Boat tax/commercial license question

jon3030

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I am going to state register my new boat here in MA and I also plan to get my commercial striper and tuna licenses. I want to make sure I avoid paying tax on the boat because I will be commercial but I cannot get my commercial licenses until I have a boat registration. Kind of a chicken and egg thing. Does anybody know what procedure to take here?

Thanks.
 

lobstercatcher

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Why? The state won't let you sell striper/etc if you caught it standing on a dock?

I'd question that. Did you speak with someone in the commercial division?
 

Raider Ronnie

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fullhouse

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Pay the tax. I went through this a few years ago and I ended up paying more in penalty a and interest than the tax . The state called it a sales and USE tax .good luck
 

Curmudgeon

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The law is that the boat must be for commercial use only, and not used for pleasure at all. Only having tuna and striped bass permits will be a red flag for auditing. I would use caution as raider Ronnie said.
 

Pitou

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When you register your boat you will have to sign an affidavit that you are commercial only. The red flag comes in when you're not reporting any income.

I'd call the registration office in Boston to find out the procedure: 617-626-1610

Boat license / covers everyone on board & requires a state registration number or USCG Doc. #. Individual license angler license does not need boat registration and only covers one fisherman.
 

hntrss

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I agree with lobstercather here, but will say i also agree with just paying the tax to avoid major future hassles if you are not truly a commercial guy. Tax problems seem to have a life of their own and never seem to go away. A few friends here in ny have gone this route and all got caught and all ended up paying. With penaltys. Now they are all in chasing the people that are illeagally claiming taxes paid on fuel. Going back 5 years. One friend owed 9k in taxes/penalties. Just saying.....
 

lobstercatcher

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When you register your boat you will have to sign an affidavit that you are commercial only. The red flag comes in when you're not reporting any income.

I'd call the registration office in Boston to find out the procedure: 617-626-1610

Boat license / covers everyone on board & requires a state registration number or USCG Doc. #. Individual license angler license does not need boat registration and only covers one fisherman.

I'd agree to check. If the boat is for commercial purposes it should qualify. There shouldn't be some xyz% income derives from the boat. If someone is making 1 half mil in some aspect of their business and only making 50k from a commercial boat segmentof their business... I don't know why the state should say anything. What if the commercial boat makes nothing???? It is the state and fed regulations that turned commercial boats into no profit, Even the best of the fishermen had hard times catching and profiting under the regulations. Then the state wants to blame the boat for not following regulations????
 

greg

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Any business that involves a boat will automatically raise red flags with auditors because the rate of abuse is so high.

If you are buying a vessel that is clearly commercial, you will not have not too much pain (steel hull dragger, sea tow franchise boat for an existing business license, etc). Even buying a commercial boat with existing permits and catch history is relatively safe.

But if its a boat that "could be" or worse yet, "is", dual use pleasure/commercial, expect to be denied a lot of whatever you try to claim. Sales tax isn't the only area you can foul your props. Claims for marina fees, maintenance and repairs, insurance, etc, will all be met with that cynical civil service stare.

So the rules my accountant advised me to follow are that it can't just look like a busines (bank account, web site, etc), it has to have real documented revenue, and it has to show a profit, even if its only a few bucks. So if your expenses for the year are $15k, and you made $1k, you should only deduct less than $1k total for the year.

And yes, there is the three year rule but if the IRS decides you aren't running a bona-fide business three to five years from now, they will claw back every cent you deducted plus penalties.

Then there are the rules that disallow any expense that is a barrier to participating in a new venture. That includes training (as in the costs for your captains license), fishing permits, even safety gear if it is CG required for commercial fishing.

Both states and the IRS itself take a very dim view of hobby businesses. They turn the lights out completely when a boat is involved.

And no, I'm neither a lawyer nor a licensed tax adviser. But this is the internet and I can make crap up as it suits me. ;) You can decide for yourself if you want to get advice from a qualified source.:lol:
 
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Downeaster

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I would be careful with trying to go the "commercial" route to avoid paying the tax.
Unless you really are commercial and make the majority of your total income from commercial fishing and have the proof of sales receipts, you are not commercial.
State of Ma has been cracking down on this.

To this I'd add a logbook showing engine hours/trip (no recreational use); insurance (P&I, crew, etc.); federal documentation as commercial; etc. This is just the beginning if the auditor (typically an ex-commercial himself) senses that something isn't right it'll get real expensive real fast.
 

tomy

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When I got audited, and passed years ago, the thing that helped me the MOST was when I pulled out my log book. I remember him stating that I was 1st guy who ever had one. Marol of story..keep a log.:(:)
 

CEShawn

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With anything if your legit, its no problem if your not and trying to hide something your screwed. Its amazing to see what they pull up and you have to think them going into social media sites is next. They pulled up everything on our old business, the biggest things that helped us was money we showed for advertising, the website monthly bill etc. That we were always actively seeking new business. BTW they will also look into people that are your other captains and crew if you list them. We had an incident that when one of our captains wasn't working he was collecting unemployment from someone else, lol lets say I know that Captain well.
 

CEShawn

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I will tell you what was bullshit and this is where things have to stop. I forget the exact detail but we paid for our summer slip and fall slip, was in two different area's at the time. In the summer we blew an engine and were hauled out of the water. They tried to say that they were something like invalid and couldn't deduct them. I still never got that bit... When they come, they come looking at everything...
 

CEShawn

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You can dis spell alot of the myth's right here. Including the great line about fuel, if its a sport fishing and commercial trip, the fuel is considered recreational!

Fishing Tax Center
 
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