I bought a documented Morgan 33 sailboat in 1985/

Dear steve,

Thank you for the opportunity to respond to this question.

Unfortunately, you received bad information. In 1985, the law stated that the state charges sales tax on every sale and purchase of personal property unless it is specifically exempted.

In the matter of boats and marine equipment, unless you are engaged in commercial fishery or farming or the direct consumption of the purchase, the sailboat, as such is not exempt form sales tax.

In addition, sales tax is charged for the dry dock of the boat.

The person who told you it was tax exempt was probably basing this on the fact that you purchased a New Hampshire documented Morgan. However, boat registrations or documentation are treated in New York, as in other states, similarly to car registrations. Sales tax has to be paid. If you paid a sales tax on the boat to New Hampshire, you would only pay the difference if New York sales tax was greater.

Dear Steve,

Thanks for the followup. I checked this law out. This was a Missouri state senate law and applies only to Missouri. This was the Missouri state House Ways and Means Committee.

New York, throughout the 80's and to present time has and continues to charge sales tax on boats based on destination or abode of the person purchasing the boat. The only sales tax exemptions in the 80's was if the boat was conducing interstate or public water commerce including charter boat services, fishing, etc.

I reverified the state tax laws and vehicle registration laws.

The DMV requires all boats to be registered, and before they are registered, they require two things:

1. That they are coast guard documented AND

2. Proof of sales tax or an exemption request.

the exemption request does not include coast guard documented boats, only non-resident, non-NY operated or moored, and commercial use exemptions for boats.

There is an exemption based on paying tax in another jurisdiction.

Dear steve,

Unfortunately, according to the New York state Department of Taxation, the time of purchase does not really matter. Interestingly, for boats and cars, it is driven by the registration process. In order to register a boat (and vehicles also) for the first time in the state, you have to show that (a) it was coast guard documented, and (b) that you paid sales tax.

It would make a difference if you had paid sales tax in CT.

There is a general statute of limitations on the collection of sales and use taxes of 3 years. The state has three years in which to assess the tax. What I am not able to tell you, is if they actually met this requirement. Generally, in most states, the tax is procedurally assessed at the time of registration. If you claimed an exemption you were not entitled to (even though you thought you were), then the statute of limitations, in many states, does not start until discovery of the fact. We do not know when they discovered the oversight.

let me share this with you. I noticed that several people had filed an appeal with the state based on their individual circumstances. about 2/3's were successful with the appeal or had the tax and penalties reduced.

I recommend that you find a local tax attorney. Sit down with him or her for a few minutes. Nothing beats sitting down face to face with an attorney for 30 to 45 minutes and having a discussion. You may discover a little factoid in your circumstances that allows you to file an appeal. At the very least, your attorney may be able to negotiate for you and get a reduce payment. I am assuming the tax bill will be a couple of thousand dollars and the attorney's fee will be worth it.

If you can challenge this tax based on a procedural issue, then you might be able to avoid it.

Dear Steve,

This is how it goes in the attorney's office. Little bits of additional information keep coming out.

The coast guard registration is not who collects the sales tax. The coast gaurd is only interested in providing an identification number to your boat (kind of like an inventory), for their purposes of controling the boats operating in the ports. It is a matter of security and is equivalent to a license plate number.

However the agency charged with collecting the sales tax is the DMV.

If I understand you correctly, you have never registered your boat with the DMV.

It is possible, the state did an audit of coast gaurd registrations to balance against the tax accounts.

However it is also possible that CT also got involved. There is a recipricol agreement between CT and NY concerning the audit and reporting of sales taxe delinquincies between the states.