New yacht tax bill to hurt Calif. marinas?

SACRAMENTO, Calif. – Democrats and Republicans have compromised over how to change the legislation that currently allows yacht purchasers to avoid sales tax by keeping the vessels out of the state for 90 days, reported the Ventura County Star in an article today.

Some estimate that this decision is likely to hurt California marinas. The compromise consists of an extension of the period of time yacht buyers are required to keep their vessel out of state to benefit from the loop hole – from 90 days to one year, according to the newspaper. A provision also has been added to allow the vessels to return to the state for maintenance, which takes some of the sting out of the bill for repair and refit businesses.

Currently, many new yacht owners take delivery of their boats in Ensenada, Mexico, docking their boats for 90 days, Cris Wenthur, an attorney who has helped clients take advantage of the loophole, told the newspaper. With the new bill, however, many will likely leave their boats in Mexico for an entire year or longer, denying California marine businesses a chance at that revenue.

There is still hope for those businesses that are hurt by the change. If it can be demonstrated that the bill has had a devastating effect on the state’s marine businesses, it will be up for review in two years, according to the newspaper.

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