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  1. #1
    Registered PhantomChaos's Avatar
    My Boats:
    Formula FASTech 382 Sunseeker Apache 45
    Join Date
    Dec 2000
    Bell Canyon, CA

    Post Possible changes with California "Out of State" boat delivery tax laws

    I took "out of state" delivery when I bought my new boat two years ago. As a precaution, I contracted an attorney to handle the logistics and to insure that things were done properly.

    This is a portion of a letter received from him today explaining possible changes to the tax laws. I would recommmend David without hesitation. Here is the letter.


    249 East Ocean Blvd., Suite 801
    Long Beach, California 90802
    Telephone: (562) 432-8618 Fax: (562) 432-8638
    e-mail: [email protected]

    You will recall that this office was retained to assist with the purchase of your yacht, and to structure the purchase as an “offshore” or out-of-state delivery to be exempt from California sales tax. According to our records, the yacht may still be outside of California or, if it has returned, you may not have filed for a tax exemption yet. I am writing at this time to advise of a possible change to California law, and to encourage you to contact me if you are thinking of bringing the boat back to California. If your plans call for the boat to remain outside of California permanently, you may disregard this letter. And, I apologize for this “form letter” style of communication, but I wanted to bring you up to date as quickly as possible.

    State Assemblyman Lloyd Levine (a democrat from Van Nuys) has introduced a bill (AB 694) that may eliminate the “offshore delivery” process. The bill provides that any yacht that is purchased by a California resident will be presumed to have been purchased for use in California. Period. The bill also provides that a non-resident will be presumed to have purchased the boat for use in California if it is ever subject to California registration or property tax laws, or if it is in California for more than 6 months during the first year of ownership. The proposed bill may be viewed on the internet, at:

    The bill has not yet been signed into law. It was heard on April 21st by the Assembly’s Revenue and Taxation Committee, and sent off to that committee’s “Suspense File.” It is scheduled for another hearing on May 21st. It has bounced around a bit, but if it ever comes out of the committee it will require a 2/3 vote of the state legislature before it is presented to the Governor. I should note that in its current form, the bill suffers from several obvious Constitutional problems that may throw a roadblock in front of it for a while. In view of these issues, we do appear to have some time before we need to start worrying, but it is important that we stay on top of things. It’s clear that this issue has appeared on the radar of our elected representatives, and during our current budget crisis it is not likely to go away.

    The biggest problem that the proposed bill presents to people in your position is the question of the effective date. The proposed bill does not change the fundamental tax law. Remember - if your intent at the time of purchase was to use the boat outside of California, you will not owe the tax. This will not change. However, the proposed bill changes the method used to test or to determine your intent. As such, even if the law is not passed until after you return to California, you may have a problem if the test is changed before your file is reviewed.

    Please take a look at the bill and give it some thought. If you have any connections in Sacramento or with Assemblyman Levine, it may help to write a few letters or to do some other form of lobbying. Regardless, you may feel free to give me a call at any time to discuss your options. Thank you.


    David Weil

  2. #2
    Registered Havasu Cig's Avatar
    My Boats:
    2004 28 Skater / 300x's
    Join Date
    Jun 2002
    San Diego
    Nort, you just need to buy a place in Havasu. When Kalifornia came after me for tax on my last boat, I showed them proof that I owned a house there and the communist bastards left me alone.

    My neighbor's house is for sale

  3. #3
    Join Date
    Jul 2001

    This post couldn't have been more timely for me. I've been fighting with the state on this very subject for a boat that was purchased out of state and remained out of state for over the 90 days. Unfortunately I didn't consult anyone before the purchase was made and now it's a war with the State of Cal. I may be contacting David to see what his assesment is.

  4. #4
    Platinum Member Platinum Member CigDaze's Avatar
    My Boats:
    Cigarette 35 Cafe Racer
    Join Date
    Jun 2001
    St. Petersburg, FL

    Re: Possible changes with California "Out of State" boat delivery tax laws

    Originally posted by PhantomChaos
    a democrat from Van Nuys
    'Nuff Said

  5. #5
    GLH is offline
    Platinum Member Platinum Member GLH's Avatar
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    Dec 2002
    Burlington, VT

  6. #6
    Registered garshev's Avatar
    My Boats:
    2001 baja outlaw 33
    Join Date
    Apr 2001


    BUCK UP and pay your taxes!!!!

  7. #7
    My Boats:
    24 Hallett, 40 Hallett
    Join Date
    Sep 2001
    Nort, I bought from Jeff C and paid no taxes nor registration...

  8. #8
    Registered dockrocker's Avatar
    Join Date
    May 2002
    Originally posted by garshev
    BUCK UP and pay your taxes!!!!
    Yeah! Nort, you cheap SOB - don't you know that there's lots of welfare receipients depending on you? Cripes, what do you want them to do, work???

    Pay your taxes!!!!

  9. #9
    hmmmm , another reason to live at loto

    all kidding aside , hope it works out for you guys

  10. #10
    Registered PhantomChaos's Avatar
    My Boats:
    Formula FASTech 382 Sunseeker Apache 45
    Join Date
    Dec 2000
    Bell Canyon, CA
    Date of Hearing: May 28, 2003

    Darrell Steinberg, Chair

    AB 694 (Levine) - As Amended: April 10, 2003

    Policy Committee: Revenue and
    Taxation Vote: 5-2

    Urgency: No State Mandated Local Program:
    No Reimbursable:


    This bill establishes the rebuttable presumption that a vehicle,
    vessel, or aircraft purchased outside this state is purchased
    for use in California and is subject to California use tax if
    that vehicle, vessel, or aircraft was:

    1)Purchased by a California resident.

    2)Subject to California's vehicle registration or property tax
    during the first 12 months of ownership, or

    3)Used or stored in this state more than half of the time during
    the first 12 months of ownership.

    This bill would not apply to any vehicle, vessel, or aircraft
    used in interstate or foreign commerce pursuant to regulations
    prescribed by the Board of Equalization (BOE).


    The BOE estimates this bill would result in an increase in state
    and local sales and use tax revenue of $54.6 million annually,
    as follows:

    State General Fund (5.0%) $34.5 million
    Cities and Counties (2.25%) $15.5 million
    Special Districts (.67%) $4.6 million


    1)Background . Current law imposes use tax on the purchaser of

    AB 694
    Page 2

    tangible personal property that is purchased out-of-state for
    storage, use, or other consumption in the state. The use tax
    is levied at the same rate, and on the same tax base, as the
    sales tax, and must be remitted to the BOE, or in the case of
    a vehicle or vessel, to the Department of Motor Vehicles.

    Under current law and BOE regulations, a vehicle, vessel, or
    aircraft purchased by a California resident is presumed to
    have been purchased for use in California and is subject to
    the California use tax. Also, a vehicle, vessel, or aircraft
    purchased by a nonresident is presumed to have been purchased
    for use in California if it enters this state within the first
    90 days of ownership. These transactions are subject to the
    tax unless all of the following occur:

    The purchaser takes title to and possession of the
    vehicle, vessel, or aircraft while it is out of state, and
    The purchaser makes the first functional use of it
    outside the state, and
    The purchaser uses it out of state for more than 90 days
    before the vehicle, vessel, or aircraft first enters

    Under BOE Regulation 1620, Interstate and Foreign Commerce, in
    determining the 90-day period of use outside California, the
    time is not counted when the vehicle, vessel, or aircraft was
    in shipment, or in storage for shipment, to California.

    If the vehicle, vessel, or aircraft is purchased outside
    California and is first functionally used outside California
    but enters the state within the first 90 days of purchase
    (exclusive of time of shipment or storage for shipment to
    California), the vehicle, vessel, or aircraft is presumed to
    have been purchased for use in California unless it is used or
    stored outside the state more than 50 percent of the time
    during the six-month period immediately following the first
    entry into California.

    1)Purpose . This bill was prompted by a Sacramento Bee article
    concerning a perceived tax loophole in which California
    purchasers of yachts from California yacht retailers arrange
    for delivery of the yachts outside the territorial waters of
    California, leaving them in Mexico for the 90-day period, then
    bringing them into California to escape the California sales
    and use tax. Essentially, yacht brokers have discovered that

    AB 694
    Page 3

    the 90-day and 6-month rules in existing law and regulations
    can be manipulated in a variety of ways by purchasers seeking
    to avoid payment of use tax

    This bill has the effect of shifting the burden from BOE, who
    under existing law is required to prove that use tax is owed,
    to the purchaser, who under the provisions of this bill is
    rebuttably presumed to owe use tax unless he or she can prove

    Analysis Prepared by : Stephen Shea / APPR. / (916) 319-2081

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