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Documenting a boat vs Registration with the state

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Old 09-25-2008, 08:02 AM
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Question Documenting a boat vs Registration with the state

Has anybody documented there boat instead of registering it with the state and did the state come back and say you still need to register it and pay the sales tax ? I am being told by the state of Michigan i still have to register it and pay the sales tax. I called there1-800 number , anonymously of course.This is a bunch of crap, I understand the state wants there sales tax , but to pay them every 3 years for there sticker is bull. Has anybody just documented there boat and just said screw the what ever state there in ?
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Old 09-25-2008, 08:10 AM
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I don't know how your state works, but in Indiana, you document the boat and register with the state. You regester with the state for the annual watercraft sticker, not for the title. we pay no sales tax on a documented boat. The sticker fee is the same wether titled or documented.
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Old 09-25-2008, 08:13 AM
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Why would this be a "bunch of crap"? Why would you even think for a moment that you would be exempted from the laws and tax rules that everyone else plays by? Coast Guard documentation is for proof-of-ownership only. You're still a MI resident, using it in Michigan. You've got to pay the same as every other Michigan boater if you want to use it on their waters.

If you tell Michigan to f- off, they'll send you a bill for taxes, interest and fines. They can also impound your boat if you operate it without proper registration. You can try a dodge like Delaware incorporation, but if Watercraft sees you regularly on the water or finds it docked/stored in a marina or they find it at your private storage, you're on the hook. The states all got smart on this. They have maximum numbers of use-days for boats registered elsewhere.
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Old 09-25-2008, 08:26 AM
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In virginia you are to either be documented, or registered - not BOTH.

I am documented. They will still catch up to you eventually on the taxes. I thought I would get away with it forever, but they snagged me a couple months ago.

P.S. - if you search on here there are literally hundreds of threads like this pretty much all with the same tone. "I am going to avoid the following tax implications by documenting". Hell, I was hoping for the same thing - as everyone is. It won't happen though. If you are lucky, you MIGHT be able to avoid the sales tax if you don't have to register with the state. But I guarantee they will catch you on PP taxes.

Last edited by seafordguy; 09-25-2008 at 08:57 AM. Reason: Felt Like It
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Old 09-25-2008, 09:01 AM
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USCG Documentation does not exempt you from paying salestax. If you only USCG Doc the boat and you get caught, back taxes and penalties will apply.
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Old 09-25-2008, 09:06 AM
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in most states including michigan you need to be registered with the state even if you are documented. you do not place registration numbers on the boat, but you do need to have a current state registration sticker, along with the proper coast gaurd documentation numbers posted and proper hailing port and name of vessel.

you can register your boat in any state that you choose you do not need to be a resident of that state, but you do need to follow the rules of that state as far as number of days the boat is used there in order to be legal.
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Old 09-25-2008, 09:20 AM
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I believe falsely registering a boat in a state which you are not a resident is a crime. Your state of residency is the one in which you file your Federal taxes from. You can incorporate in another state and pay those sales taxes and registrations but that can be alot of hassle. Some states (I believe NJ is one) require local registration if you keep the boat there more than the prescribed number of days. If you incorporate the boat in another state and house it in another, you'll most likely have to register as a foreign corporation operating in that state. Alot of hassle unless you'rer talking about a yacht
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Old 09-25-2008, 09:21 AM
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In Illinois and Missouri, you still have to register the boat even if it is CG documented. In Illinois, you will pay the full sales tax. In Missouri, you pay an "in lieu" tax which is a fixed amount based on the purchase price of the boat. For example, on boats with a purchase price between $0 - $50,000 the tax is $1,000, $50,001 - $100,000 is $1,500, etc. Don't try to play the game of registering in a state with no or reduced sales tax if your state requires full sales tax. Your state will want the difference between what you paid in that state and what you should have paid in your state when they catch up to you. Bottom line, register the boat in the state you will operate it in and pay whatever tax is owed.
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Old 09-25-2008, 09:25 AM
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Quote:
Originally Posted by DaveP View Post
USCG Documentation does not exempt you from paying salestax. If you only USCG Doc the boat and you get caught, back taxes and penalties will apply.
Yup, found this out the hard way... When we bought our boat, we were told since it was previously documented, it would be in our best interest to just document it again. Since the state was not involved there would be no sales tax due.

Guess what, two years later, the state of Maine requested a list of all Coast Guard documented boats listing Maine as the home Port of Call. We recieved a letter stating either send proof of sales tax paid or send tax and penalties immediately.

As for state reg and Documentation, in our state, documented only, no need for state reg.

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Old 09-25-2008, 09:34 AM
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Originally Posted by Chris Sunkin View Post
I believe falsely registering a boat in a state which you are not a resident is a crime. Your state of residency is the one in which you file your Federal taxes from. You can incorporate in another state and pay those sales taxes and registrations but that can be alot of hassle. Some states (I believe NJ is one) require local registration if you keep the boat there more than the prescribed number of days. If you incorporate the boat in another state and house it in another, you'll most likely have to register as a foreign corporation operating in that state. Alot of hassle unless you'rer talking about a yacht
Missouri just changed their laws to where you cannot register or renew an existing registration without proof of property ownership within the state. Too many people where registering their boats there to take advantage of their "in lieu" tax and then avoiding the personal property tax that you owe on boats, cars, etc. Up until this year you could register without being a resident and without any type of incorporation. Like you said, states are getting smart and closing the loopholes. Not worth the hassel to try to avoid a few bucks.
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