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Something Fishy at the MA DOR

Old 02-28-2019, 05:28 PM
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Default Something Fishy at the MA DOR

This may be of interest to anyone who has had exorbitant penalties and interest levied upon them by the MA Department of Revenue surrounding a boat purchase. I wouldn’t mind hearing from you if you did.If you are a lawyer (or not) with insight into these abuses, I would be interested in hearing from you as well.

I bought a documented vessel in June of 2017. If you’ve been through it, you know it’s a big ordeal.You have a million questions and concerns, and never once did I ask myself who I could run out and pay more money to…

Fast forward over a year later, and I get a letter from MA DOR with questions about the purchase. I’m found liable for taxes due and pay a sizable lump sum of money around Thanksgiving time.Shortly after that, just before Christmas, I’m hit with penalties and interest charges.They are nearly 50% of the tax bill.The tax bill was bad, but this is just crazy.I question the auditor via email and he responds with a solid explanation.He’s fair enough and I hold no ill-will towards him personally.

Our exchanges are always civil.But I’m left with a giant nagging question…. So I ask him, and this series of exchanges follow…

There are quite a few, and they escalate, so I’ll post one at a time as I can…
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Old 02-28-2019, 05:33 PM
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[Exchange #1]

=rightThu, Jan 10, 7:57 PM





Hello [Auditor 1],Thank you for the explanation. I'm certainly glad you contacted me when you did, then. I wish it was one year ago, though...Do you suppose that is done intentionally to increase revenue? Just a thought...Thanks,

Mike




The reply,




=rightFri, Jan 11, 7:09 AM

Good morning [me],Thank you for your email. As to your “Just a thought…” that DOR might “…intentionally [delay contacting a delinquent taxpayer in order] to increase revenue…,” please be advised that when a person purchases a boat from a seller who is not a registered vendor / boat dealer, as was the case with your purchase, and does not register the boat with the Massachusetts Marine Registration and Title Division, there is no way DOR would know of that transaction at the time it occurred unless the purchaser contacted DOR. If there is any tax liability question, the prudent thing to do for anyone purchasing tangible personal property in Massachusetts is to inquire of DOR at the time of purchase as to its taxability. I hope this is responsive to your inquiry.Very truly,

[Auditor 1]

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Old 02-28-2019, 05:36 PM
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Yup, sales tax is due on the date of purchase To the state of MA regardless of whether it’s bought out of state, every day after that date you are accruing penalty interest, don’t forget to fill out the excise tax form for the town it is moored in or slipped bc that’s another one that will come back in time to get you
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Old 02-28-2019, 06:12 PM
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Get me, indeed. That’s kind of my point here….. and maybe a legitimate concern to MA residents….

So this is a pretty bright guy I’ve been dealing with. An attorney.His response above is the first time in many emails that he either misses the point of my message, or just fails to directly address the issue.

This is strange, and precipitates [Exchange 2]. I know it’s a long read, but it’s the long-windedness of the reply, with yet another failure to address the issue, that makes it all the more suspicious. He also goes out on a limb to claim no knowledge of my purchase at all.Ever.Which is nonsensical, of course, because the DOR initiated contact with me.
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Old 02-28-2019, 06:19 PM
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[Exchange 2]


Jan 25, 2019, 1:08 AM


Dear [Auditor 1],

Thank you for your response.

I do appreciate the time it took you to respond. However, I have read your response several times, and I find it does not address the issue that I had posited to you. Furthermore, I read your response to suggest that there is no mechanism in place to identify parties involved in a transaction or sale that may be subject to taxation by the State of Massachusetts. And, yet, here I find myself, over a year after making such a purchase, as being subject to egregiously large penalties and interest charges that accumulate in a manner that are clearly punitive.

It is obvious to me that there must be such a mechanism in place, or we wouldn't be having this conversation. To reiterate, my concern is that such mechanism may, deliberately, delay investigation into tax liability in a way that ensures maximum penalty against an involved party should such an investigation demonstrate culpability. In my case, it just seems more than coincidental.

Thank you for considering this issue,

Mike



The reply….

Good morning [me],

You write that it is obvious to you “…that must be …a mechanism in place…to identify parties involved in a transaction or sale that may be subject to taxation by the State of Massachusetts.” Further, you express your concern that the Commonwealth “…may, deliberately, delay investigation into tax liability…to ensure maximum penalty…” Let’s use your private transaction between two individual parties as an illustration: How would DOR know that you contacted the boat owner /seller to purchase his vessel, that you went to where the vessel was kept “on the hard,” that you sea-trialed the vessel in Nahant, MA and that you purchased the vessel in a private, non-Dealer transaction? What mechanism would the Commonwealth of Massachusetts have in place to know any of that? The answer is: there is no way a purchase of a vessel transaction between private parties would be known to DOR at the time of the transaction unless the purchaser notified DOR and / or registered the vessel in Massachusetts.

As to penalties that accumulate, those are statutory. As explained in my email to you dated January 7, 2019, DOR provides an avenue of appeal for any taxpayer aggrieved by the imposition of late-file / late-pay penalties. It may be to your advantage to file an application for abatement of your penalties.

I regret that I’m apparently unable to explain to your satisfaction the statutory tax effect of your private vessel purchase transaction and to disabuse you of the notion that the Commonwealth of Massachusetts is involved in a deliberate scheme to ensure maximum penalty against persons who purchase a boat in a non-Dealer, private transaction. To assuage your concerns in this matter, you may want to consult with a professional person who is conversant with the Massachusetts sales and use tax provisions.I hope this email is responsive to your inquiry.

[Auditor 1]
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Old 02-28-2019, 06:57 PM
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He gave you an out for some of the pain in the second paragraph. Take it!
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Old 02-28-2019, 06:57 PM
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Originally Posted by Rmoody79 View Post
Yup, sales tax is due on the date of purchase To the state of MA regardless of whether it’s bought out of state, every day after that date you are accruing penalty interest, don’t forget to fill out the excise tax form for the town it is moored in or slipped bc that’s another one that will come back in time to get you
This has always been the case, taxes are due when the sale is made. Just curious, why didn't you pay the sales tax when you bought the boat?
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Old 02-28-2019, 07:05 PM
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Originally Posted by ken62k View Post
This has always been the case, taxes are due when the sale is made. Just curious, why didn't you pay the sales tax when you bought the boat?
not assuming OP did this, however, when you purchase a documented vessel you don’t register to MA so therefore you don’t really acknowledge purchase to state.

OP - how he heck did they find out about purchase?
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Old 02-28-2019, 07:12 PM
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Originally Posted by MikeRI View Post
Get me, indeed. That’s kind of my point here….. and maybe a legitimate concern to MA residents….

So this is a pretty bright guy I’ve been dealing with. An attorney.His response above is the first time in many emails that he either misses the point of my message, or just fails to directly address the issue.

This is strange, and precipitates [Exchange 2]. I know it’s a long read, but it’s the long-windedness of the reply, with yet another failure to address the issue, that makes it all the more suspicious. He also goes out on a limb to claim no knowledge of my purchase at all.Ever.Which is nonsensical, of course, because the DOR initiated contact with me.

i am not trying to be a prick or take a side, but your suggestion that MA residents should somehow be concerned is irrelevant, it’s on the buyer in the transaction to understand at Time of purchase that a ST-6 or whatever the tax form is called to be dated, filled out, and remitted with purchase agreement and check for 6.25%. If you don’t, the way the commonwealth will find you will be when registering the boat to the state or on an excise roster in town it is pricipally moored for federally documented vessels

you even say yourself that you weren’t looking to run out and pay more money to the state, being ignorant or hoping to skate on the sales tax laws and then getting caught a year later and being bent about it to the point of suggesting MA residents revolt seems off to me.

Agsin i am not trying to be a prick, but reading your story I can’t find any fault on the commonwealth
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Last edited by Rmoody79; 02-28-2019 at 07:19 PM.
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Old 02-28-2019, 07:21 PM
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lets start with some basic questions:
1. what state was the boat purchased from?
2. new or used?
3. where are you a resident?
4. how long after purchase did you move the boat into MA?
5. what state(s) was the boat kept in after you purchased? for how long?
6. was the boat kept in a permanent slip, on a mooring, at anchor?
7. is the boat trailerable? did you trailer it?
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Old 02-28-2019, 07:37 PM
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I went through this in 2017 when I bought my documented boat. I never was given a sales tax bill when I bought the boat BUT I knew I owed the state so I paid them a few days after the sale.

Mike: I don't see your beef here. You should've paid your sales tax shortly after buying the boat. That was one of the first things I thought about after buying my boat. You know there's nothing free in life!

Last edited by South of Heaven; 02-28-2019 at 07:46 PM.
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Old 02-28-2019, 08:54 PM
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I’ve been reading here long enough to expect the “your bad” comments. I take no offense, and submit to your criticism.It was my bad.I should have paid tax, and would have if I knew of the liability.I’m putting myself on trial here in the “court of public opinion” as well.I do so with the full awareness that nobody- but nobody- likes a tax cheat.Of course, that includes me.

And I didn’t state that I “wasn’t looking to run out and pay more money to the state”, though. That’s a misquote.I stated that I never asked myself who I could run out and pay more money too.

The boat purchase ordeal is expensive and intimidating. “Who can survey this rig?” (That was a bad experience, too… Scanlon..) “What’s my windstorm plan for insurance?”“What’s a windstorm plan?”“Should I keep documentation?”“Why is the CG headquarters in West Virginia?”“What’s that noise?”“What does this button do?”“How can I get my elderly Dad out on this rig.” “How can I get the wife to like this thing?”“Who ELSE can I write a check to?” never occurred to me.

I’m a MA resident and bought the boat from a MA resident. Tax liability is not fuzzy, in hindsight.Although this is the one scenario where you will not be made aware of the tax liability at the time of purchase.I had it hauled to RI and have used it there exclusively.Last summer I was made aware that documented vessels must also be registered in RI, and so I did that.



What I take issue with, is “why now?”

What’s important to all of this is that the tax penalty cannot exceed 50% of the original tax liability.It accrues and compounds monthly.I’m suddenly notified by the state of MA DOR, as we approach the penalty maximum, that I may have tax liability.From my perspective, out of the blue.

If the significance of that is lost on you, we may have a differing view of the role of government in our lives, and you need not read on. “My bad” can be the end of it.If you are wondering, even a little, what I’m wondering,please, read on…
I’ll post exchange 3 in a bit if I can…
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Old 03-01-2019, 03:08 AM
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Mike- i think the part we disagree on is, it’s not on the state to notify or send you a sales tax bill when you bought the boat, it’s the other way around, less when the state finds it unpaid, you are notified plus penalty and interest.

I get it, the whole thing sucks, send in that paperwork for an abatement and take what they give you for a break
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Old 03-01-2019, 03:20 AM
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Yeah I think if you can make a appeal, id just plead ignorance which sounds accurate (for the record I don’t mean that as an insult), you may be able to get the penalties erased and voila!

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Old 03-01-2019, 03:22 AM
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Guys, PLEASE, PLEASE do not move to Florida and vote for the same people that like to raise taxes!! I see and hear regularly about your tax situation from my customers from your area when purchasing and owning luxury RV's. It blows me away when they show me their tax bills!
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Old 03-01-2019, 05:01 AM
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MA DOR just taxed me $325 on a $300 vehicle purchase and I wasn't late.
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Old 03-01-2019, 05:03 AM
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Originally Posted by MikeRI View Post
I’ve been reading here long enough to expect the “your bad” comments. I take no offense, and submit to your criticism.It was my bad.I should have paid tax, and would have if I knew of the liability.I’m putting myself on trial here in the “court of public opinion” as well.I do so with the full awareness that nobody- but nobody- likes a tax cheat.Of course, that includes me.

And I didn’t state that I “wasn’t looking to run out and pay more money to the state”, though. That’s a misquote.I stated that I never asked myself who I could run out and pay more money too.

The boat purchase ordeal is expensive and intimidating. “Who can survey this rig?” (That was a bad experience, too… Scanlon..) “What’s my windstorm plan for insurance?”“What’s a windstorm plan?”“Should I keep documentation?”“Why is the CG headquarters in West Virginia?”“What’s that noise?”“What does this button do?”“How can I get my elderly Dad out on this rig.” “How can I get the wife to like this thing?”“Who ELSE can I write a check to?” never occurred to me.

I’m a MA resident and bought the boat from a MA resident. Tax liability is not fuzzy, in hindsight.Although this is the one scenario where you will not be made aware of the tax liability at the time of purchase.I had it hauled to RI and have used it there exclusively.Last summer I was made aware that documented vessels must also be registered in RI, and so I did that.



What I take issue with, is “why now?”

What’s important to all of this is that the tax penalty cannot exceed 50% of the original tax liability.It accrues and compounds monthly.I’m suddenly notified by the state of MA DOR, as we approach the penalty maximum, that I may have tax liability.From my perspective, out of the blue.

If the significance of that is lost on you, we may have a differing view of the role of government in our lives, and you need not read on. “My bad” can be the end of it.If you are wondering, even a little, what I’m wondering,please, read on…
I’ll post exchange 3 in a bit if I can…
do you drive a vehicle? did you know there is sales/use tax on vehicles (and sometimes property tax)? did you know vehicles have to be registered?

if you are a MA resident, bought the boat in MA, kept it in MA, i dont think there are any excuses

sales and use tax is common knowledge
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Old 03-01-2019, 05:10 AM
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Read paragraph 2 again and do what sammytheruna says....the end result will be that you took out a 6% loan from the state on your taxes which isn’t that usurious of a deal...
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Old 03-01-2019, 07:43 AM
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Hi. I'm a lawyer. You are supposed to know what your taxes are and you are supposed to pay them without the government sending you reminders or instructions. Not asking who you needed to pay because the registration process you chose was complicated is no excuse. I went through the same decision making process on registering my boat because it was documented as well. I absolutely looked into the sales tax question. It was first and foremost. If you did a google search you would have found several threads on this very site about how it works. Here is just one of them:

Documentation vs Registration in Mass

As I understand it, the Coast Guard sends a list of newly documented boats and documentation transfers to the States every so often and it is then up to the state to track them down to see if they paid their sales tax. So two different government agencies work on this issue and the states have to compare the list they get from the Coast Guard to the state boat registration rolls to see if any are missing. So how long did it take you to do the documentation? How long did it take the Coast guard to do the parer work? How long does it take the Coast guard to put the list together and send it to the Commonwealth of Mass? How long does it take the state to compare the list to their own registration records to see who didn't pay? How long does it take to send out the notices?

I don't think there is anything fishy at the Mass DOR.
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Last edited by Legal Bill; 03-01-2019 at 08:29 PM.
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Old 03-01-2019, 08:23 AM
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If you dock your boat or have a mooring at a marina the DOR routinely asks the marina for a list of boats documented and state registered at there facility. Most comply. Some (private) marinas refuse completely but others do allow the DOR to walk the docks on the own and take down VINs. A change of ownership at a local marina I'm aware of had a change of policy and allowed the DOR onto the docks for the first time in many years. There were at least a half dozen boats that I know of that had not paid taxes and were sent letters with heavy penalty's attached. There were also some that had paid sales tax and the state wanted proof.

I can tell you first hand that trying to reason with them is a waste of time. Remember your dealing with some state reps cousin that was appointed a job, and could care less about you.
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