"Homebuilt" makes you a "dealer" in Tennessee

Check it out:
http://www.wsmv.com/story/16773393/state-threatens-suit-against-boat-hobbiests

http://www.wsmv.com/story/16912107/revenue-dept-speaks-out-on-boat-controversy

 

And when cornered on it, the state Department of Revenue claims that the term "boat manufacturers and dealers" also means 'purchasers'? Baloney.

And they're claiming the $539.00 they're trying to dig out of the father and his kid is just 'uncollected sales tax' on the boat kit? More baloney. State sales tax in Tennessee is 7%. Do they really expect anyone to believe that they calculated the taxable value of a 14' fishing boat kit at $7,700.00 dollars?

 

Normally you keep track of building material and the local tax paid on them , to prove your status as a home builder when you register the craft . I don't understand the controversy ?

 

What's 'normal' depends on where you are. I didn't have to prove anything when I registered mine, here in California.

What's hard to understand about the fact that the state is being completely absurd, when it decides the taxes owed on a home-made rowboat are more than the completed boat is worth?

edit: keep in mind that they voluntarily took the boat down to the state office, paid the required fees and registered it properly. It wasn't until later that the state started sending them letters accusing them of being 'boat manufacturers and dealers,' and demanding absurd amounts of money from them.

 

This s going around the web, but it's nothing to be concerned about. Obviously the paper pusher in Tenn. doesn't know the process and hasn't been in contact with anyone who does at the Wild Life Resources Department, who is responsible for the process. It's also likely the builder didn't go through to appropriate process, making it a comedy of errors on both parts.

If it's registered properly, it'll have a "Z" HIN and this says it all and as soon as the sate attorney looks up the process, he'll simply call the boneheads that bungled this process up and tell them to shut up and apologize to the builder. No "boat manufacture" produces a product with a Z designation for the MIC portion of the HIN.

The real problem is there are very few registered home builts in Tenn, so the process is odd to the folks pushing the paper work. This is an issue in many states with a relatively small boating population. Though Tenn. is one of the larger of the small communities, they obviously don't handle this much.

A quick call from the builder's attorney will sort out the whole thing, though they do have to foot the bill for the attorney, they might be able to recover this, if the state insists on being boneheads and drags them into a court. This is what I'd let them do, for several reasons. First it makes public how foolish they are, in an election year. Second a judge will quickly see the problem and chew on the various boneheads involved and lastly, it'll let the builder recover the attorney's fee and any court costs.

 

Looks like it's getting resolved. From http://www.wsmv.com/story/16912107/revenue-dept-speaks-out-on-boat-controversy

The Department of Revenue issued a statement after we asked them for three days to explain their position.

"It is not the Department's position that an individual who builds a boat from a kit or component parts is in the business of selling boats," write communications manager Billy Trout.

The statement says the term"dealer," which is used in the tax statutes, also refers to a purchaser. They regret if information from the department was confusing.

The revenue department's statement explains that state statutes protect taxpayer privacy, and therefore, they cannot discuss tax matters involving particular taxpayers.

"We would like to provide some general information about use tax and boats," the statement says.

"Generally, sales tax is collected by the seller when an item, such as a boat, a boat kit, or component parts, are purchased. Sometimes, such as when the item is purchased outside the state, the tax is not collected by the seller. In those cases, the purchaser must pay, under state law, a "use tax" on the item. Use tax is equal to the sales tax that normally would have been collected by the seller. The purpose of use tax is to ensure that all purchases are taxed alike, whether bought from a seller in Tennessee or outside the state.

"When a boat is registered, the boat owner is required by law to document that sales or use tax was paid on the price of the boat. If the boat was built from a kit or other component parts, the owner must show that sales or use tax was paid on the kit or parts. Receipts or invoices are acceptable proof, as are records that show the taxpayer paid use tax directly to the Department of Revenue. When no information is provided, the Department must determine whether tax is due."

 

This is a completely normal SNAFU when dealing with the DMV. They probably do owe some tax. It is probably more or less up to the discretion of the person you're talking to across the counter (So making a fuss is a bad move). There is an office every ten miles or so. If you don't like the answer at one place, try the next. I've had initial claims drop by 90% on cars, trucks, trailers and boats. I make a habit of downloading all the forms and taking them with me, because the DMVs often don't have them or can't find them or tell me there's no such form. Try getting an antique boat sticker in Florida for a boat you built in Georgia 30 years earlier- a boat that didn't require to be registered or titled in Georgia. Same with trailer, I didn't have a tag or title or lights on the trailer in Georgia. I think we agreed on a value of $100 for the pair. Oh, I still had all the reciepts. I have travelled to all 50 US states and lived in over 20 of them. When all else fails, try to imply that you're on some sort of federal govt business. If the Fed stationed you in the state (or you happen to be volunteering in a National Park) there seems to be all kinds of exemptions and special clauses. I never asked too many questions when these came up. The nice lady suggested I sign here and I did. I payed about $3 year for my skiff until I sold it.

Honestly, I think this guy probably misread someone who might have been trying to do him a favor, and now they are both stuck. In most places, dealers don't pay tax until they sell the boat. If I was told that, based on the info I had provided, I was a dealer, I think I might take them up on that one.

 

As I suspected, some one high enough up the chain of responsibility has caught the problem and is "backing it down" with election year expedition.

The process as I understand it in Tenn is an inspection by Tennessee Wildlife Resource Agency personal (likely an officer), then a set of forms at the local county tax collector's office (each county has different rules to comply with in Tennessee) then the DMV gets involved.

In Tennessee the process is much like building a custom car. If you have a kit, then the manufacture's "Statement of Origin" is needed for major elements. If it's scratch built the TWRA makes a cursory inspection and declares the pointy end the bow. Then the tax accessor puts a value on it, based on your lumber and 'glass receipts and you get to pay a tax on this amount.

Again, each county has a slightly different set of rules, so it might be easier to try neighboring counties, just to get the ball rolling.

 

I don't really see the benefits with a small boat register. Where I live we don't have to register (or pay tax for) boats shorter than 12 m or more narrow than 4 m. Society doesn't seem to crumble in spite of all our unregistered boats. It's amazing that there is so little sentiment to abolish boat registering in the US considering all the anti-government feelings in the US in other areas. What are the perceived benefits of a boat register in the US that outweighs the extra bureaucracy and the loss of freedom?

I know that many European countries also register small boats but that doesn't explain why boat registering can survive in the US.

Erik

 

Well, I guess someone has to pay for the marine infrastructure funded by the state. Might as well be the people who use it...makes no sense for a highlander to have to subsidize a public launching ramp.

 

I know most of the Americans are heartedly against the VAT, or value added tax, but life and the taxation process is a lot simpler. One just keeps on wondering what value is added by taxation.

 

There is some VAT in the US...just low. Exacty what the boat registration fee is used for I dont know. I would assume marine infrastructure,


In Finland who pays for the intricate marine bouyage system in the islands ?

 

The state maintains the marine traffic systems here, or atleast I think so. Commercial shipping pays dearly in fairway dues for usage and ice breaking services during winters but I don't think there exists any connection between the income and expenditure.

 

Taxes are very seldom earmarked for a certain expenditure i Sweden, so it's difficult to say which tax pays for what. Commercial shipping pay through fees for much of the infrastructure needed for shipping, which I believe is quite reasonable. The system with lighthouses and bouys are where commercial shipping needs them, not where the leisure boats go. For leisure boating, taxes on gasoline and diesel alone amounts to much more than whats spent by the state on leisure boating. In addition to that there is VAT on everything, and boat owners tend to spend a lot on their boats.

My objection to a boat register is that it provides the state with more control and more information about the citizens than needed. A yearly fee of $3 for a small dingy hardly pays for more than the cost of the register itself, so also from a fiscal perspective it's an inefficient form to collect taxes.

Erik

 

Most states and some municipalities in the US do have VAT, but it's called a sales tax. Sales tax is collected when goods are sold, and is a percent of the cost of the goods. Merchants can show prices including the sales tax (very uncommon) or without the sales tax (almost always). For goods which will be used to make other goods intended for sale, sales tax is either not collected or is refunded (assuming the person/organization is registered as making items for sale).

For cars, trucks and boats in most states the sales tax is not paid at the time of purchase. Rather a tax, typically at the same rate as the sales tax, is paid at the time the car, truck or boat is first registered. This is also a VAT by a different name. This is what is at issue in the Tennessee case.

States also have registration fees for cars, trucks and boats which are paid periodically. Typically they are paid annually but there are exceptions. (In Michigan the registration fee for a boat is paid every three years.) Which boats have to be registered depends on the state, and typically the fee is small for small boats.