they got the letter they elected to store in RI as well.

I would be willing to bet you'll get a letter no matter what. They appear to review lists of documented boats that have owners with MA residents. Then they send the letter. You have to prove you keep the boat in RI and don't owe any tax. In each case they were let off when they showed the boat stayed in RI. Don't know what proof was used but I bet a paid seasonal slip receipt would do the trick.
 
I talked to the yard I winter with. The state visited the yard asking questions about owners. The yard owner is also a lawyer and did some research. According to the conversation he had with the state folks and his own research the tax "use" laws are based on where you use the boat. So the state folks said they weren't interested in where owners were storing they're boats cause they're not in "use".

With that reassurance I'm going to winter with them again because I like the owners, the service and the price. I'd love to get something more concrete in writing but I feel pretty sure the state wouldn't go after those that store in Mass but use in RI. I can certainly prove I use the boat out of RI with the marina contracts.

If I get a letter I will definately let others know. Another detail about my situation, my port of call is my home town whcih is also in Mass. I did this way back when I documented my first boat cause I wasn't sure where my home port was going to be and I didn't want to change it on the boat every couple of years. This has no bearing on sales use tax but it might be another piece of information the state is using to find potential violators.
 
Is there anywhere that lists what the use tax is by state anywhere? It is bad enough that they charge a sales tax of x% when you buy the boat but then to charge you x% to make up the difference when you move is even worse. Then add on another 2% or more for use tax and no wonder folks stop buying boats. Or move them off shore.

And to threaten you with the "if you ever come in our waters" deal should be against the law.
 
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