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Tips For Complying With Ohio Sales & Use Tax Law On Watercraft Purchases

Published: Tuesday, January 23, 2018

When a watercraft is purchased or used in Ohio, it is subject to state and local sales and use tax. A boat can either be titled with the State of Ohio or documented with the United States Coast Guard. The purchase of either type is taxable at the current state tax rate of 5.75%, plus the applicable local tax rate, which varies. The differences between documented and titled boats are which local tax rate to use, who remits the tax, and where the tax is remitted.

Ohio’s trade-in law requires that the selling dealer/broker, whether located in Ohio or elsewhere, must be licensed as a Watercraft Dealer with the Ohio Department of Natural Resources (ODNR) prior to the purchase. Otherwise, the trade-in value cannot be used to reduce the tax base for computation of the Ohio tax due. The license application can be accessed on the ODNR website at www.ohiodnr.gov.

Titled boats are taxed based on the tax rate in the county where the buyer lives, regardless of where the watercraft is docked and/or stored. In the case of a casual sale (a transaction between two private parties), the buyer pays the tax to the county Clerk of Courts at the time the title is transferred from the seller to the buyer. If the watercraft is purchased from an Ohio dealer or broker, the dealer/broker is required by law to collect the tax from the buyer and remit the tax to the county Clerk of Courts with the title paperwork.

Coast Guard documented boats do not have titles. They are taxed based on the tax rate in the county where the boat is purchased from the Ohio dealer/broker. The dealer/broker must collect the tax as above. The tax is then remitted on the dealer/broker’s monthly sales tax return filed with the Ohio Department of Taxation (“Taxation”).

For casual sales of Coast Guard documented boats, the tax is paid directly to Taxation by the purchaser using Form VP USE, available on Taxation’s website at www.tax.ohio.gov. The purchaser must pay the Ohio tax due within 30 days of the purchase in Ohio. The tax is computed based on the rate in effect in the county where the boat is docked and/or stored and not the residence address of the purchaser. Please contact Taxation’s Audit Division at 1- 614-752-6864 for assistance in completing the form and accurately calculating the tax.

If you are thinking about buying a Coast Guard documented boat out-of-state, contact the Audit Division at 1-614-752-6864 prior to the purchase to discuss your potential Ohio tax liability. The following questions will need answered:

  1. Is the boat being purchased from an individual or a dealer/broker?
  2. Where is it being purchased (which state)?
  3. Where is physical possession of the boat being taken?
  4. Is tax being paid in the state where the boat is being purchased or where physical possession of the boat is being taken?
  5. Is anything being traded for the boat being purchased?
  6. Where will the boat be docked and/or stored in Ohio?

Based on this information, you will be informed of the potential Ohio tax liability on your boat purchase. If Ohio tax is owed, you will be required to file Form VP USE and to provide a copy of your Purchase Agreement, Closing Statement, or Bill of Sale indicating the full purchase price of the boat. Your check will be made payable to the Treasurer of the State of Ohio. Once your payment is received, you will be mailed a letter acknowledging receipt of your payment and a receipt for your tax payment.

Taxation’s Audit Division interacts with boat owners and broker/dealers on a regular basis and is happy to answer your tax questions. Please feel free to call 1-614-752-6864 Monday through Friday between the hours of 8:00 am and 5:00 pm. Taxation also recommends that you visit the ODNR website at www.ohiodnr.gov for information about boat registration.

This article first appeared in the Winter Issue (Jan/Feb) 2018 of Great Lakes Scuttlebutt magazine.

 


tags: Boating 101, Lake Erie

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