Florida sales and use tax issues are rife with twists and turns leaving most people scratching their head at what to do. The implications of Florida sales and use tax on boats is no exception. In this arena, boats will have their rules, exceptions to the rules, and then exceptions to those exceptions. This article will discuss the Florida sales and use tax consequences of boats requiring a saltwater fishing license fee to be paid. SPOILER ALERT – The Florida sales tax Six-Month Rule does NOT apply to licensed saltwater fishing boats!
As a general rule, Florida sales or use tax is imposed on tangible personal property sold or used in the state. Tangible personal property will include boats. Therefore, boats sold or used in Florida should be subject to Florida sales or use tax. The general exception to this rule is there is a presumption that if a boat is in another state, territory of the United States, or the District of Columbia for a period of six months or longer before coming to Florida, the boat should not be subject to Florida use tax. Yet, there is an exception to this exception.
The above presumption of a boat being used in another state, territory of the United States, or the District of Columbia for six months or longer before coming to Florida does not apply for boats being required to obtain a saltwater fishing license fee pursuant to another statute. It does not matter whether the saltwater fishing license fee is required directly or indirectly for the purpose of taking, attempting to take, or possessing any saltwater fish for noncommercial purposes. In these instances, boats that are brought to Florida are subject to use tax. Proof of payment of the use tax must be provided prior to the first licensure, registration, or titling of the boat.
For boats fitting within this category of needing a saltwater fishing license, the amount of tax owed varies primarily based on how soon after purchase the boat is licensed. A boat that is first licensed within 1 year after purchase shall be subject to use tax on the full amount of the purchase price. A boat that is first licensed in the second year after purchase shall be subject to use tax on ninety percent (90%) of the purchase price. A boat that is first licensed in the third year after purchase shall be subject to use tax on eighty percent (80%) of the purchase price. A boat that is first licensed in the fourth year after purchase shall be subject to use tax on seventy percent (70%) of the purchase price. A boat that is first licensed in the fifth year after purchase shall be subject to use tax on sixty percent (60%) of the purchase price. A boat that is first licensed in the sixth year after purchase, or later, shall be subject to use tax on fifty percent (50%) of the purchase price. If the purchaser fails to provide the purchase invoice on such boat, the fair market value of the boat at the time of importation into this state shall be used to compute the tax.
Above, the statute notes if a saltwater fishing license is needed. How do you know if a saltwater fishing license is required? The statute requiring a saltwater fishing license is as follows:
(7) VESSEL LICENSES.—
(a) Except as provided in paragraph (f), a person may not operate any vessel wherein a fee is paid, either directly or indirectly, for the purpose of taking, attempting to take, or possessing any saltwater fish for noncommercial purposes unless she or he has obtained a license for each vessel for that purpose, and has paid the license fee pursuant to paragraphs (b) and (c) for such vessel.
(b) A license for any person who operates any vessel licensed to carry more than 10 customers, wherein a fee is paid, either directly or indirectly, for the purpose of taking or attempting to take saltwater fish, is $800 per year. The license must be kept aboard the vessel at all times.
(c)1. A license for any person who operates any vessel licensed to carry no more than 10 customers, or for any person licensed to operate any vessel carrying 6 or fewer customers, wherein a fee is paid, either directly or indirectly, for the purpose of taking or attempting to take saltwater fish, is $400 per year.
2. A license for any person licensed to operate any vessel carrying 6 or fewer customers but who operates a vessel carrying 4 or fewer customers, wherein a fee is paid, either directly or indirectly, for the purpose of taking or attempting to take saltwater fish, is $200 per year. The license must be kept aboard the vessel at all times.
3. A person who operates a vessel required to be licensed pursuant to paragraph (b) or this paragraph may obtain a license in her or his own name, and such license shall be transferable and apply to any vessel operated by the purchaser, provided that the purchaser has paid the appropriate license fee.
(d) A license for a recreational vessel not for hire and for which no fee is paid, either directly or indirectly, by guests for the purpose of taking or attempting to take saltwater fish noncommercially is $2,000 per year. The license may be purchased at the option of the vessel owner and must be kept aboard the vessel at all times. A log of species taken and the date the species were taken shall be maintained and a copy of the log filed with the commission at the time of renewal of the license.
(e) The owner, operator, or custodian of a vessel the operator of which has been licensed pursuant to paragraph (a) must maintain and report such statistical data as required by, and in a manner set forth in, the rules of the commission.
(f) If the operator of a vessel that carries scuba divers for a fee, either directly or indirectly, maintains the appropriate vessel license under this subsection based upon the number of persons the vessel is licensed to carry and the applicable permits, the individual scuba divers engaging in taking or attempting to take saltwater products are not required to obtain individual fishing licenses or any applicable permits. However, if the operator of such a vessel does not have the appropriate license and applicable permits, the individual scuba divers engaging in taking or attempting to take saltwater products must have individual fishing licenses and any applicable permits.
Now, the above might be moot to an extent based on another statutory provision. This other statute says that despite any other statute within the sales and use tax chapter, the most amount of Florida sales or use tax to be imposed on the sale or use of a boat in Florida may not exceed $18,000.00. The real question is whether the Florida Department of Revenue would agree with this conclusion. Based on the Florida Department of Revenue’s ultra-aggressive tactics as of lately, it would not be surprising for the Florida Department of Revenue to ignore this provision.
What if you already paid sales or use tax to another state when the boat was purchased? The Florida Department of Revenue “should” give you credit for having paid a sales or use tax to another state. There is a caveat. If you cannot prove you paid the sales or use tax to another state, then you will not get credit. Thus, there is the possibility you could end up paying sales or use tax twice – once to the original state and another time to Florida. There are a few different ways to prove you paid sales or use tax to another state. One would be a receipt showing the sales or use tax had been paid. Another option would be showing the registration or title certificate for the boat, assuming those documents show sales or use tax has having been paid. Some people pay the sales or use tax through a state tax return – whether it is a state income tax return, a use tax return, or something else. The possibilities are endless. The important aspect is you can prove the sales or use tax was paid so you may receive credit from the Florida Department of Revenue.
In conclusion, those needing a saltwater fishing license in Florida for boats they bring into Florida may be in for a shock of having to pay Florida use tax on the boat. Careful planning is required to ensure Florida sales and use tax is appropriately minimized.
About the author: David Brennan is partner with Moffa, Sutton, & Donnini, P.A. His primary practice area is multistate tax controversy. David received a B.S. in Accounting and Finance, with a minor in Computer Science, from Florida State University. He worked as an accountant for a CPA firm before attending law school at Regent University. He received his Juris Doctor in 2013 and was licensed to practice law in Florida in the same year. In 2015, David earned his Masters of Laws in Taxation from Boston University. While working for the Florida Department of Revenue as a Senior Attorney, David focused on various sales and use tax issues, including that of motor vehicles and boats. You can read his BIO HERE.
At the Law Office of Moffa, Sutton, & Donnini, PA, our primary practice area is Florida taxes, with a very heavy emphasis in Florida sales and use tax. We have defended Florida businesses against the Florida Department of Revenue since 1991 and have over 100 years of cumulative sales tax experience within our firm. Our partners are both CPAs/Accountants and Attorneys, so we understand both the accounting side of the situation as well as the legal side. We represent taxpayers and business owners from the entire state of Florida. Contact us for a FREE INITIAL CONSULTATION to confidentially discuss how we can help put this nightmare behind you.
AUTHORITY
Section 212.06 - Sales, storage, use tax.
Rule 12A-1.007, F.A.C. – Aircraft, Boats, Mobile Homes, and Motor Vehicles.
ADDITIONAL RESOURCES
FL SALES TAX: FISHING CHARTER VS HEAD BOAT, published July 30, 2024, by James Sutton, CPA, Esq. and Andrea Arauz, Esq.
FL SALES TAX: BOAT DEALER GUIDE, published May 7, 2023, by David J. Brennan, Jr., Esq.
BUYING A BOAT IN FLORIDA: OUT OF STATE SALES TAX, published May 23, 2019, by David Brennan, Esq.
FLORIDA SALES TAX AUDITS PROCESS AND TRAPS, published March 4, 2023, by David J. Brennan, Jr., Esq.
2023 FLORIDA SALES TAX RATE ON COMMERCIAL RENT, published January 23, 2023, by James Sutton, CPA, Esq.
PHONE CALL FROM FLORIDA DEPARTMENT OF REVENUE: SALES TAX, published October 15, 2022, by Jeanette Moffa, Esq.
FLORIDA SALES TAX INFORMAL WRITTEN PROTEST, published November 17, 2018, by James Sutton, C.P.A., Esq.
FLORIDA SALES TAX - VOLUNTARY DISCLOSURE PROGRAM, published April 9, 2018, by Jeanette Moffa, Esq.