Sales tax on boats, motors, and trailers, deals

Mr.Gadget

Old Mossy Horns
So I have been looking a new boat.
Part of it is looking the correct boat and motor, the other is the deal.
Keep in mind the motor will be a 40, 50, or 60 tiller so install is easy.

One thing I found was the dealers think you must get the combo from them. They want 100 to 200 to install the motor also. For a tiller motor also. I liken this to you going to the store and getting a wheelbarrow and they charge you 20$ to fill the tire with air before you leave.
As in having the same price on the boat motor or trailer for anyone that would want any or all the package.
They say the deal comes down to tax and you get a deal with the combo because it is only 3% tax and not full tax.

I started looking around for deals and I can get a lot better deal on a motor from another shop.
Also another from out of state.
Think is that the dealer in SC stated they do not charge sales tax on the motor. State rule or law maybe. They offered to repower or install the motor on any boat or cash and carry.
Same no tax.
NC dealer stated that I would need to pay the tax in NC in order to buy it.
Dont think so. Why?

That is like going to another state and getting gas that has no tax or lower tax and when you return to NC you need to pay the gas tax or difference. Same with an ABC store say they have 30% tax but in SC they had nothing and you needing to pay the tax to the state when you return...

Now I could see the tax thing coming into play if I did it mail order or on the net.
Then I would buy something from SC when in NC and not be paying tax so would need to declare it on my tax forms for the year.

Reason all this come up was I wanted to pay cash for the boat and pick up the trailer and boat then look a deal on the motor this fall when the deals are better.

I have a small motor I can get by with. Just looking a floating catfish barge anyway to use in gaston where we have a place.
 
Last edited:

TrkyJedi

Eight Pointer
Gadget, if you buy out of state and live in NC there will be what is called Use tax. If you look it up on www.dornc.com and look under sales and use tax it should explain it or call your local NC Dept of Rev. office. Audits are done everyday on out of state vendors for this type of thing.
 

Mr.Gadget

Old Mossy Horns
http://www.dornc.com/taxes/sales/boatsandaircraft.html

correct, I know that.

It talkes about boats, also trailers.

Both need to be registered, taged and in the NC systems.

No question about that.

Question is the motor.
IF a state does not charge tax on the motor or other items that NC would? Why do you need to pay tax?

Think smokes, alcohol that other stats have low to no taxes on and you buy them in that state, do you need to pay tax?

Motor has no tag, title, paperwork.
Can be cash and carry. They really dont need your name or info.
 

nccatfisher

Old Mossy Horns
Contributor
You will pay tax on it soon as you register it in NC or when property tax catches up with you. Trust me, may be 3-4 years down the road, but they will send you a greetings from NC. Just like if you bought a car in SC and then when to register it in NC.
 
Last edited:

Quackman

Twelve Pointer
I don't think I have ever paid use tax on any of my outboards. Hull and Trailer yes, because they are registered with the state. As far as i know outboard motors are not registered in NC. At least the past 5 I have owned have not been registered.
 

TrkyJedi

Eight Pointer
Click on the website provided by Mr. Gadget and look in Section 35-8 A #3. It states motors sold separately are subject to any applicable state & local sales or USE tax.
 

nccatfisher

Old Mossy Horns
Contributor
I don't think I have ever paid use tax on any of my outboards. Hull and Trailer yes, because they are registered with the state. As far as i know outboard motors are not registered in NC. At least the past 5 I have owned have not been registered.
You get a form every year from your county tax assessor asking if you own such and such boat. It will ask what year boat and what year motor. If you change the year or HP on that motor then they first then they ask is for a sales slip.
 

catfishrus

Twelve Pointer
You get a form every year from your county tax assessor asking if you own such and such boat. It will ask what year boat and what year motor. If you change the year or HP on that motor then they first then they ask is for a sales slip.

Yep and when you sell it down the road...you better tell them in Jan. Otherwise once the bill has been "computer generated" unless you have a copy of the bill of sells...you will pay tax on a boat you don't own. I just had to do that on my lund...sold the year before but forgot to take it off my taxes in Jan of last year...I had to pay the $78. I told her I call called the NCWRC and told them I sold it..she said well we don't check that list.

I bought a new 4 wheeler once in SC...I was told I didn't have to pay tax. 4-5 years later...I got a welcome letter myself from NC for taxes on the asking price on the 4 wheeler not what I paid for it.
 

JONOV

Twelve Pointer
You get a form every year from your county tax assessor asking if you own such and such boat. It will ask what year boat and what year motor. If you change the year or HP on that motor then they first then they ask is for a sales slip.

What if you had no sales slip? How do they know if your BIL or Daddy gave it to you or you had it in the barn as a project. There's no title, as Gadget said.
 

Homebrewale

Old Mossy Horns
http://www.dornc.com/faq/use.html#use

What is use tax?

The use tax is a tax due on purchases, leases, and rentals of tangible personal property and certain digital property purchased, leased or rented inside or outside this State for storage, use, or consumption in North Carolina. The use tax is also due on taxable services sourced to North Carolina. The use tax is paid to the North Carolina Department of Revenue by the purchaser when the North Carolina tax has not been collected by the retailer.

Is a boat motor tangible property? Yes
Was the motor bought outside of NC for use in NC? Yes
 

Mr.Gadget

Old Mossy Horns
Click on the website provided by Mr. Gadget and look in Section 35-8 A #3. It states motors sold separately are subject to any applicable state & local sales or USE tax.

I see what you are saying.
it states that they are covered like normal sales tax.
If sold separately. I see that is the case.


does not say anything about items that are obtained from another state.

In other words, if I owned a boat and everything is up to date, tags title all tax and so on....

Then you go on a trip and find a deal on a motor to repower a boat you have had say several years....
So on the trip you buy the motor to bring home and place on the boat.

Case 1 you paid tax at point of sale. You should not owe sales tax when you enter NC correct?

Case 2 you paid for the motor and that state has no sales tax or has no sales tax on motors. What law or rule points to out of state sales that would apply nc sales tax?

Case 3 you got a used one from someone, they can not and do not collect sales tax. Would you owe a sales tax and what law shows private sales out of state sales, tax would be due?
 

Mr.Gadget

Old Mossy Horns
http://www.dornc.com/faq/use.html#use

What is use tax?

The use tax is a tax due on purchases, leases, and rentals of tangible personal property and certain digital property purchased, leased or rented inside or outside this State for storage, use, or consumption in North Carolina. The use tax is also due on taxable services sourced to North Carolina. The use tax is paid to the North Carolina Department of Revenue by the purchaser when the North Carolina tax has not been collected by the retailer.

Is a boat motor tangible property? Yes
Was the motor bought outside of NC for use in NC? Yes
What if they charged you sales tax?
 

Mr.Gadget

Old Mossy Horns
Had a dealer call me back.
Ask what the reason for the boat was and if I had a NC HF license. ......

Looks like I will set up a LLC get my guide license and guide catfishing for 3 to 4 years.....

That will pay for the boat and cover taxes with write offs.
Did not know it was that easy.
 

Mr.Gadget

Old Mossy Horns
What if you had no sales slip? How do they know if your BIL or Daddy gave it to you or you had it in the barn as a project. There's no title, as Gadget said.

Correct SC dealer said he will sell me any motor cash in hand.

Or I could just do the internet thing and file the defalt sales tax for not retaining paperwork or BOS.
They just have you put in a % of one line in your tax form.
No much at all and default. You paid and declared tax per the law.
 

Homebrewale

Old Mossy Horns
What if they charged you sales tax?

§ 105-164.6. Complementary use tax.

(c) Credit. - A credit is allowed against the tax imposed by this section for the following:

(2) The amount of sales or use tax due and paid on the item to another state. If the amount of tax paid to the other state is less than the amount of tax imposed by this section, the difference is payable to this State. The credit allowed by this subdivision does not apply to tax paid to a state that does not grant a similar credit for sales or use taxes paid in North Carolina.

http://www.ncleg.net/EnactedLegislation/Statutes/HTML/ByArticle/Chapter_105/Article_5.html
 

Homebrewale

Old Mossy Horns
Had a dealer call me back.
Ask what the reason for the boat was and if I had a NC HF license. ......

Looks like I will set up a LLC get my guide license and guide catfishing for 3 to 4 years.....

That will pay for the boat and cover taxes with write offs.
Did not know it was that easy.

§ 105-164.13. Retail sales and use tax.
The sale at retail and the use, storage, or consumption in this State of the following tangible personal property, digital property, and services are specifically exempted from the tax imposed by this Article:

(9) Boats, fuel oil, lubricating oils, machinery, equipment, nets, rigging, paints, parts, accessories, and supplies sold to any of the following:
a. The holder of a standard commercial fishing license issued under G.S. 113-168.2 for principal use in commercial fishing operations.
b. The holder of a shellfish license issued under G.S. 113-169.2 for principal use in commercial shellfishing operations.
c. The operator of a for-hire boat, as defined in G.S. 113-174, for principal use in the commercial use of the boat.

http://www.ncleg.net/EnactedLegislation/Statutes/HTML/ByArticle/Chapter_105/Article_5.html
 

Firefly

Old Mossy Horns
You get a form every year from your county tax assessor asking if you own such and such boat. It will ask what year boat and what year motor. If you change the year or HP on that motor then they first then they ask is for a sales slip.

Yes you will, I have to list both boats that we own, motors and trailers. On the form I get from Carteret County they always want to know what I paid for both our rigs when we bought them, I've done this for years now. Seems our county ain't about to lose any tax dollars on what a person owns..
 

Mr.Gadget

Old Mossy Horns
So they state that the tax could be due even if you paid tax in another state if they do not offer tax credits to NC.

Double tax...

That us why this system is broken and not working...

more reason to buy outside the state and let the money exit and stay out of state.
 

Homebrewale

Old Mossy Horns
So they state that the tax could be due even if you paid tax in another state if they do not offer tax credits to NC.

Double tax...

That us why this system is broken and not working...

more reason to buy outside the state and let the money exit and stay out of state.

What they're saying is that a NC resident pay the difference in sales tax through a use tax if the other state has a lower sales tax rate. Just a made up example. You buy a $100 widget in a state where the sales tax is 5%. Your NC sales tax on the widget is 7%. You owe the different in tax rates (2%) or $2 in use tax. This is done through your NC tax return.

If you do your own tax return, there is a section on use tax. You can either itemize your out-of-state purchases (for use in NC) or you can apply the small percentage that's listed times your total income. It's the "easy button" method for people who don't want to itemize. For use in NC is important. You eat a burger in another state - no tax. You go on a guided hunt in another state - no tax. You buy a gun in another state - you owe a use tax if the other state's sales tax is lower than NC sales tax.
 
Last edited:

Mr.Gadget

Old Mossy Horns
[The credit allowed by this subdivision does not apply to tax paid to a state that does not grant a similar credit for sales or use taxes paid in North Carolina.]

this is the part they can double tax you.



Yep is is easier to just place it on your tax return.
its a token amount.
 

Soilman

Old Mossy Horns
Contributor
Gadget, this may have already been posted, but there have been many cases where someone bought something out of state, like a vehicle, ATV ,etc. and didn't know about or pay the use tax. NC will wait 3-4 years, let the taxes pile up, along with the penalty for not paying right away, then send you a billing notice. The buyer ends up owing the state more in taxes and penalties than what the bought items costs to begin with.
 

dsink

Eight Pointer
Correct me if I am wrong but you do not have to register a boat and pay the tax unless it has a motor on it. In other words, kayaks are not registered so you only pay sales tax when you buy it. Stick a motor on it and you have to register it. So when you stick a motor on it and register it, then you are being taxed on the motor/boat.
 
Top