Long Island waters will become more taxing this summer for some boaters who dock in New York while trying to evade state sales tax.
That’s the promise of New York State Department of Taxation and Finance officials.
They believe the Empire State is being cheated out of millions of dollars a year. So, tax collectors are patrolling various Long Island docks, targeting boaters who buy boats in states with lower sales taxes, then dock in New York waters.
“Out-of-state boaters thinking about docking their sloop, yacht or cabin cruiser in the Empire State’s waterways had better keep their checkbooks aboard,” according to Sharon Ackerman, a CPA. She is the director of the tax controversy services group of Anchin, Block and Anchin, a New York City-based accounting and advisory firm.
Tax evaders may be New Yorkers who bought boats out of state or people who have come from other states to use New York facilities. Either way, Ackerman says, it could trigger a big tax bill and penalty.
She adds that New York state officials catching those not paying New York state sales tax can impose the tax as well as huge interest and penalty charges. Still, she notes that some dealers in other states are advising people to register boats in New York.
Ackerman warns that even if one thinks he or she has ducked the taxes, state agents take numbers at New York docks and eventually nab tax cheaters, whether it takes months or a year.
“It’s not worth it. Sometimes it can cost someone tens of thousands of dollars,” she says. Ackerman notes the state can impose a penalty of up to 15 percent.
“When you add the interest and penalties, it can sometimes be almost as much as 50 percent more than the tax that you owe,” Ackerman says. Although she had no estimate of how much the state might recover.
“There are states in which you don’t have to pay sales taxes on boats, or states where the sales tax is less than here,” Ackerman says.
On a luxury purchase, say a yacht priced at a quarter of a million dollars, ducking the tax man could mean avoiding upwards of $20,000 in sales taxes.
Sales taxes on boats here range from 8.25 percent to 8.875 percent, Ackerman said. New York and California have the highest sales taxes, she adds.
But if you go to other states to obtain lower sales taxes, when you come back you will be required, if caught, to pay the difference between the New York sales tax rate and the lower tax rates.
And you must be able to prove that you paid the sales tax elsewhere.
The state wants all its money and is pushing harder to get it.
For example, sources say that Suffolk County officials are considering pursuing criminal charges against some Long Island boaters sailing around local sales taxes.
Calls to the Suffolk County District Attorney’s Office were not returned.