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Washington: Use Tax vs Tourist Dollars

  • Sep 23, 2013 | Gail Cole

 The Serene, at Seattle's Pier 90.

Late last month, residents of Washington's Puget Sound region noticed an unfamiliar addition to the Seattle waterfront: the 440-foot palatial yacht, the Serene. Owned by Russian vodka distributor Yuri Scheffler, the ninth largest privately-owned yacht in the world has two helicopter pads, a dock for a submarine, and more than 50 people on staff. Such privately-owned yachts do not typically grace Seattle's waters--at least not for very long.

Private and corporate yachts bring dollars to coastal communities--sometimes lots of dollars. Yet private yachts might not feel welcome in Washington State thanks to the state's recreational boating tax. That's why Senator Nick Harper and Representative Kristine Lytton are backing legislation that would change Washington's recreational boating tax. In touting the Marine Tourism Bill, the lawmakers referenced the Serene and the fact that it "will spend at the most 60 days in our waters before it departs." Most yachts, they argue, either leave before the the 60th day or "stay away from our waters altogether."

Boats owned by private individuals may stay in Washington State waters for up to 180 days tax-free. Beginning the 181st day, use tax amounting "to about 10 percent of the boat's value" is due. Boats owned by by businesses and LLCs have 60 tax-free days in Washington State waters. After that, the tax man comes knocking.

According to the Northwest Marine Trade Association (NMTA), the Serene will spend roughly $90,000 each day that it's at the Port of Seattle, on repairs and other services. Yet Peter Schrappen of NMTA has remarked that the economic impact of the Serene "will probably be capped at $5.4 million," thanks to the "heavy tax on out-of-state yachts [that] drives them away and deprives local businesses of money owners of these types of boats can spend."

Sen. Harper and Rep. Lytton and the NMTA are working together to Washington Department of Revenue, which "remains steadfast in their concern regarding Washington residents using the 'corporate veil' to avoid taxes on boats."

How does your business handle consumer use tax, on yachts and other items?

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photo credit: Drewski2112 via photopin cc

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.