Could a yacht enter Florida without use tax solely to be offered for sale by a registered Florida broker?

Plain-English summary

A foreign-registered yacht had spent time in several U.S. states but had not been shown to fall under another state's taxing jurisdiction or to have paid another state's sales or use tax. Its owner planned to list it for at least a year with a registered Florida yacht broker.

Florida found the yacht would not owe use tax while in the state if it remained under the broker's care, custody, and control and was used solely to be offered for retail sale. The owner's crew could remain aboard and conduct prospective-buyer test trips, but the owner, family, and guests could make no personal use of the yacht in Florida.

The yacht could leave Florida during lulls in the selling period for owner use elsewhere without violating this Florida broker-sale exception. The other-state-tax and six-month-use exceptions did not apply because the taxpayer supplied no proof of another state's taxing jurisdiction or tax payment.

What this means for you

The ruling's protection came from the registered-broker sale exception, not from the yacht's prior travel. The listing documents and actual conduct had to keep the vessel under broker control and limit every Florida use to sale, inspection, sea trial, survey, demonstration, or upkeep.

Common questions

Was the yacht exempt merely because it had traveled among U.S. states? No. Florida found no proof that another state had taxing jurisdiction or that tax was paid there.

What three conditions controlled the Florida exception? Listing with the registered broker, broker care/custody/control, and sole Florida use for retail sale.

Could the owner personally use the yacht in Florida? No. Personal Florida use would violate the stated exception.

Could the crew show the yacht to buyers? Yes. The agreement permitted inspections, sea trials, marine surveys, demonstrations, and upkeep related to the sale.

Could the yacht leave Florida during the listing? Yes. The ruling says owner use outside Florida during selling lulls did not violate the Florida exception.

Citations and references

• Fla. Stat. § 212.06(1)(e)3. (vessel held solely for retail sale by registered broker or dealer)
• Fla. Stat. § 212.06(6)-(8) (use tax, other-state tax, and prior-use provisions)
• Fla. Admin. Code r. 12A-1.007(2), (3), (9) (boats purchased outside Florida)
• Straughn v. Kelly Boat Service, Inc., 210 So. 2d 266 (Fla. 1st DCA 1968)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 06A-039

Original ruling text

SUMMARY
QUESTION: Whether the taxpayer's yacht is subject to Florida use tax if it enters Florida and is listed for sale with a
Florida broker, and is placed under the broker’s care, custody, and control, when the yacht has not been subject to the
taxing jurisdiction of any state, territory, or the District of Columbia.
ANSWER - Based on Facts Below: The taxpayer's yacht will not be subject to Florida use tax, if it is 1) listed for sale
with a Florida broker under the taxpayer's XXX Listing Agreement and Addendum; 2) placed under Broker's care,
custody, and control; and 3) used in Florida for the sole purpose of being offered for sale at retail.

December 7, 2006

Re: Technical Assistance Advisement 06A-039
Sales and Use Tax - Vessel - Use in Florida
Section 212.05, Florida Statutes (F.S.)
Section 212.06, F.S.
Rule 12A-1.007, Florida Administrative Code (F.A.C.)
XXX[the taxpayer]
XXX[Broker]
FEIN: XX
Dear
This is a response to your letter of August 11, 2006, requesting a Technical Assistance Advisement (TAA) regarding
the above-referenced matter. This response to your request constitutes a TAA under Chapter 12-11, Florida
Administrative Code (F.A.C.), and is issued to you under the authority of Section 213.22, Florida Statutes (F.S.).
FACTS
The taxpayer is the owner of a XX motor yacht, XXX [the yacht], which is registered in the XXX. The yacht was built in
XX, and ownership was immediately taken in the name of the taxpayer.
The taxpayer is wholly owned, directly or indirectly, by XXX ("Individual"), a XXX resident and citizen of the XXX.
Since XX, the yacht has been used in the XXX. The yacht has been periodically used by the taxpayer in Florida
(including some visits for repairs) but has never been present in Florida for periods longer than 90 consecutive days at
any one time or longer than 183 days in the aggregate in any one year. The yacht has, since its acquisition by the
taxpayer, been operated in the U.S. under a Cruising License issued by the U.S. Customs and Border Protection
under 19 C.F.R. s. 4.94. The yacht has at all times been operated in a manner consistent with the requirements of the
license. The yacht has not been located for more than six uninterrupted months in any one state of the U.S. since it
was built, but it has spent more than six months in the aggregate in various states of the United States.

The yacht has a permanent crew of XX persons. The yacht is not used for any commercial purposes, is not chartered
to others, and carries no passengers other than Individual, his family members, and his non-paying guests.
The taxpayer intends to offer the yacht for sale and is considering listing the yacht for sale with Broker of XXX, Florida.
Broker is registered as a Florida yacht broker or dealer. Any listing of the yacht with Broker will last for a minimum of
one year unless the yacht is sold sooner. Broker has proposed that the listing agreement with the taxpayer for the sale
of the yacht provide that: while in Florida, the yacht will be docked in XXX, under Broker's care, custody, and control;
the taxpayer's crew will remain on board the yacht while in Florida; the taxpayer will pay for the yacht's normal costs
(dockage, crew, maintenance, insurance, etc.) incurred while the yacht is in Florida; the yacht’s crew will take
prospective purchasers on test trips as necessary; and, the taxpayer will indemnify Broker from claims not caused by
Broker’s gross negligence or willful misconduct.
Under this arrangement, the yacht will be brought into Florida by the taxpayer's crew and would remain in Florida
under Broker's care, custody, and control while in Florida. When it is not necessary for the yacht to be in Florida for
sale-related purposes, the yacht will be returned to its base in the XXX or another location outside Florida until it is
needed again. While in Florida, the yacht will be used solely for sale-related activities. There will be no personal use of
the yacht while in Florida by Individual or any of his family or guests.
ISSUE
Whether the taxpayer's yacht is subject to Florida use tax if it is listed for sale with Broker, placed under Broker's care,
custody, and control, and used in the manner described above.
REQUESTED ADVISEMENT
The taxpayer requests that the Department issue a TAA stating the taxpayer's yacht will not be subject to Florida use
tax if it listed for sale with Broker, placed under Broker's care, custody, and control, and used in the manner described
above.
TAXPAYER'S POSITION
The taxpayer states that while Florida use tax generally applies to property purchased outside Florida for use in
Florida, s. 212.06(1)(e)3., F.S., provides an exception to Florida's use tax laws. The taxpayer states: 1) the yacht,
while in Florida, would be subject to the listing with Broker and under Broker's care, custody, and control; and 2) the
taxpayer would make no use of the vessel in Florida other than as set out in the listing and the care, custody, and
control agreements; therefore, the yacht would be subject to the use tax exception in s. 212.06(1)(e)3., F.S.
The taxpayer states that even in the absence of the exception in s. 212.06(1)(e)3., F.S., no use tax would be due
under the present circumstances. The taxpayer states that its use of the yacht in Florida, limited to an attempt to sell
the vessel, does not constitute a "use" for Florida use tax purposes. The taxpayer cites Allied Marine Group v.
Department of Revenue, 701 So.2d 630 (Fla. 4th DCA 1997); HMY New Yacht Sales, Inc. v. Department of Revenue,

676 So.2d 1385 (Fla. 1st DCA 1996).
The taxpayer states that its only use of the yacht while under the listing with Broker would occur outside of Florida,
principally in the XXX and the XXX region. The taxpayer believes this use of the yacht would not give rise to any
Florida use tax liability. The taxpayer cites Straughn v. Kelly Boat Service, Inc., 210 So.2d 266 (Fla. 1st DCA 1968).
APPLICABLE LAW
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... stores for use
or consumption in this state any item or article of tangible personal property as defined herein and who leases or rents
such property within the state.
(1) For the exercise of such privilege, a tax is levied on each taxable transaction or incident, which tax is due and
payable as follows:

(b) At the rate of 6 percent of the cost price of each item or article of tangible personal property when the same is not
sold but is used, consumed, distributed, or stored for use or consumption in this state....

Section 212.06, F.S., provides, in part:
(1)(e)3. Notwithstanding any other provision of this chapter, tax may not be imposed on any vessel imported into this
state for the sole purpose of being offered for sale at retail by a yacht broker or yacht dealer registered in this state if
the vessel remains under the care, custody, and control of the registered broker or dealer and the owner of the vessel
does not make personal use of the vessel during that time. The provisions of this chapter govern the taxability of any
sale or use of the vessel subsequent to its importation under this provision.

(6) It is however, the intention of this chapter to levy a tax on the sale at retail, the use, the consumption, the
distribution, and the storage to be used or consumed in this state of tangible personal property after it has come to
rest in this state and has become a part of the mass property of this state.
(7) The provisions of this chapter do not apply in respect to the use or consumption of tangible personal property or
services, or distribution or storage of tangible personal property for use or consumption in this state, upon which a like
tax equal to or greater than the amount imposed by this chapter has been lawfully imposed and paid in another state,
territory of the United States, or the District of Columbia. The proof of payment of such tax shall be made according to
rules and regulations of the department. If the amount of tax paid in another state, territory of the United States, or the

District of Columbia is not equal to or greater than the amount of tax imposed by this chapter, then the dealer shall
pay to the department an amount sufficient to make the tax paid in the other state, territory of the United States, or the
District of Columbia and in this state equal to the amount imposed by this chapter.
(8)(a) 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.

Rule 12A-1.007, F.A.C., provides, in part:
(2)(b) Tax shall apply and be due on any aircraft, boat, mobile home, motor vehicle, or other vehicle imported or
caused to be imported from a foreign country into this state for use, consumption, distribution, or storage to be used or
consumed in this state. It is immaterial whether such aircraft, boat, mobile home, motor vehicle, or other vehicle was
used in another country for a period of six months or more prior to the time it is brought into Florida. Furthermore, tax
paid in another country will not be recognized by the State of Florida in arriving at the tax due.
(3) Tax Credit for Purchases Outside Florida.
(a) A credit is allowed to a person who as purchaser provides documentary evidence that a lawfully imposed sales or
use tax has been paid to another state, territory of the United States, or the District of Columbia on any aircraft, boat,
mobile home, motor vehicle, or other vehicle which later becomes subject to Florida tax. The credit shall be the
amount of legally imposed sales and use tax paid to another state, territory of the United States, or the District of
Columbia.

(9)(b)1.b. A boat, purchased by its current owner outside this state, operating on the waters of this state in excess of
90 days, which is solely documented under operative federal law, or which is registered, licensed, or titled pursuant to
a federally approved numbering system of another state as described in s. 327.16, F.S., is subject to tax on the sales
price of the boat at the time the requirements of s. 327.16, F.S., have been met.

2. Effective September 1, 1992, any boat which remains in this state for more than an aggregate of 183 days in any 1year period shall be presumed to be commingled with the general mass of property of this state, and tax shall be due
   on the sales price of the boat, except under the following circumstances:
   a. A boat used in other states or territories of the United States, or the District of Columbia for six months or longer
   under conditions which 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 Florida;

DISCUSSION AND RESPONSE
Generally, Florida use tax applies to any property purchased outside Florida for use in Florida if the property has come
to rest in Florida and has become a part of the mass property of this state. Sections 212.06(6) and (8)(a), F.S. There
are several exceptions to this application of the use tax. Section 212.06(7), F.S., provides thatthe provisions of
Chapter 212, F.S., do not apply in respect to the use or consumption of tangible personal property upon which a like
tax equal to or greater than the amount imposed by Chapter 212, F.S., has been lawfully imposed and paid in another
state, territory of the United States, or the District of Columbia.
The taxpayer's yacht was purchased in XX and registered in the XXX; the yacht has been used in the XXX. During
this period, the yacht spent more than six months in the aggregate in various states of the U.S. However, the taxpayer
has offered no evidence that sales or use tax on the yacht was imposed and paid in a state or territory of the U.S.
during this period; therefore, the exemption under s. 212.06(7), F.S., does not apply to the taxpayer's situation.
Rule 12A-1.007(9)(b)2.a., F.A.C., provides a second exception to the application of the Florida use tax. Rule 12A1.007(9)(b)2.a., F.A.C., states that if a vessel is used in other states or territories of the United States, or the District of
Columbia, for six months or longer under conditions which 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 Florida, then the vessel is not subject to Florida's use tax.
The taxpayer states that the yacht has not been located for more than six uninterrupted months in any one state of the
U.S. since it was built, but it has spent more than six months in the aggregate in various states of the U.S. Rule 12A1.007(9)(b)2.a., F.A.C., requires that the taxpayer's use of its vessel in another state occur "under conditions which
lawfully give rise to the taxing jurisdiction of another state, territory, or District of Columbia...." The taxpayer has
offered no evidence that the yacht was within a specific state or territory of the U.S. for any sustained length of time
sufficient to subject the yacht to the taxing jurisdiction of that state or territory; as previously stated, the taxpayer has
offered no evidence that it paid sales or use tax on the yacht in another state or territory. Therefore, the exemption
under Rule 12A-1.007(9)(b)2.a., F.A.C., does not apply to the taxpayer's situation.
Section 212.06(1)(e)3., F.S., provides a third exception to the application of the Florida use tax. Section
212.06(1)(e)3., F.S., states that Florida use tax may not be imposed on any vessel imported into Florida for the sole
purpose of being offered for sale at retail by a yacht broker or yacht dealer registered in Florida if the vessel remains
under the care, custody, and control of the registered broker or dealer, and the owner of the vessel does not make
personal use of the vessel during that time.
The taxpayer intends to offer the yacht for sale with Broker, a registered Florida yacht broker, in XX. The taxpayer and
Broker have created a XXX Listing Agreement, which states "[w]hen the Yacht is in XXX, the Owner shall deposit the
Yacht in the Broker's care[,] custody, and control under an additional agreement. The Owner will not make any
personal use of the Yacht while held by the Broker. Further, no use is to be made of the Yacht by anyone except as
necessary to demonstrate the Yacht to prospective purchasers or as part of the Yacht's upkeep." The Addendum to
XXX Listing Agreement states "The parties acknowledge that Owner has deposited the Vessel in Broker's care,
custody, and control until the listing expires or the Vessels (sic) is sold, whichever first occurs.... Owner shall keep the

yacht fully insured for inspection, sea trial, and marine survey purposes. Permission is hereby given to [Broker] for its
salesman and sub listed brokers to board and show the yacht, by appointment or as otherwise agreed."
The taxpayer states that when it is not necessary for the yacht to be in Florida for sale-related purposes, the yacht will
be returned to the XXX or another location outside Florida until it is needed again in Florida. Section 212.06(1)(e)3.,
F.S., states that an owner of a vessel may not make personal use of the vessel during the time the vessel is under the
care, custody, and control of the registered broker. Although the taxpayer may not use the yacht in Florida while it is
under the care, custody, and control of Broker, the taxpayer's use of the yacht outside Florida (during lulls in the
selling period) will not violate the exemption found in s. 212.06(1)(e)3., F.S. Straughn v. Kelly Boat Service, Inc., 210
So.2d 266 (Fla. 1st DCA 1968), states that the use of a vessel outside the territorial waters of Florida does not subject
the vessel's owner to Florida's sales and use tax.
It is clear from the agreement that the sole purpose of the taxpayer's arrangement is to offer the yacht for sale at retail
through the services of Broker, a registered Florida yacht broker. The agreement adequately restricts the use of the
yacht during its time in Florida.
CONCLUSION
The taxpayer's yacht will not be subject to Florida use tax, if it is 1) listed for sale with Broker under the Central Listing
Agreement and Addendum; 2) placed under Broker's care, custody, and control; and 3) used in Florida for the sole
purpose of being offered for sale at retail.
This response constitutes a Technical Assistance Advisement under s. 213.22, F.S., which is binding on the
Department only under the facts and circumstances described in the request for this advice, as specified in s. 213.22,
F.S. Our response is predicated on 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 than 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., and are subject to disclosure to the public under the conditions of s. 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.
If you have any further questions with regard to this matter and wish to discuss them, you may contact me directly at
(850) 488-8565.
Sincerely,
Matt Crockett
Attorney

Technical Assistance & Dispute Resolution
ID: 23394