Critics decry boat tax in Maine

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Boat owners in Maine, who buy their boats in other states, but use them in Maine, may find an unexpected tax bill in their mailbox.

Maine Revenue Services says boat owners must pay a use tax of up to 5 percent if they bought their boat in another state that doesn’t require sales taxes for boats, brought it into Maine within the first year of ownership and had it available to use for at least 30 days, The Associated Press reports.

Critics claim the tax and its strict enforcement are having a chilling effect on boaters and discouraging tourism.

A retired Maine businessman thought he was helping the local economy in 2005 when he spent more than $100,000 in Portland, Maine on repairs to his 72-foot yacht, newly purchased in Florida.

But, more than a year later, Tom Toye III received a $60,000 bill from Maine Revenue Services for “use taxes” on the boat.

Toye appealed and later sued the state tax assessor, claiming the vessel shouldn’t be taxed in Maine. Last week, he lost his case in Maine Superior Court. With interest and penalties accruing, he says the bill has grown to about $120,000.

“I’m just infuriated about the whole thing,” Toye told The Associated Press.

Click here for the full article.

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Comments

16 comments on “Critics decry boat tax in Maine

  1. Chuck

    Transient boaters are already making plans to avoid Maine waters for the next boating season because of unreasonable tax, registration, and enforcement issues, yet the state is looking at ways to improve and attract boats. Just what glasses are they looking through? They just don’t seem to get it and the dollars lost due to these practices will in the end far out way any income generated.

  2. DJ

    What is this crybaby complaining about. Maybe I don’t understand the whole story. Here in the midwest if you buy a boat out of state, you do not pay sales tax in the state you bought the boat in, you pay it in the state you register and title it in or your state of residency. From the story it appears that he purchased the boat in Florida but lives in Maine. So if he titled and registered the boat in Maine he should have to pay sales tax there. He’s lucky, in our state he would have had to pay 7% sales tax.

  3. E.A.

    This is a problem in many states which is a growing and potentially devastating issue for the marine industry. The states make the assumption that a boat owner is a person of affluence who will willingly pay a local use tax. The reality is that the owner will go to great lengths to avoid the tax.  The net result is a dramatic reduction in use of boats in the taxing jurisdiction. This damages all businesses in the area that in any way relate to boating, including restaurants and shops, marinas, service yards and parts and equipment retailers.  In Virginia, for example, the individual counties apply very different tax rates which causes boats to be moved from one county to another to avoid the tax.
    This is an issue that needs to be addressed by the various bodies representing the industry at the state level. It is a very large problem which is growing “under the radar” of the industry at large. The states and counties are searching for tax revenues. Annual use taxes are, in my view, likely to be more harmful to the industry over time than the luxury tax ever was.

  4. Capt. Ed

    I don’t see what the issue is. One has to pay the sales tax on a boat purchase to some one. If he paid the 6% to the state of Florida when he bought the boat he would only have to pay the state of Maine any differance due or he could have not paid the Florida tax and paid the state of  Maine when he got home. I don’t think Maine is looking to tax transient boats traveling in their waters but only collecting the sales tax from state residents. At one point the sales tax must be paid unless your state of residence (ie Rhode Island) is exempt from sales tax on boats. That would be like paying sales tax on your car for every state you drove it in!

  5. Johnny O

    I don’t think the state is doing anything out of the ordinary.  You buy a product, you pay a sales tax.  That is the law. My problem is what the idiots use the tax money for.   I am assuming he paid close to a million dollars if his tax is $60k.  As a yacht broker I get asked all the time how a buyer can avoid sales tax.  I despise  the question. Its nice that the business owner wanter to stoke the local marine economy in Maine but…… if you wanna play….pay!

  6. charles

    This is Maine copying Maryland. In MD, even if you paid the tax elsewhere, I believe the law is that if you are in MD waters for 30 days or more, you owe the 5% use tax. Same if you are foreign flagged. I had a big fight with them with expensive attys on this issue and LOST. Took two years and the whole fiasco cost me six figures. My boat is in the Bahamas, no more MD for me and it looks like Maine comes off the schedule for next summer too.
    The sad thing here is that you take a 100 ft. yacht that cruises to Maine, it puts a lot of money in the local economy in so many ways… 8 guests and 6 crew spend a lot of money. With Maine cracking down, what owner of a million or ten million dollar yacht wants to take that risk? You have to fight them even if you win and they have unlimited resources to fight you even if they are wrong. Look how nice and full Rhode Island Marinas are compared to Maine… taxes are not good.

  7. Timm

    So for those of you who don’t see a problem with this, you have no problem with the owner of a large yacht taking a slow cruise up the coast and at the end of the year receiving tax bills for tens of thousands of dollars for every state he stopped in? Why would I go and spend a month cruising the coast of your state if it was going to cost me $50,000 in taxes for that right? If I buy a new car and then drive into the state and visit family for a month, do I have to pay use taxes on my vehicle for the right to drive into that state?
    I can see this if you registered the boat in the state or are storing the boat permanently in the state, but not for someone taking a one time cruise through the state. By the way, is the state tracking how much time I spend more than 3 miles from shore in federal waters? That should be deducted from the time in the state.
    Just another way for government to furhter bankrupt their local businesses. Then they wonder why the unempoyment rate is in double digits!

  8. zyxw

    As someone who has traveled a lot up and down the Eastern seaboard by boat I can tell you the problem is partly due to unclear and diverse regulations that make it difficult or nearly impossible to comply. Maryland makes you pay the 5% whether or not you’ve already paid in some other state, while most states grant an exemption for the tax paid in another state. Some states give you 60 days, others 90 days. Some areas have property or excise taxes, others do not. Some states require you to register (FL) even if you are documented, other states don’t (MA). Some areas (RI) require you to have your MSD inspected and registered. The list of conflicting regulations goes on and on. Often brokers, law enforcement, and even boating law administrators don’t know their own state laws, and no two states talk to each other to coordinate their laws to prevent Catch 22s. I just went through months of arguing with NY (my state of residence) who wanted me to pay sales tax on a RI registered boat–I had to prove the boat had never been in NY. If the boat just enters NY waters, for any length of time, they claim the NY sales tax is due!

  9. DD

    If you don’t understand what the problem is with this, how have you ended up reading Trade Only. What if you bought an RV with the intent of touring throughout the US only to be charged a sales tax on the total cost of the RV in every state you visited? It makes no sense and will seriously damage the revenues that are generated and taxed by boats visiting the area.

  10. George

    I am a Maine boater and I keep my sailboat at the same marina that Mr. Toye keeps his boat. Prior to this boat, Mr. Toye also had a smaller, 53 ft yacht with the name October Princess that he kept at the same marina. Since purchasing this 72 ft yacht he not only brought it to Maine that first year, he continues to bring it to Maine and dock it at this same marina every summer. I find it interesting that he is now playing the role of a victim by saying he only brought it here for repairs when in fact he has been keeping his boats here for years.  He simply tried to avoid taxes by registering his boat in NH while docking it in Maine and he got caught.  He lives and plays in Maine so he should pay taxes in Maine.  I have paid all my taxes to ensure that I can enjoy the beautiful Maine waters and Mr. Toye should pay his taxes as well. I say congratulations to the state authorities who caught on to his game. Keep up the good work!

  11. George

    This case is being portrayed incorrectly as poor Tom Toye being a transient boater just passing through Maine and being taxed unfairly.  Did you miss the fact that he lives in Maine?  The law states that if a boat is kept in the state of Maine for more than 30 days the first year that it is purchased, then a 5% use tax must be paid.  This would not affect transient boaters.  Tom Toyes’ boat is in Maine for 5 months out of the year … every year.  This is tax evasion, not unfair taxes.  It is frustrating to me to see how twisted this story has become.  Wish people would get the facts straight before publishing this stuff.

  12. Brenda

    If you are keeping your boat in the state of Maine you should pay the tax.  Those tax dollars help keep our waters and marinas clean so all boaters and visitors to Maine can enjoy the luxury of boating in such a beautiful enviroment.  As one person previously said, if you play, you pay.  I for one, am sick of people trying to get out of paying their fair share of taxes and then it ends up that I and many more pick up the tab.

  13. Joshua

    I have seen this idea in numerous states disguised in the registration/title fees for vehicles brought in from out of state.  In some states you can be “re-taxed” on newer vehicles even if you bought it & paid sales tax in another state years prior.  But it’s the size, or taxability, of the item is what really matters.
    It’s really a question of residence.  If you live in Maine and try to avoid the tax by buying out of state, you know that the State is going to get their money.  But if you reside outside of Maine and choose to visit or leave your boat there for an extended period they have no right to assess a “sales tax”.
    If Maine thought this out past the ‘we need money’ view perhaps they would instead require temporary registration for any vessels in state waters for more than two weeks with long term storage at a cheaper rate.  Make the registrations only good for two weeks and based on boat size and worth.  Then the registration is easily justifiable as a “Use” charge.
    I think there can be no doubt that this will hurt Maine a little in the long run but it will hurt their marinas & service yards a whole lot more.

  14. Dan

    I’ve been following this line of (mis)information for a few months and I think I understand now. This is a resident’s sales tax. Not a User’s fee. I am moving to Massachusetts and when I cruise down east I won’t be tapped for a sales tax on my boat.

  15. Kevin Turner

    Um what is wrong with you people who thinks its ok  to put a  annual “sales” tax on an item that been baught already and or bought in another state. Maine’s tax revenues have been declining every year, because of all the taxes they impose on its residents and the tourist. Hello, if you have to pay to play and taxes are involved your living in a fascist state. I cant believe my home state of Maine and the fools that live here or anyone who doesnt have enough brains to realize why Maine is in the shape its in. Vote republican this governors race, and vote me next time.

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