Boat Tax!!!! yikes!! help!

[Kitchen363]

Last June of 2009 I bought my Bentley pontooon boat, motor and trailer used from a private seller that lives in Michigan. I live in Kentucky. When I went to the court house to register the boat no sales tax was collected.
The lady at the DMV told me that no sale tax is due from used boats comming from private sellers from Michigan?? Sounds good to me. So they take my reciept from the private seller we wrote up and filed it away, so I thought. (should have kept a copy of the receipt, but was in shock of the no sale tax thing)
Here's the problem I'm faced with, Kentucky revenue of useage tax sent me a letter. They want proof that sales tax was collected and any receipts. I can already see this one becomming a problem.
I've got no receipt DMV has it And can't really prove where and whom I bought it from.
Has anybody who lives in Kentucky bought a used boat from a private seller in Michigan and not had to pay sales tax???????
I need to arm myself with some knowledge. Hopefully they don't force me to write a $1000 dollar check...............
What Should I do??

 

[fishrdan]

Re: Boat Tax!!!! yikes!! help!

Can you contact the seller and have them write you another bill of sale?

I bought my boat in CA, didn't pay sales tax there, and had to pay sales tax in NV before registering it here in NV. 8.75% paid at the assessors office down town (worst 2 hours of my life ).

Sounds like KY DMV should have made sure the sales tax was paid before registering the boat....

 

[Kitchen363]

Re: Boat Tax!!!! yikes!! help!

Sounds like KY DMV should have made sure the sales tax was paid before registering the boat....

That's the problem..... No sale tax is due from either state. When a Kentucky resident buys a used boat from a Michigan resident. Now I will just have to prove it can from a Michigan resident.

Good idea about getting the seller to write me a receipt again. Hopefully he is not to hard to track down

 

[Silvertip]

Re: Boat Tax!!!! yikes!! help!

Don't you have a title for the boat from the state of michigan. No bill of sale is required if the title has a "Sold To" or "Transfer of Ownership" or similar words on it. There should be Michigan registration numbers on the boat as well. Have the previous owner get a duplicate title.

 

[Silver Eagle]

Re: Boat Tax!!!! yikes!! help!

Here in Delaware we don't pay a sales tax on a used boat. We only pay a sales tax on something with Wheels like the trailer. There is no title on a boat here ,just a bill of sales.

 

[lncoop]

Re: Boat Tax!!!! yikes!! help!

Don't you have a title for the boat from the state of michigan. No bill of sale is required if the title has a "Sold To" or "Transfer of Ownership" or similar words on it. There should be Michigan registration numbers on the boat as well. Have the previous owner get a duplicate title.

Some states title boats, some don't. Here in Arkansaw they figgers us hillbillies is lucky to git the bill of sale rite (sadly, they're not far off the mark in many cases), so they require a title on the trailer but only a bill of sale on the boat. Sounds like Kitchen's solution is to determine which method Kentucky uses then proceed accordingly. If they title boats, the revenue office is your source of proof. If they don't, you'll need to either come up with the BOS or contact the seller and ask him to write you another one (or send him one and ask him to simply sign it). Either way, transfer of ownership should be relatively easy to prove once you know where to look. Good luck.

 

[lmuss53]

Re: Boat Tax!!!! yikes!! help!

I would go back to DMV and ask for a copy of what I gave them.

 

[Silvertip]

Re: Boat Tax!!!! yikes!! help!

Here is the requirement for Michigan boat registration. A title is required on an engine powered boat. No bill of sale should be required if you have a title with the "transfer" information completed. As I warn people repeatedly -- if you are buying an RV, boat, car, truck or anything that requires registration, if the seller cannot provide you with proof of ownership (title or bill of sale) walk away or be prepared for government run-around.

Watercraft - Title Required
All watercraft 20 feet and longer and all watercraft with a permanently affixed engine, regardless of length, must be titled. Watercraft not required to be titled may be titled as an option.


Watercraft - Registration Required

All watercraft on Michigan waters, including privately-owned lakes and waterways, must be registered except:

watercraft 16 ft. or less, propelled by oars or paddles, and not used for rental or commercial purposes,
non-motorized canoes and kayaks not used for rental or commercial purposes, rafts, surfboards, sailboards, and swim floats, regardless of length,
watercraft registered in another state and used only temporarily in Michigan

 

[Dave1251]

Re: Boat Tax!!!! yikes!! help!

You do not owe sales tax under Kentucky law. All you need to do is tell the Kentucky Revenue Cabinet the the boat was purchased from a private seller.
You should not need a copy of a purchase agreement.

It makes no difference that the purchased was done out of state of Kentucky.

If you purchased the boat from a dealer in Michigan, the dealer is required to collect sales tax at the time of purchase. Michigan is one of four states that is required to collect sales tax when the boat is register in Kentucky.

 

[642mx]

Re: Boat Tax!!!! yikes!! help!

I'm an Indiana resident, but I registered (and titled) my old boat in KY (purchased used in IN). At that time they didn't charge sales tax and an Indiana resident could register in KY if you use your boat in KY waters 90% of the time (which I do).

When I bought my Hammer, I called the clerks office in Henderson, KY to make sure that I had all the needed paperwork to register it. (I purchased the Hammer used on consignment from an IN dealer). I was told that I needed a BOS to prove how much I paid so I could pay KY sales tax. I told them on my last boat that I didn't pay sales tax and was quickly told me that the law had changed. This was in June of this year....

Needless to say, I registered in Indiana... so at least my tax money went to my home State.

Kind of sounds like your up a creek... they are going to get you on sales tax. I would call the original owner and draw up another BOS.

 

[lncoop]

Re: Boat Tax!!!! yikes!! help!

It may be that you paid sales tax because you bought from a dealer (even though it was a consignment sale). In some states (not necessarily saying this is the case in the Bluegrass State) sales tax doesn't apply to private boat transactions. Also, just out of curiosity, 642MX did you specify to the revenue clerk that it was a consignment transaction?

 

[642mx]

Re: Boat Tax!!!! yikes!! help!

It may be that you paid sales tax because you bought from a dealer (even though it was a consignment sale). In some states (not necessarily saying this is the case in the Bluegrass State) sales tax doesn't apply to private boat transactions. Also, just out of curiosity, 642MX did you specify to the revenue clerk that it was a consignment transaction?

I told them that I bought it from an Indiana resident and had an Indiana BOS that was notorized. The dealer gave me the generic Indiana BOS that had the previous owners name and my name on it (from the paperwork side, you can't tell it came from a dealer). To add to the mystery, the boat (actually both boats) where already titled in KY before I bought them.

 

[Dave1251]

Re: Boat Tax!!!! yikes!! help!

Under Kentucky law, consignment or brokerage boats can be treated differently then the purchase from a private parties. As long as the purchase was from a private party, no sales is due.

 

[642mx]

Re: Boat Tax!!!! yikes!! help!

Under Kentucky law, consignment or brokerage boats can be treated differently then the purchase from a private parties. As long as the purchase was from a private party, no sales is due.

If that's true, I got screwed. I hate paying taxes... at least they left the BOS blank so I filled in how much I paid for it...

 

[109jb]

Re: Boat Tax!!!! yikes!! help!

The OP used the word "useage". A useage tax is not a sales tax per se. It is a tax for the priviledge of registering in that state. Most often the useage tax is based on the purchase price, but since it is not a "sales" tax you CAN be taxed twice.

Many states have useage tax for airplanes. Lets say you are the legal owner of an airplane, paid tax when you bought it and have it registered in state A. Now you move to state B that has useage tax. When you register in state B you have to pay the tax even though you are the current owner. No way around it. You just got taxed for the privilege of bringing your airplane to state B. Sounds like the states are now using this same stuff for boats.

The taxes collected for this type of stuff are supposed to go to the right place like the aviation fund, funding DNR, etc. Whether they do or not is the question. You are supposedly taxed though because you are now using that state's infrastructure (airports, boat ramps, etc) for your activity.

 

[Home Cookin']

Re: Boat Tax!!!! yikes!! help!

\No bill of sale is required if the title has a "Sold To" or "Transfer of Ownership" or similar words on it.
In Virginia trailers are registered like cars, and as you describe. But the clerk still insisted I have a BOS for the trailer even though I had the signed over title. Then she gave me a ration b/c the BOS didn't have the trailer VIN. I think the year on the BOS and the title were off by 1; the seller simply remembered incorrectly.
Point is, what shouldn't be a big deal can be, what isn't required can be, it's all a function of what the clerk had for breakfast. and gone are the days when they's exercise common sense and let a few details slide. They act like that 30 year old 12' jon boat is going to get to Al Quaida for mischief.

 

[Dave1251]

Re: Boat Tax!!!! yikes!! help!

In Kentucky, sales tax is paid at the time of purchase or registration. The amount is 6% of the net purchase price. If there is a trade, the sales tax is paid on the net difference only. If the boat is purchased from a private party, than no sales tax is due.

Kentucky also collects personal property tax on boats paid with your yearly regisrtaion. For state titled boats, this tax is about 1% of the value of the boat. 50% of this tax goes to the state and 50% to local goverment services. If your boat is larger than 25', you can also document your boat with federal government. In this case, the personal property tax is reduced by about 50%.

 

[Silver Eagle]

Re: Boat Tax!!!! yikes!! help!

In Maryland,They have a 5% registration tax and you pay it each year. Thats on the value of the boat, that's one of the reasons I trailer my boat from Delaware. We only pay $20.00 per year.

 

[Kitchen363]

Re: Boat Tax!!!! yikes!! help!

Thanks DAVE1251,

You have put my mind as ease. After getting that letter from the state I thought maybe the local court house here in Kentucky screwed up.
Kentucky like most states are hurting for money and are probaly sending out letters to people who have bought boats to make sure they paid sale tax if it was bought at a dealership

But since I got mine from a private seller in Michigan I should be in the clear.

 

[fishrdan]

Re: Boat Tax!!!! yikes!! help!

Kentucky like most states are hurting for money and are probaly sending out letters to people who have bought boats to make sure they paid sale tax if it was bought at a dealership

I had that exact thing happen to me. I bought my boat in CA and took it back to NV. 2 years later (this summer) I received a letter from an accounting firm for the state of CA, asking if I had paid sales tax on the boat in CA.... Nooo, I paid the tax in NV.