Rules for foreign flag vessels in US

Capt J · 02-05-2009, 05:56 PM

Quote:

Originally Posted by Marmot

Capt J, you seem to be missing the point entirely. As do all threads, this one morphed into something about the applicability of the Longshore Act to vessels in boatyards that service yachts. Once of the criteria referred to net tonnage.

I don't believe anyone said your license mentioned net tonnage. I did, in no uncertain terms say that if you really do hold a license, part of the responsibility to exercise the authority of that license is to know what the laws are and what the terms and vocabulary of the laws mean. Since you didn't know the difference between the weight and the tonnage of a vessel your knowledge of seamanship and the regulations under which you operate and claim to hold a license were very rightly brought into question. You can make all the cute little jokes you want to try and divert the message but it still remains that as a captain you should at least be able to define the terms printed on the face of your license. You might be the best guy in the world at docking a little fishing boat at the end of a day trip but the authority of your license is not based on what kind of bait to use or how well you back into a slip.

So, feel free to tell us fishing stories and how to dock your boat but just make sure you know what you are talking about before you start whinging about the Jones Act and Longshoremans insurance or dispense advice on how to bring a foreign flagged or built vessel into this country for business or pleasure.

Everything that applies to all of the vessels that I Captain is "gross registered tons" not net registered tons. I have never had a yard ask for net registered tons when putting a boat in the yard, EVER. And I bring about 15 to a yard a year for work. If they happened to ask for Net Registered Tons I would look at the documentation and give it to them.

If a yard states that any subcontractor that works on a vessel over 65' needs longshoremans insurance. You as a captain or owner are signing that you agree to that when you sign the vessel in. It's their rules and you have to obey them if you are bringing a boat to that yard.

Marmot · 02-05-2009, 09:10 PM

CAptJ wrote in post #46:

"The Net tonnage along with the gross tonnage is listed on every USCG documentation paper on every yacht that I've seen. Net tonnage is easily found when you haul the boat, most travel lifts have a scale on them that shows the weight."

Then just wrote in post #61:

"Everything that applies to all of the vessels that I Captain is "gross registered tons" not net registered tons."

Is there some point you are trying to make about net tonnage or is it just stuck in your craw for some reason?

dennismc · 02-05-2009, 09:13 PM

A non resident can purchase a US flagged pleasure craft in Florida and avoid State sales tax provided he/she does not own any other property in the State, receives an annual cruising permit from US Customs, renews the permit annually by handing it to Customs prior to expiry date , will receive certified copy ok, then on return from foreign port, shows proof that the entry to foreign port was more than 16 days from expiry of previous permit.

Have no ideas on US citizens being allowed to own/operate foreign flagged vessels, Canadians are not allowed to unless sales taxes have been paid or,they are hired crew with proof to show.

Same as Canadians are not allowed to operate a foreign plated automobile, i.e, rent a car.

Maybe same applies here ??

Capt. Bill11 · 02-06-2009, 01:17 AM

"A non resident can purchase a US flagged pleasure craft in Florida and avoid State sales tax provided he/she does not own any other property in the State, receives an annual cruising permit from US Customs,"

I must be missing something. Why would a US flagged vessel need a cruising permit in US waters?

NYCAP123 · 02-06-2009, 09:31 AM

You pay sales tax in your place of residence AKA where the item will be kept. Keep moving and he'll only have the place where he registers it to contend with. Florida is pretty good at keeping track of how long boats are sitting though.

dennismc · 02-10-2009, 04:22 PM

Sorry, forgot to mention that after purchase of US vessel the vessel will be then foreign flagged,

NYCAP123 · 02-10-2009, 04:34 PM

Quote:

Originally Posted by dennismc

Sorry, forgot to mention that after purchase of US vessel the vessel will be then foreign flagged,

In that case you're under the normal rules of foreign flaged vessels in U.S. waters. Before you dump that U.S. flag though give consideration of where you expect to be cruising, home porting and reselling. You may find it more advantagous to just buy a foreign flagged vessel.

lwrandall · 02-11-2009, 08:48 AM

Ok, by what I have read, the reason that most US owners flag their vessels outside of the US is for tax and liability reasons, correct. The US is not only the land of the free and home of the brave but it is also the home of the frivolous law suits. AGAIN - Warning, dumb question alert, can you flag a vessel outside of the US and still pay US taxes thereby by passing the requirement of obtaining a yearly cruising permit? If you don't mind paying the US/State sales tax but your concern is more protection of your assets ie: liability. Could flagging your vessel outside of the US, if this is possible, or for that matter Delaware provide good asset protection?

NYCAP123 · 02-11-2009, 10:31 AM

Quote:

Originally Posted by lwrandall

Ok, by what I have read, the reason that most US owners flag their vessels outside of the US is for tax and liability reasons, correct. The US is not only the land of the free and home of the brave but it is also the home of the frivolous law suits. AGAIN - Warning, dumb question alert, can you flag a vessel outside of the US and still pay US taxes thereby by passing the requirement of obtaining a yearly cruising permit? If you don't mind paying the US/State sales tax but your concern is more protection of your assets ie: liability. Could flagging your vessel outside of the US, if this is possible, or for that matter Delaware provide good asset protection?

Some others may come in with more detail, but let me give you what I can. Delaware corps. have long been a haven, but IRS is wise to it so be legit. You can and will pay state sales tax if you overstay your welcome (some states are as little as 90 days others 6 months). As far as lawsuits are concerned we do have our share of ambulance chasers, but that's a rep mainly from the 70's & 80's. Juries are a bit more realistic and judges are loath to waste their time these days. Besides, the boat is always attachable so you're only really looking for protection beyond the value of the boat. You're not going to run someone over and walk away clean. Additionally, you might have notice the disclaimers in the mags "Not for sale or charter in the U.S." Before you complicate your life to save $5 make sure it doesn't cost you $500. Sometimes it better to just not bother wheeling and dealing.

Capt. Bill11 · 02-11-2009, 12:30 PM

Quote:

Originally Posted by lwrandall

AGAIN - Warning, dumb question alert, can you flag a vessel outside of the US and still pay US taxes thereby by passing the requirement of obtaining a yearly cruising permit?

It's not a dumb question. Of course my answer might be.

But I don't believe you can get around the requirement for a cruising permit by paying the taxes. And I'm sure there are other ways to shelter your assets.

PropBet · 02-11-2009, 09:19 PM

It's is probably best to discuss the topic with qualified, knowledgeable council for your specific needs / requirements.

Essentially, you can't have your cake and eat it to.
If you flag outside the US, you're doing so for a reason. Tax, liability, asset protection, privacy, etc. Once you flag outside the US, your visits to the US are thereby limited. You get one or the other.

On the other hand, there may be a way (which is where your discussion with your chosen qualified council) to bury the boat in a trust, and then behind a LLC or a Blind Corp., and get around it. I believe this will be highly dependent on your state of filing / paperwork and what each state says.

As mentioned earlier, make sure your not spending 500 to save 5, and end up with a 2500 headache later down the road.

You'll also run into issues if you employ non-US crew, so be sure to look / check on all elements.

NYCAP123 · 02-11-2009, 09:35 PM

Quote:

Originally Posted by PropBet

It's is probably best to discuss the topic with qualified, knowledgeable council for your specific needs / requirements.

Essentially, you can't have your cake and eat it to.
If you flag outside the US, you're doing so for a reason. Tax, liability, asset protection, privacy, etc. Once you flag outside the US, your visits to the US are thereby limited. You get one or the other.

On the other hand, there may be a way (which is where your discussion with your chosen qualified council) to bury the boat in a trust, and then behind a LLC or a Blind Corp., and get around it. I believe this will be highly dependent on your state of filing / paperwork and what each state says.

As mentioned earlier, make sure your not spending 500 to save 5, and end up with a 2500 headache later down the road.

You'll also run into issues if you employ non-US crew, so be sure to look / check on all elements.

It hasn't specifically been said, but I get the feeling this boat is meant to spend a considerable amount of time in US waters. Is that the case? The reason I ask is that the boat or entity will still be paying sales tax if she hangs too long in one state.

PropBet · 02-11-2009, 11:48 PM

Bingo.
Which is the get the cake / eat it too scenario.

It's usually a pick the lesser of two evils situation. (at least it was for us)

lwrandall · 02-12-2009, 08:49 AM

The boat will be US based most of the time. It may spend sometime in Florida for the winter, which means it could make a run to the Bahamas to solve the Foreign flag cruising permit requirement. But if it does not go to Florida, my foreign port options around Maryland are non-existent. Unless there is someplace I don't know about. My concern is the boat will be kept in the Maryland area and Delaware is a very popular home port around here. But, as many of you know the water tax police patrol the local marinas to see if a vessel stays in state more than ninety days. If you do, you will be for liable state use tax. It's not a sales tax, per say. Either way it's still about 6%. Again, paying the tax is not the issue, lord knows the government needs every penny. I'm just checking into ways to protect my personal assets (I have some not so family oriented family members

) and Delaware is very friendly in keeping ownership and assets confidential.

K1W1 · 02-12-2009, 09:09 AM

Hi,

I would think that if you are going to keep it in the US most of the time and are not worried about the sales/use tax thing then it would make sense to have it US Flag.

This will of course be limited if you are buying a boat that falls under the restrictions to being placed on the US Register by the Jones Act.