Did a Florida resident owe use tax when bringing in a yacht bought outside Florida and used for more than six months in other taxing jurisdictions?

Plain-English summary

Florida concluded that the owner could bring, use, and store the yacht in Florida without sales or use tax on the documented 2004 facts. The yacht had been bought outside Florida and used for more than six months in other jurisdictions before its first Florida entry.

The Florida resident bought the yacht in Washington in April 2002. Title transferred there, the Washington sale was exempt, the vessel was federally documented rather than state titled or registered, and it cruised the West Coast, Alaska, Canada, and Mexico.

The ship's log showed 47 days in Washington and 152 days in California, plus time elsewhere. The owner stated that the vessel had been used in other U.S. states for more than twelve months under conditions that could lawfully give those states taxing jurisdiction.

Six months of qualifying out-of-state use rebutted Florida intent

Section 212.06(8)(a) presumed that tangible property used in another state or U.S. jurisdiction for six months or longer before Florida importation was not bought for Florida use.

The Department required documentary proof of the purchase date and qualifying use. The ship's log was not enough by itself; the ruling called for additional support such as dockage receipts.

No out-of-state tax was actually paid

Washington treated the original sale as exempt. California's rules did not impose use tax because the vessel entered California more than 90 days after purchase. The Department distinguished a state's authority to tax from its decision to impose tax and accepted that both jurisdictions had taxing power even though their statutory structures produced no tax.

With sufficient substantiation, the yacht could remain in Florida without a later use-tax time limit arising from the importation addressed in the ruling.

What this means for you

Boat and yacht owners

Keep the bill of sale, title or federal-documentation records, ship's logs, marina and dockage receipts, repair invoices, fuel records, and other evidence showing where and when the vessel was used.

Marine dealers and documentation services

Elapsed time alone was not the only fact. The Department examined whether use occurred in jurisdictions with lawful taxing authority and whether the owner could prove it.

Accountants and tax professionals

Treat this as a fact-specific 2004 ruling. Verify current Florida statutes and rules before applying its treatment to a modern importation.

Common questions

Q: Did the yacht owe Florida use tax when first brought into the state?
A: No, if the owner substantiated the stated purchase and out-of-state use facts.

Q: Was tax paid to Washington or California?
A: No. Washington exempted the sale, and California's timing safe harbor applied.

Q: What proof did Florida require?
A: The ship's log plus supporting documentation such as dockage receipts.

Q: Could the yacht later stay in Florida indefinitely without this use tax?
A: On the substantiated facts, the ruling said Florida use or storage did not create a use-tax consequence from the importation addressed.

Citations and references

• Fla. Stat. § 212.02(15)(a) — sale definition
• Fla. Stat. § 212.05 — Florida sales and use tax
• Fla. Stat. § 212.06(8)(a), (10) — property used outside Florida before importation
• Fla. Admin. Code r. 12A-1.007(2)(a) — boats and other vehicles purchased outside Florida
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 04A-007

Original ruling text

SUMMARY

QUESTION: Is a boat purchased outside of Florida, and used
outside of Florida subject to Florida's use tax upon
importation into Florida.

ANSWER - Based on Facts Below: If a boat purchased outside
of Florida is used in a taxing jurisdiction or
jurisdictions for six months or longer under conditions
that would give rise to that taxing jurisdiction's
imposition of a tax, the boat may then be imported into
Florida without being subject to Florida's use tax.

Feb 02, 2004

Re: Technical Assistance Advisement 04A-007
Sales and Use Tax; Use Tax on Boat
XXX
Section 212.02(15)(a), F.S.
Section 212.06(8)(a), F.S.
Section 212.06(10), F.S.
Rule 12A-1.007(2)(a), F.A.C.

Dear :

This is a response, styled a Technical Assistance Advisement, to
your letter dated April 17, 2003. You have asked the Florida
Department of Revenue to provide clarification and guidance on
an issue relating to the purchase and subsequent importation of
a vessel for use or storage for use in Florida. You present the
following facts:

On April 24, 2002, our client, [Owner], a resident of the
State of Florida, purchased the [Yacht]. The purchase and
sale, including the transfer of title, took place in the
State of Washington. Continuously since then, [Owner] has
kept the Yacht within the United States (outside of
Florida). [Owner] wishes to bring the Yacht to Florida,

but not before August 3, 2003, by which time over six
months will have elapsed between his purchase of the Yacht
and the Yacht's first entry thereafter into the State of
Florida.

You provided by electronic mail, May 8, 2003, in direct reply to
my inquiry on the subject:

1) To clarify my statement/fact #3 in the original TAA
request, yes, Owner has used the vessel in other U.S.
states in excess of 12 months under conditions which
would lawfully give rise to their taxing jurisdiction.
2) No such tax, however, was actually imposed or paid.

Your letter of June 20, 2003, provided the following additional
facts:

1) The vessel was purchased in April 2002, from the XXX
2) The vessel was purchased as an exempt sale in the
State of Washington.
3) That the vessel has not been licensed, titled or
registered in another state. That the vessel is
federally documented with the United States Coast
Guard.

Further, you provided a copy of the bill of sale, and a copy of
the ship's log. The log indicates the vessel cruised the West
Coast of the United States, Alaska, Canada, and Mexico. From
the log, it has been determined that the vessel spent four days
at various times in Canada, 47 days in Washington state, 152
days in California, and 1 day in Mexico. The vessel also spent
214 days in unknown or other locations outside the United
States.

You respectfully refer to Technical Assistance Advisement (TAA)
01A-033 dated June 18, 2001.

You then pose the following two questions:

Question 1: Based on the facts stated above, will our
client be subject to any sales or use tax as a consequence

of bringing the Yacht to Florida, or using or storing the
Yacht in Florida?

Question 2:If the answer to Question 1 is no, are there any
time limits beyond which our client may not use or store
the Yacht in Florida, at the cost or risk of then being
subject to Florida's sales or use tax?

LAW

Section 212.02(15)(a), F.S., provides:

"Sale" means and includes:

(a) Any transfer of title or possession, or both, exchange,
barter, license, lease, or rental, conditional or
otherwise, in any manner or by any means whatsoever, of
tangible personal property for a consideration.

Section 212.05, F.S. provides, in part:

It is hereby declared to be the legislative intent that
every person is exercising a taxable privilege who engages
in the business of selling tangible personal property at
retail in this state,... or who stores for use or
consumption in this state any item or article of tangible
personal property as defined herein.... (e.s.)

Section 212.06(8)(a), F.S., provides, in part:

Use tax will apply and be due on tangible personal property
imported or caused to be imported into this state for use,
consumption, distribution, or storage to be used or
consumed in this state; provided, however, that, except as
provided in paragraph (b), it shall be presumed that
tangible personal property used in another state, territory
of the United States, or the District of Columbia for 6
months or longer before being imported into this state was
not purchased for use in this state.... (e.s.)

Rule 12A-1.007(2)(a), F.A.C., provides, in part:

(2) Purchases Outside Florida.

(a) There shall be a presumption that any aircraft, boat,
mobile home, motor vehicle, or other vehicle purchased in
another state, territory of the United States, or the
District of Columbia but titled, registered, or licensed in
this state is taxable except as otherwise provided in
subsection (26) of this rule. This presumption may be
rebutted only by documentary evidence that the person
owning the aircraft, boat, mobile home, or motor vehicle
purchased the aircraft, boat, mobile home, or motor vehicle
in another state, territory of the United States, or the
District of Columbia six (6) months or more prior to the
time it is brought into this state. In order for such
property to be presumed exempt as purchased for use outside
Florida, the person owning the aircraft, boat, mobile home,
motor vehicle, or other vehicle must provide documentary
proof that such property was used in other states,
territories of the United States, or the District of
Columbia for six months or longer under conditions which
would lawfully give rise to the taxing jurisdiction of
another state, territory, or District of Columbia and any
lawfully imposed tax was paid to such state, territory, or
District of Columbia before being imported into this
state.... (e.s.)

DISCUSSION AND ANALYSIS

Florida's sales tax scheme does not impose a sales tax on sales
occurring outside its jurisdiction. Florida levies a tax on the
privilege of engaging in the selling of tangible personal
property when that property is sold for a consideration in
Florida, Section 212.05, F.S. When property enters Florida for
use in Florida, Florida asserts its "use" tax on the importation
or storage for use in Florida. This use tax is "... due on
tangible personal property imported or caused to be imported
into this state for use, consumption, distribution, or storage
to be used or consumed in this state...." Section 212.06(8),
F.S. The use tax provisions carry a specific exception to the
imposition, "... it shall be presumed that tangible personal

property used in another state, territory of the United States,
or the District of Columbia for 6 months or longer before being
imported into this state was not purchased for use in this
state." (e.s.) Section 212.06(8), F.S.

Rule 12A-1.007(2)(a), F.A.C., supplies an administrative
interpretation of Section 212.06, F.S. It provides that the
person owning a boat purchased outside Florida, for use outside
Florida must provide documentary proof that the boat purchased
outside Florida, for use outside Florida, was in fact used
outside Florida under conditions that would give rise to the
taxing jurisdiction of another state, territory, or District of
Columbia. Additionally, the person owning a boat under the
aforementioned conditions must provide documentary evidence that
any lawfully imposed tax was paid to such state, territory, or
District of Columbia before the boat was imported into this
state.

The state of California imposes a use tax on vessels purchases
outside California and brought into the state, if either the
first functional use is in California, or if first used outside
the state, it will be presumed to have been purchased for use in
California if brought in within 90 days after its purchase. See
CA ADV s. 1620. According to the ship's log, the vessel was
brought into California more than 90 days after its purchase.
It was, therefore, exempt from the imposition of California's
use tax, although it was clearly within that state's taxing
jurisdiction (and earlier, the state of Washington upon the sale
of the vessel). Jurisdiction to tax does not equate to
imposition of tax. Clearly, both the states of Washington and
California had the jurisdiction to tax the vessel; the statutory
scheme of Washington deemed the sale exempt, however, and that
of California provided a safe harbor for vessels purchased
outside the state and imported after 90 days. The preliminary
information provided (ship's log) appears to indicate that the
vessel met that requirement, and also appears to indicate that
it has been within those taxing jurisdictions for at least six
months. No tax was imposed or paid, but that was the choice
made by the legislative bodies of those states in designing
their taxing structures.

In answer to Question 1: based on the facts as presented above,
and provided that documentation sufficient to substantiate the
information gleaned from the ship's log (such as dockage
receipts), your client will not be subject to any sale or use
tax as a consequence of bringing, using, or storing the vessel
in Florida.

In response to Question 2: based on the facts as presented
about, and substantiation of the ship's log, the vessel may be
used or stored in Florida without a use tax consequence.

This response constitutes a Technical Assistance Advisement
under section 213.22, F.S., which is binding on the Department
only under the facts and circumstances described in the request
for this advise, as specified in section 213.22, F.S. Our
response is predicated upon those facts and the specific
situation summarized above. You are advised that subsequent
statutory or administrative rule changes or judicial
interpretations of the statutes or rules upon which this advice
is based may subject similar future transactions to a different
treatment from that which is expressed in this response.

You are further advised that this response, your request and
related backup documents are public records under Chapter 119,
F.S., which are subject to disclosure to the public under the
conditions of section 213.22, F.S. Confidential information
must be deleted before public disclosure. In an effort to
protect confidentiality, we request you provide the undersigned
with an edited copy of your request for Technical Assistance
Advisement, the backup material and this response, deleting
names, addresses and any other details which might lead to
identification of the Taxpayer.

Your response should be received by the Department within 15
days of the date of this letter.

Sincerely,

Jimmy Kalfas
Senior Tax Specialist
Technical Assistance and Dispute Resolution

P.O. Box 7443
Tallahassee, Fl 32314-7443
(850) 922-4845
Facsimile (850) 921-2983

Ctrl No.: 54846