2015 Maine Watercraft Tax Summary

The State of Maine imposes a 5.5% tax on sales and use of watercraft in the state.  The tax scheme is similar to most sales tax states.  The tax is imposed on boats purchased in the state, unless there is an exemption.  If a boat is purchased out of the state and brought in, it is potentially taxable if it is used enough in the State to justify the tax.  Knowing or intentional invasion of the tax is a class C crime, subject to penalty of up to $5,000, on top of the tax, penalty and interest.  Penalties up to 25% of the underpayment plus interest are also a possibility in the event of failure to pay.

There are a number of exceptions to the tax, with two that are most typical with boats being the exemption for non-residents and the the exemptions for boats used in international commerce.

1. Non-resident exemptions.

There is a good deal of confusion about the non-resident exemptions, because there are actually two types, and they have different requirements.  For boats purchased in the state by a non-resident, the boat must leave the state within 30 days.  For a boat purchased outside the state by a person that is not a resident, an exemption to use tax can be obtained if the boat was in Maine not more than 30 days in the 12 months following purchase, with the use being actual use of the vessel, not mere storage.

2. Interstate and Foreign Commerce

An exemption is also available for boats that are purchased and placed in interstate or foreign commerce, and which remain in commerce for at least 80% of the two years following purchase.  For these purposes, interstate or foreign commerce means carrying freight or passengers to and from jurisdictions (not just foreign waters) outside of Maryland.  (Note that USCG documented vessels cannot do this unless they have a commercial endorsement on the documentation).

This is current as of November, 2015.  This is a general overview of the law.  For answers to your specific questions, you must become a client and seek specific advice.  

Mr. Schwenk is a lawyer in private practice in Annapolis, Maryland.  He is a member of the board of the Marine Trades Association of Maryland, and has written extensively on issues on boat tax, maritime law and real estate, especially riparian rights.