Could a foreign-flag vessel return to Florida within six months of an exempt purchase without triggering use tax?

Subject

Foreign-Flag Vessel Returning Within Six Months of Purchase

Plain-English summary

The vessel could return to Florida before the six-month period ended without triggering Florida use tax, provided the owner obtained and complied with a U.S. Customs cruising permit. The Department reasoned that a foreign-flag vessel operating under that permit had not commingled with the mass of property in Florida.

The nonresident owner had bought the vessel from a Florida seller, claimed the purchase-for-removal sales-tax exemption, obtained a 90-day Florida cruise permit, and timely took the vessel to the Bahamas. The proposed return was only for a recreational event. The owner represented that neither it nor the Florida seller would sell, charter, or list the vessel for sale or charter at the event.

The Department also stated that the owner could bring the vessel into Florida through Customs duty-free using the temporary-importation-under-bond procedure in 19 C.F.R. § 4.94. Its conclusion remained tied to use consistent with the federal cruising permit.

What this means for you

The ruling did not create a general six-month exception for returning vessels. Its result depended on the vessel's foreign-flag and Customs status, continued compliance with the cruising permit, and the limited event-related use described by the owner.

For a vessel bought under Florida's removal exemption, returning before six months can raise use-tax exposure. A vessel owner considering an early return should confirm the applicable Florida tax rule and federal Customs procedure before entering the state.

Common questions

Q: Did the vessel's return within six months automatically create Florida use tax? No. Under the stated facts, the Department said the return would not trigger use tax if the owner obtained and complied with a U.S. Customs cruising permit.

Q: Why did the cruising permit matter? The Department treated the compliant foreign-flag vessel as not having commingled with the mass of property in Florida.

Q: Was there another procedure mentioned? Yes. The ruling stated that the owner could use the temporary-importation-under-bond procedure in 19 C.F.R. § 4.94.

Q: Could the vessel be sold or chartered during the event? That was outside the approved facts. The owner represented that the vessel would not be sold, chartered, or listed for sale or charter, and the ruling noted that such activity could lead to tax.

Q: Can another vessel owner rely on this result? No. Under section 213.22, the advisement binds the Department only for the requester and the facts and circumstances described.

Citations and references

• Fla. Stat. § 212.05(1), including § 212.05(1)(a)2 — vessel purchase-for-removal exemption and early return
• 19 C.F.R. § 4.94 — temporary importation under bond
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 98A-015

Original ruling text

SUMMARY

A taxpayer that claimed exemption from Florida sales tax
based on its intent to remove the boat from state at the
time of purchase, should be able to bring the boat back
into Florida without triggering the use tax, if the owner
obtains a United States Customs Service ("Customs")
cruising permit for the vessel upon returning it to
Florida. Also, the Owner could bring the vessel into
Florida through Customs duty free by way of the temporary
importation under bond ("TIB") procedure set forth in 19
C.F.R. Section 4.94. The Department holds that a foreign
flag vessel in Florida waters under a Customs cruising
permit, as long as it remains in compliance with the
permit, is not subject to use tax because it has not
commingled with the mass of property in Florida. In
addition, the Owner will not be selling, chartering, or
listing the Vessel at the event, nor would the Florida
seller.

Mar 25, 1998

Re: Technical Assistance Advisement 98A-015
Sales and Use Tax
XXX ("Owner")
Return of Vessel Within Six Months of Purchase
Section 212.05(1), F.S.

Dear :

This response is in reply to your letter dated January 5, 1998,
requesting the Department's issuance of a Technical Assistance
Advisement ("TAA") pursuant to s. 213.22, F.S., and Chapter 1211, F.A.C., regarding the referenced matter and parties. An
examination of your petition has established that you have
complied with the statutory and regulatory requirements for
issuance of a TAA. Therefore, the Department is hereby granting
your request for issuance of a TAA.

Facts

The following facts have been provided to the Department:

Our firm represents [Owner].... Through this letter, I am
requesting a Technical Assistant Advisement concerning
exemption from use tax under F.S. s. 212.05(1)(a)2.

[Owner] purchased the vessel "XXX" (the "Vessel") from
[Florida Seller]. [Owner], a "non-resident" within the
meaning of Section 212.05, Florida Statutes, claimed
exemption from Florida sales tax based on its intent to
remove the Vessel from the state. At the time of purchase,
[Owner] bought a 90-day Florida cruise permit. In
compliance with Section 212.05, the Vessel left Florida and
traveled to the Bahamas within required time period.

Section 212.05 provides that a vessel, the purchase of
which has been exempted from sales tax as a purchase for
removal, will be subject to use tax if it returns to
Florida within six months of its removal from the state.
[Owner] would like to return the Vessel to Florida for
[Florida Seller's] "XXX," a recreational event attended by
owners of [Florida Seller] yachts. The XXX will take place
before the expiration of six months from the date of
removal. The Vessel would not be offered for sale or
charter and would be removed from Florida after the event.
I ask that your Technical Assistance Advisement state
whether the Vessel's participation in the XXX under the
foregoing circumstances would trigger the imposition of use
tax.

On the basis of our review of Florida law and previous
Technical Assistance Advisements, we conclude that [Owner]
should be able to bring the Vessel to the event without
triggering the use tax, as long as the company obtains a
United States Customs Service ("Customs") cruising license
for the Vessel upon returning it to the state. By issuing
a cruising license to a foreign flag vessel, Customs, in
essence, determines that the boat has not been brought into

the United States permanently. Accordingly, the Department
has recognized that a foreign flag vessel in Florida waters
under a Customs cruising license, as long as it remains in
compliance with the license, is not subject to use tax
because it has not been commingled into the mass of Florida
property. TAA 89(A)-015. The Department has cautioned that
it may impose the use on such vessel if it is sold,
chartered, or listed for sale or charter. Id. [Owner],
however, would not be selling, chartering, or listing the
Vessel at the XXX would [Florida Seller].

Ruling Requested

Whether the Owner should be able to bring the Vessel to the XXX
without triggering a use tax liability?

Conclusion

It is the Department's position that the Owner should be able to
bring the Vessel to the XXX without triggering the use tax if
the Owner obtains a United States Customs Service ("Customs")
cruising permit for the Vessel upon returning it to Florida.
Also, Owner could bring the vessel into Florida through Customs
duty free by way of the temporary importation under bond ("TIB")
procedure set forth in 19 C.F.R. Section 4.94. The Department
holds that a foreign flag vessel in Florida waters under a
Customs cruising permit, as long as it remains in compliance
with the permit, is not subject to use tax because it has not
commingled with the mass of property in Florida. In addition,
you have stated that Owner will not be selling, chartering, or
listing the Vessel at the event, nor would Florida Seller.

Therefore, as long as it is used in a manner consistent with the
federal cruising license, the presence of the Vessel in Florida
for the XXX would not subject the Vessel to Florida use tax.

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 and 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 request you notify the undersigned in writing
within 15 days of any deletions you wish made to the request or
this response.

Sincerely,

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

Ctrl. No: 32412