Boat Tax 2007 -- How Long Can I Cruise?

Boaters coming in to Maryland regularly ask us how long can they stay without owing tax under the State Boat Act. The answer to this question is somewhat difficult to give, because there are a lot of factors both future (repairs) and past (location of purchase), that may affect the answer to the question. There are also ambiguities in the law that may be read differently by a judge than they are by this Firm or by the personnel at the Department of Natural Resources -- not to mention that the personnel at the Department of Natural Resources, being human, sometimes are not 100% consistent as to their views on what the statute says. That said, here is the short answer, and the best answers that we can give without a 25 page legal brief. The actual text of the 90 day exception below, so you can see why we are hesitant to speak in absolutes.

It should be noted that if you have paid sales or use tax on your boat to another state, and paid at least 5% tax on the purchase, you will not likely owe Maryland anything. You should register with Maryland if you are staying on and cruise without significant concern if not.

 

1. You can cruise for 90 days in a calendar year in Maryland waters without tax consequences if your boat was purchased in another state and principally used or registered there prior to coming to Maryland.
   
   
2. We are hearing that brokers are saying that one can cruise Maryland for 90 days after purchase. By our reading, this is not what the law says, although it is true that the DNR does not generally issue assessemnts for tax on boats that are in Maryland less than 90 days. If it did, however, tax would probably be due.
   
   
3. The DNR generally takes the position that you can cruise for 90 days even if your boat was purchased in Maryland, so long as you did not owe tax when the boat was purchased. (Generally this means that the boat was purchased in Maryland, but left within 30 days and filed the DNR's form B110 Affidavit of Out of State Use). WARNING: We are not aware of anyone that has tested the DNR's patience by leaving on day 29 and returning on day 31, then staying for the remaining 90 days. If you do this, or something similar, you are in a gray area of the statute, and we do not make any promises about your outcome. WARNING: If it smells to the DNR that there was a fraud-ish effort to avoid tax (for example, if you are Maryland resident) then this general rule may not apply.
   
   
4. You can stay in Maryland more than 90 days in a calendar year without tax consequences, so long as you stay more days in another single jurisdiction. If you are in Maryland 100 days and in Florida 110 days, you are fine -- but you may need to demonstrate this to Maryland's DNR, and you will therefore need to be sure that you are on the right side of Florida's sales and use tax. WARNING: If you are in the BVI, or some combination of other states (as opposed to a single state of the United States), then you need to be under 90 days. Editor's note: if you have spent time in a jurisdiction other than a US State or territory, and this time matters in terms of whether the boat is taxable, please call for specific advise - analysis in this area of the law is currently in a state of flux.
   
   
5. International cruising permits -- The U.S. government preempts the state by decreeing that a foreign flag vessel may ply U.S. waters free of taxation as long as it has a valid cruising permit. Mr. Lochner has handled case where the foreign flag yacht failed to make entry and gain a cruising permit and cases where the permit has expired. If you are concerned about the tax consider whether it would be cost effective to flag the vessel offshore. 
   
    

Actual Text of the State Boat Act
 

(i) A vessel is not deemed used on the waters of the State if the vessel is used for 90 days or less of a calendar year; and

(ii) If a vessel is used for more days than 90 days in a calendar year, the period of 90 days shall be counted in the determination of principal use under this subtitle;

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