NJ Sales and Use tax. Any accountants out there?

marks737

Active Member
Sep 15, 2009
333
NJ
Boat Info
2005 390 Sundancer
Engines
Cummins QSB 5.9
Hello. I'm a NJ resident and purchased a boat last July in MD. It's a documented boat so I couldn't register it in NJ until the new CG documentation came through which wasn't until Late Oct. at end of boating season. So long story short...I haven't registered it or payed NJ sales tax yet...was going to wait until spring.

Does anyone know if this will be an issue? Does the sales tax have to be payed in the year the boat was purchased? Does a NJ "Use tax" apply? (hope not!).

Any CPA's or tax experts out there familiar with NJ with input would be greatly appreciated!
 
From what I have heard the use tax applies. There have been reports of people who have their boats in New Jersey for extended periods of time documented outside of NJ being contacted by the NJ tax department to collect their revenue.

Do a Google on NJ sales tax documented boats and you will find more info.

When you register it you will pay the taxes.

-Kevin
 
I would expect NJ to be the same as NY. Use tax will apply, and if you paid tax in the purchasing state, you are able to reduce your use tax by that amount.

The fees are strong, in both penalty and interest, and i would not advise waiting for anything to blow over. The states are smart and do look at CG documentation for the hailing port.

Check your records on when you officially transfered the bost to NJ, that does not need to be the same purchase date.........use tax would be due based on the rules around that usage date in NJ....just saying
 
Your fine i did that 2 years ago... Brought a boat in Florida and was supposed to Reg it in NJ but same thing as u was waiting on cost guard... Got the letter in Sept but decided to wait because then i would always be running last years sticker so waited into the following spring...
 
Your fine i did that 2 years ago... Brought a boat in Florida and was supposed to Reg it in NJ but same thing as u was waiting on cost guard... Got the letter in Sept but decided to wait because then i would always be running last years sticker so waited into the following spring...
Thanks! So did you have to pay a "use" tax?
 
From what I have heard the use tax applies. There have been reports of people who have their boats in New Jersey for extended periods of time documented outside of NJ being contacted by the NJ tax department to collect their revenue.

Do a Google on NJ sales tax documented boats and you will find more info.

When you register it you will pay the taxes.

-Kevin
The boat is documented in NJ now.
 
From NJ Tax Code:
In addition to the exemption and cap, for uses on or after January 1, 2016, the law allows a grace period for certain boats or other vessels purchased out of State by a New Jersey resident to be used in New Jersey for up to 30 days in a calendar year without triggering use tax so long as:

  1. the boat or other vessel is legally operated by the resident purchaser and meets all current requirements pursuant to applicable federal law or pursuant to a federally-approved numbering system for boats and vessels adopted by another state; and
  2. the resident purchaser is not engaged in or carrying on in this State any employment, trade, business, or profession in which the boat or vessel will be used in this State.
So what exactly does this mean?
 
Any CPA's or tax experts out there familiar with NJ with input would be greatly appreciated!

Lol. So based on the responses above, apparently you haven’t heard from a CPA or tax expert on this question yet! Getting lots of meaningless input though!
 
Basically means that unless you are keeping the boat in NJ less than 30 days a year you will owe tax. The fact that you documented it with your home port in NJ will make you an easy target for the inspectors.

From what I saw tax is only about 3.5% so it's not too bad. In NY we got hit for 8.625.

-Kevin
 
Basically means that unless you are keeping the boat in NJ less than 30 days a year you will owe tax. The fact that you documented it with your home port in NJ will make you an easy target for the inspectors.

From what I saw tax is only about 3.5% so it's not too bad. In NY we got hit for 8.625.

-Kevin
Are u talking about sales tax which is paid when registering ir use tax?
 
Lol. So based on the responses above, apparently you haven’t heard from a CPA or tax expert on this question yet! Getting lots of meaningless input though!
That’s my next step.
 
Are u talking about sales tax which is paid when registering ir use tax?

Ok, I admit I am not a CPA but according to NJ per what you already quoted from (https://www.state.nj.us/treasury/taxation/boatbill.shtml) it really does not make a difference as they classify it as a sales and use tax. The "use" portion is how the States get to legislate a tax something purchased elsewhere without tax when it is brought into their jurisdiction. The 30day exemption is to allow transients to move in and out without tax liability and the state facing a lawsuit for prejudicial enforcement.

I have heard of a few complex schemes to avoid the taxed so if you are looking to avoid the sales and use tax please talk to your CPA who will need to defend you if the state comes looking for their taxes.

-Kevin
 
Ok, I admit I am not a CPA but according to NJ per what you already quoted from (https://www.state.nj.us/treasury/taxation/boatbill.shtml) it really does not make a difference as they classify it as a sales and use tax. The "use" portion is how the States get to legislate a tax something purchased elsewhere without tax when it is brought into their jurisdiction. The 30day exemption is to allow transients to move in and out without tax liability and the state facing a lawsuit for prejudicial enforcement.

I have heard of a few complex schemes to avoid the taxed so if you are looking to avoid the sales and use tax please talk to your CPA who will need to defend you if the state comes looking for their taxes.

-Kevin
I'm not looking to avoid any taxes. I'm just confused. Is this one tax paid at registration or is the "use" tax a separate thing paid on top of sales tax?
 
I'm not looking to avoid any taxes. I'm just confused. Is this one tax paid at registration or is the "use" tax a separate thing paid on top of sales tax?

No the tax is a one or the other. If you bought the boat in NJ you would have paid "sales" tax based on the location of registration. For an out of state purchase the "use" tax applies.

As I mentioned, this how they legislate getting their part of lost taxes and keep things fair - otherwise everyone would buy big ticket items likes cars and boats out of state. While this is paid when you register the boat, most states offer exemptions of some type to owners who are bringing in the boat in but are not transferring ownership or if the ownership is transferred between a husband and wife in the same state.

Not exactly sure of your process in NJ but in NY when we go to DMV to register the vehicle we pay the sales/use tax there based on their calculations. Be prepared to have your bill of sale. I did this when I purchased a previous boat in NJ and brought it into NY. If it would have been purchased through a company/broker with a presence in both states it would have been collected at closing.

-Kevin
 
No the tax is a one or the other. If you bought the boat in NJ you would have paid "sales" tax based on the location of registration. For an out of state purchase the "use" tax applies.

As I mentioned, this how they legislate getting their part of lost taxes and keep things fair - otherwise everyone would buy big ticket items likes cars and boats out of state. While this is paid when you register the boat, most states offer exemptions of some type to owners who are bringing in the boat in but are not transferring ownership or if the ownership is transferred between a husband and wife in the same state.

Not exactly sure of your process in NJ but in NY when we go to DMV to register the vehicle we pay the sales/use tax there based on their calculations. Be prepared to have your bill of sale. I did this when I purchased a previous boat in NJ and brought it into NY. If it would have been purchased through a company/broker with a presence in both states it would have been collected at closing.

-Kevin
Thanks Kevin! I hope the use tax is 3.5% like the sales tax is on boats in NJ!
 
I bought my documented boat in Connecticut and the dealer was able to register it in NY immediately.
It was a trade in and the previous owner signed the USCG form when he traded the boat in.
They (MarineMax) have retail stores in NY so they collected the 8.625% sales tax the day I closed. I asked if they would let me go to the DMV and register it (I wanted to put the sales tax on my credit card for the cash back), but they said they weren’t able to do it because they had NY stores.
Anyway, if NJ is anything like NY, make sure you pay the tax and get the sticker ASAP. Although I’ve never seen them myself, I’ve heard stories where the tax people have nailed people on my canal and in a couple of local Marinas. I’m told the fines are hefty.
 
I bought my documented boat in Connecticut and the dealer was able to register it in NY immediately.
It was a trade in and the previous owner signed the USCG form when he traded the boat in.
They (MarineMax) have retail stores in NY so they collected the 8.625% sales tax the day I closed. I asked if they would let me go to the DMV and register it (I wanted to put the sales tax on my credit card for the cash back), but they said they weren’t able to do it because they had NY stores.
Anyway, if NJ is anything like NY, make sure you pay the tax and get the sticker ASAP. Although I’ve never seen them myself, I’ve heard stories where the tax people have nailed people on my canal and in a couple of local Marinas. I’m told the fines are hefty.

Yep, NYS requires merchants with a presence in NYS to collect and remit the taxes. Fortunately I traded in my old boat so they wrote down the sale with my trade so at least that part was exempt.

Based on my calculations MarineMax made most of their money because of the tax offsets. I know what the old owner traded for and I know what my trade was. Between sales tax and provided maintenance and pre-delivery repairs I could not have done the deal cheaper direct with the old owner who I knew.

-Kevin
 
marks737, I would also recommend you clean up any potential issues with Maryland while you are at it. MD has a sales tax on boats of 5% of purchased value capped at 15K. They have also been known to be rabid enforcers. I think you are supposed to file a form with MD if you buy a boat and take it out of state. Otherwise they may see the transaction at some point and come looking for you. If you happened to have paid the tax to MD at purchase, I imagine you may be able to have that credited to you by NJ.
 
marks737, I would also recommend you clean up any potential issues with Maryland while you are at it. MD has a sales tax on boats of 5% of purchased value capped at 15K. They have also been known to be rabid enforcers. I think you are supposed to file a form with MD if you buy a boat and take it out of state. Otherwise they may see the transaction at some point and come looking for you. If you happened to have paid the tax to MD at purchase, I imagine you may be able to have that credited to you by NJ.
Spoke to the broker in MD who handled sale. The taxes are paid in the "State of Use" so just NJ.
 
Spoke to the broker in MD who handled sale. The taxes are paid in the "State of Use" so just NJ.

Bennett and I both had this same question when we purchased boats out of state and moved them to GA. I researched and researched, finding different opionions all over the place. Even my broker was unsure.

In the end, I registered the boat, and a tax bill arrived within a few months. Problem solved for a mere 7%. I budgeted the taxes into the cost so I had the money but my a$$ is still sore.
 

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