Would taking title to and possession of a newly purchased vessel in Rhode Island or its territorial waters create Rhode Island sales or use tax liability?

Plain-English summary

Taking title to and possession of the vessel in Rhode Island or its territorial waters did not create Rhode Island sales or use tax liability. The ruling applied Rhode Island's statutory exemption for the sale, storage, use, or consumption of new and used boats.

The buyer was under contract to purchase a WESMAC 38-foot Custom Family Cruiser from a Maine builder. The original contract called for delivery at the builder's Maine premises, but the buyer proposed amending it to take title and possession in Rhode Island or Rhode Island territorial waters.

The Division concluded that the Rhode Island delivery location did not change the exemption. The proposed in-state transfer of title or possession remained covered by the boat exemption applied in the ruling.

What this means for you

Boat buyers

Under the law applied in this order, accepting a new or used boat in Rhode Island did not by itself trigger Rhode Island sales or use tax.

Boat builders and brokers

Document the vessel, purchase contract, amendments, title transfer, and delivery location. The exemption here depended on the item being a boat or vessel within the cited provision.

Tax professionals

The ruling addressed Rhode Island sales and use tax only. It did not decide registration, documentation, excise, property, or other possible charges.

Common questions

Did the buyer have to take delivery in Maine to avoid Rhode Island tax? No. Rhode Island delivery or title transfer did not create sales or use tax under the ruling.

Did the exemption cover both new and used boats? The quoted statute covered any new or used boat.

Did it matter whether title or possession transferred? No. The ruling addressed either or both occurring in Rhode Island or its territorial waters.

Was the ruling specific to this buyer? Yes. The reliance paragraph identifies the requesting client.

Citations and references

• R.I. Gen. Laws § 44-18-18 — use-tax provision referenced by the boat exemption.
• R.I. Gen. Laws § 44-18-20 — sales-tax provision referenced by the boat exemption.
• R.I. Gen. Laws § 44-18-30(49) — exemption for the sale, storage, use, or consumption of a new or used boat.

Source

• Landing page: Rhode Island Declaratory Rulings
• Declaratory order: Declaratory Order 1999-02

Original ruling text

Ruling Request No. 99-02

Declaratory Rulings

Ruling Request No. 99-02

Re: Ruling Regarding the Applicability of the Sales/Use Tax Law to Delivery of a Vessel in Rhode Island

Request for Ruling

On behalf of your client you request a declaratory ruling regarding the applicability of the Rhode Island sales/use tax as to the delivery of a vessel and the taking of title thereto within the State of, or in the territorial waters of, Rhode Island.

Facts

The facts set forth in your request dated August 19, 1999 are incorporated herein by reference. The salient facts are as follows. Your client is under contract to purchase a WESMAC 38' Custom Family Cruiser, ("the Vessel") from a builder located in the State of Maine. The current contract calls for a series of payments as the construction progresses with your client, the buyer, to take delivery of the vessel at the builder's premises in Maine upon completion.

Your client desires to amend the contract wherein he would take title to, and possession of the vessel within the State of, or in the territorial waters of Rhode Island.

Ruling Requested

Assuming the proposed amendment is added to the contract, the purchase of the vessel will not be subject to Rhode Island sales or use tax.

Discussion

R.I.G.L. 44-18-30(49) reads in pertinent part as follows:

> 44-18-30(49). Boats or vessels generally. Notwithstanding the provisions of this chapter, the tax imposed by §44-18-20 and §44-18-18 shall not apply with respect to the sale and to the storage, use or the consumption in this state of any new or used boat.

The sale, storage, use or other consumption of boats and vessels in Rhode Island is exempt from the Rhode Island sales and use tax pursuant to R.I.G.L. 44-18-30(49).

Ruling

The taking of possession and/or title of the vessel within this state or its territorial waters will not create a Rhode Island sales/use tax liability.

This ruling may be relied upon by your client and shall be valid until expressly revoked or until the applicable statutory provisions of law are amended in a manner that requires a different result or the underlying situation described above changes.

**R. Gary Clark

Tax Administrator**

September 3, 1999