When were commercial fishing vessels and parts bought outside or inside Florida exempt from sales and use tax under the vessel rules?

Plain-English summary

A commercial fishing vessel bought outside Florida would not be taxed under the first rule if it stayed outside Florida's registration requirement, was documented solely under federal law, operated in Florida waters no more than 90 consecutive days, and remained in the state no more than 183 aggregate days in a one-year period. Crossing those thresholds or becoming subject to Florida registration could change the result.

The Department also approved an independent interstate-or-foreign-commerce exemption method covering both vessels and their parts. Florida tax on qualifying purchases was prorated by the ratio of Florida mileage to total mileage. Travel from Florida's territorial limit to a dock and back was not treated as Florida mileage under the cited rule, so a zero Florida-mileage ratio could make even Florida purchases fully exempt.

If the company later accumulated Florida mileage, it would have to register as a Florida sales-tax dealer, remit tax on Florida purchases using reasonable revised estimates, and reconcile the first fiscal year to actual mileage through payment, refund, or credit.

What this means for you

The ruling offered two distinct paths. One focused on an out-of-state vessel purchase, documentation, registration, and time in Florida. The other used commercial-fishing status and mileage proration for vessels and parts used in interstate or foreign commerce.

Both depended on records and affidavits. The purchaser had to execute the vessel-use affidavit even when the mileage ratio produced a full exemption, and Florida part purchases required an affidavit delivered to the seller.

Common questions

Q: Did buying the vessel outside Florida automatically eliminate Florida tax? No. The result depended on federal documentation, Florida registration rules, and the 90-consecutive-day and 183-aggregate-day limits stated in the ruling.

Q: Did the commerce exemption cover vessel parts? Yes. The cited statute and rule covered qualifying vessels and their parts.

Q: How was the taxable share of Florida purchases calculated? Florida miles divided by total miles for vessels used in interstate or foreign commerce.

Q: Did travel from the territorial limit to a Florida dock count as Florida mileage? No, under the rule interpretation applied in this advisement.

Q: What happened before the company had a full year of mileage? It could use reasonable estimates, then reconcile to actual first-year mileage without interest or penalty on an additional liability if the estimates were reasonable.

Citations and references

• Fla. Stat. § 212.08(8) — partial exemption for vessels and parts used in interstate or foreign commerce
• Fla. Stat. §§ 327.10 and 327.16 — vessel registration and numbering provisions referenced by the rule
• Fla. Admin. Code r. 12A-1.007(9)(b) — tax treatment of boats bought outside Florida
• Fla. Admin. Code r. 12A-1.064(5) — mileage proration and commercial fishing vessels
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 97A-063

Original ruling text

SUMMARY

A Corporation's purchase of a commercial fishing vessel
outside of Florida will not be taxable unless it becomes
subject to the registration and numbering requirements of
section 327.10, F.S. If a commercial fishing vessel
purchased outside Florida is not required to be registered
and numbered in this state, is soley documented under
federal law, does not operate in Florida waters for more
than 90 consecutive days, and does not remain in Florida
for more than 183 days in the agregate during any one year
period, no Chapter 212, F.S., tax is due under the rule
provisions of Rule 12A-1.064(5), F.A.C.

Sep 25, 1997

Re: Technical Assistance Advisement 97A-063
XXX ("Corporation")
Commercial Fishing Vessels
Section 212.08(8), F.S.
Rules 12A-1.007(9)(b) and Rule 12A-1.064(5), F.A.C.

Dear :

Your letter of July 24, 1997, requested a Technical Assistance
Advisement concerning the above referenced matter. This
response constitutes a Technical Assistance Advisement (TAA)
under Chapter 12-11, Florida Administrative Code, and is issued
to you under the authority of s. 213.22, Florida Statutes.

REQUESTED ADVISEMENT

The issues under advisement herein are restated from your letter
of July 24, 1997.

1. [Corporation's] purchases of commercial fishing vessels
   outside this State are not subject to Chapter 212 tax,
   provided the vessels are not required to be registered and

numbered in this State, are solely documented under federal
law, and are not present within Florida waters for more
than 90 consecutive days, or for more than 183 days in the
aggregate in any year. Department Rule 12A-1.007(9)(b),
F.A.C.

2. [Corporation's] purchases of commercial fishing vessels
   also qualify for the exemption in section 212.08(8), F.S.
   and Department Rule 12A-1.064(5), and this exemption also
   applies to vessel parts. No tax applies to purchases of
   vessels and parts thereof outside Florida. In calculating
   the mileage ratio for Florida purchases prior to the
   accumulation of mileage for a fiscal year, [Corporation] may
   use estimates. Mileage between a Florida dock and the
   Florida territorial limit is not considered Florida mileage
   for purposes of the ratio. If the ratio is zero, the
   purchases are fully exempt provided [Corporation] executes
   the appropriate affidavit. In addition, [Corporation] would
   not be required to register as a sales tax dealer under
   Chapter 212.

If [Corporation] accumulates Florida mileage and seeks
partial exemption of Florida purchases, it must register as
a Florida sales tax dealer and begin reporting and remitting
tax on such purchases based upon revised mileage estimates.
The ratio is the total Florida miles divided by the total
miles everywhere. After the first fiscal year of
operations, [Corporation] will calculate the actual mileage
ratio for the fiscal year, and any difference between its
actual tax liability and amounts paid during the fiscal year
will be resolved by additional payment, refund or credit.
No interest or penalty will be applied to any additional tax
liability, provided the mileage estimates during the year
were reasonable. The mileage ratio to be applied in any
future year will be based upon the mileage experience during
the immediately preceding fiscal year.

A copy of the affidavit [Corporation] plans to use for
vessel purchases is attached hereto. Please confirm this is
acceptable, and please also identify the locations to which
[Corporation] should direct the originals and copies of such

affidavits. Note that there will be no state registration
number for federally documented vessels. Note also that
sellers outside Florida may not be registered as dealers for
purposes of Chapter 212, Florida Statutes.

RELEVANT FACTS

Your letter imparts the following information regarding the
issues under advisement herein:

[Corporation] is a Florida corporation, with its principal
place of business in..., Florida.... It is not a registered
dealer under Chapter 212. [Corporation] contemplates
purchasing vessels to be used exclusively for commercial
fishing. The vessels will be designed, constructed, and
used in a regular and recurring course of business to catch
seafood for the commercial purpose of selling such seafood
at wholesale. A contract to purchase the first vessel is
pending. [Corporation] expects to take title and possession
to the first vessel outside Florida. No sales or use tax is
expected to be due or paid with respect to the purchase of
the vessels in any other state. The vessels will be
documented solely under federal law. It is not anticipated
that Florida vessel registration and numbering requirements
will apply to such vessels.

The commercial fishing will occur in waters outside
Florida's territorial limits. [Corporation] will record the
locations of all fishing activities (by latitude and
longitude). The vessels will enter Florida waters only to
facilitate sales of fish products, required maintenance, and
replenishment of fuel and other supplies necessary to return
to non-Florida waters and engage in commercial fishing. It
is not anticipated that the vessels will be present in
Florida waters except for mileage from the Florida
territorial limit to dockside and return to non-Florida
waters. The vessels will not be present in Florida waters
for more than 90 consecutive days, or for more than 183 days
in the aggregate in any one year. [Corporation] has owned
no other vessels or otherwise accumulated any vessel mileage
within or without the territorial waters of Florida in the

past.
Depending upon the product fished, a single fishing trip
lasts from several days to several weeks (on-board freezers
preserve the catch). The vessels will not return to the
same dock after each trip. Rather, they will proceed to
whatever destination provides optimum market conditions for
sale of the product. In general, this will not be known
until the vessel is ready to return to land. Product caught
within the Gulf of Mexico may be taken for sale ("landed")
in any of several states; product from Atlantic waters will
in most cases be landed somewhere in Florida.

DISCUSSION

As provided in your letter, [Corporation] has identified two
bases for maintaining that no tax is due with respect to its
purchases of vessels. The first applies only to vessels, and
only to purchases outside the state; the second applies to
vessels and also to parts of vessels.

Rule 12A-1.007(9)(b) provides in pertinent part:

1.a. A boat, purchased by its current owner outside this
state, using the waters of this state and required to be
registered and numbered in this state within 20 days after
purchase by the owner, pursuant to s. 327.10, F.S., is
subject to tax on the sales price of the boat within 20 days
after purchase by the owner.

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....

Pursuant to these provisions, [Corporation's] purchase of a
vessel outside Florida will not be taxable unless it becomes
subject to the registration and numbering requirements of section
327.10, F.S., or the conditions of paragraphs 1.b. or 2. above
are met. If a vessel purchased outside Florida is not required
to be registered and numbered in this state, is solely documented
under federal law, does not operate in Florida waters for more
than 90 consecutive days, and does not remain in Florida for more
than 183 days in the aggregate during any one year period, no
Chapter 212, F.S., tax is due under the quoted rule provisions.

The second basis for concluding that no tax is due is independent
of the first, and applies to the vessels and also to parts
thereof. In the event a vessel is subject to Florida registration
and numbering requirements, section 212.08(8), F.S. (1996 Supp.),
and Rule 12A-1.064(5), F.A.C., would become applicable to the
purchase. The statute provides as follows:

(8) PARTIAL EXEMPTIONS; VESSELS ENGAGED IN INTERSTATE OR
FOREIGN COMMERCE.-(a) The sale or use of vessels and parts thereof used to
transport persons or property in interstate or foreign
commerce is subject to the taxes imposed in this chapter
only to the extent provided herein. The basis of the tax
shall be the ratio of intrastate mileage to interstate or
foreign mileage traveled by the carrier's vessels which were
used in interstate or foreign commerce and which had at
least some Florida mileage during the previous fiscal year.
The ratio would be determined at the close of the carrier's
fiscal year. This ratio shall be applied each month to the
total Florida purchases of such vessels and parts thereof
which are used in Florida to establish that portion of the
total used and consumed in intrastate movement and subject
to the tax at the applicable rate. Items, appropriate to
carry out the purposes for which a vessel is designed or
equipped and used, purchased by the owner, operator, or
agent of a vessel for use on board such vessel shall be

deemed to be parts of the vessel upon which the same are
used or consumed. Vessels and parts thereof used to
transport persons or property in interstate and foreign
commerce are hereby determined to be susceptible to a
distinct and separate classification for taxation under the
provisions of this part. Vessels and parts thereof used
exclusively in intrastate commerce do not qualify for the
proration of tax.
(b) The partial exemption provided for in this subsection
shall not be allowed unless the purchaser signs an affidavit
stating that the item or items to be partially exempted are
for the exclusive use designated herein and setting forth
the extent of such partial exemption. Any person furnishing
a false affidavit to such effect for the purpose of evading
payment of any tax imposed under this part is subject to the
penalties set forth in s. 212.12 and as otherwise provided
by law.

The Department's Rule 12A-1.064(5), F.A.C., interpets the statute
to apply to commercial fishing vessels:

Commercial fishing vessels which are designed, constructed,
and used in a regular and recurring course of business to
catch seafood or in the taking or gathering of sponges for
the predominant commercial purpose of selling such seafood
or sponges at wholesale or retail qualify for proration of
tax to the extent provided in paragraph (a).

Based upon the policy interpetation announced in the rule, the
[Corporation's] purchases of vessels and parts thereof qualify
for exemption under the statute and rule. The ratio is applied
only to Florida purchases, and purchases of vessels and parts
thereof outside the State of Florida are therefore fully exempt.
With respect to Florida purchases, [Corporation] would calculate
its mileage ratio based upon estimates until it accumulates
actual mileage for a fiscal year. Because mileage from the
Florida territorial limit to dockside and back to non-Florida
waters is not considered Florida mileage under the Rule, even
Florida purchases will be fully exempt provided [Corporation]
accumulates no other mileage in Florida waters.

If [Corporation] accumulates other Florida mileage and seeks to
exempt Florida purchases, it will be required to register for
sales tax purposes and begin remitting tax on such purchases
based upon revised estimates. At the end of its first fiscal
year, it will compute its actual mileage ratio and adjust its tax
liability for the prior year by additional payment, refund, or
credit. The ratio to be applied to Florida purchases in any
future year will be based upon the mileage accumulated during the
immediately preceding fiscal year.

Regardless of whether the exemption claimed for a purchase under
section 212.08(8), F.S., and Rule 12A-1.064(5), F.A.C., is
partial or total, [Corporation] would be required to complete an
affidavit in substantial conformity with the Rule. The affidavit
submitted with your letter of July 24, 1997, is acceptable for
[Corporation] to use for vessel purchases, with the following
exceptions:

1. That the word "fishing" be added to the first sentence of
   the first paragraph, since the vessel will be used exclusively
   for commercial fishing. The sentence should read, "This is to
   certify that the commercial [fishing] vessel described below will
   not be used...."
2. That the word "none" be deleted from the line for State
   Registration Number under the Description of Boat. Department of
   Highway and Safety Motor Vehicles will need to determine whether
   or not the vessel will be required to be registered and numbered
   in this State.

The original and the first copy of the affidavit should be sent
to the Department of Revenue, Boat Enforcement Unit, P.O. Box
6417, Tallahassee, Florida 32314-6417. The affidavit for use when
making Florida purchases of parts is provided only to the seller.

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 that 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 and your request are
public records under Chapter 119, F.S., which are subject to
disclosure to the public under the conditions of s. 213.22, F.S.
Your name, address, and any other details which might lead to
identification of the taxpayer must be deleted by the Department
before disclosure. In an effort to protect confidential
information, we will make the proposed deletions in accordance
with your request submitted with your letter of July 24, 1997.

Sincerely,

Vicki Allen
Tax Law Specialist
Technical Assistance & Dispute Resolution
(850) 922-4846

Ctrl. No. 30068