Did a 60-mile trip through offshore waters qualify when all fishing occurred within three miles of a California island?

Plain-English summary

A fishing vessel traveled about 60 miles from a California mainland port to an offshore island. Part of that journey occurred beyond the mainland's three-mile limit, but every fishing activity took place within California territorial waters surrounding the island.

California recognized the travel as operational use of the vessel. But section 6368 required commercial deep-sea fishing operations outside state territorial waters, and no actual fishing occurred there.

The distance and duration of the voyage did not change the fishing location. Otherwise, nearly any vessel traveling offshore long enough to reach California coastal or island fishing grounds could qualify without doing any fishing outside state waters.

What this means for you

Fishing-vessel owners and maritime tax advisers

Record where fishing actually occurs, not only where the vessel travels. Offshore transit by itself does not establish qualifying deep-sea fishing when the catch activity stays inside California's territorial waters.

Common questions

Q: Was the 60-mile journey operational use?

A: Yes.

Q: Did the journey make the fishing operation occur outside California waters?

A: No.

Q: Why did the activity fail?

A: All fishing occurred within state territorial waters around the island.

Citations and references

• California Revenue and Taxation Code § 6368
• California Sales and Use Tax Regulation 1594

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 600.0265
• Original supporting opinion: 600.0265 PDF

Original ruling text

600.0265

Mr.

February 21, 1986

Gary J. Jugum
Friday Meeting [71] - February 21,1986
This is in response to your memorandum of February 7, 1986, concerning the interpretation to be made of Revenue and Taxation Code section 6368 and Regulation 1594,"Watercraft". The case in question involves awatercraft which moves from a California mainland port to an offshore fishing location within three miles ofone of the island territories ofthis state. The journey from the mainland to the island covers approximately 60 miles. All fishing is done inthe territorial waters of this state surrounding the island. Mr. Hennessy, Mr. Murray, and I.are in agreement that there are no commercial deep-sea fishing operations outside the territorial waters of this state here. It is true that during the period of time the watercraft is journeying from the mainland to the island an "operational use" is being made of the watercraft within the definition of that term as set forth in Regulation 1594. What is lacking, however, is any actual fishing outside territorial waters. If we were to conclude that the case does involve qualifying fishing activities, then any time a vessel left a Californiaport to fish along the coast the vessel would qualify for exemption if the time of the journey to and from the fishing grounds exceeded the time fishing, so long as the journey occurred beyond the three mile limit.

GJJ:sr
cc:

Mr. Donald J.Hennessy
Mr.John Murray