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Committee approves shifting boat sales-tax collection to vehicle-registration process
Summary
Senate Bill 638 would shift collection of sales tax on new and used motorboats from the point of sale at dealerships to the Department of Finance and Administration when buyers register their vessels.
Senate Bill 638, presented by Senator Justin Boyd and Representative Jamie Lee Johnson, was approved by the Senate Revenue & Tax Committee. The bill moves the point of sales-tax collection for new and used motorboats sold by motorboat dealerships from the dealer at point of sale to the Department of Finance and Administration (DFA) at the time the buyer registers the vessel.
Representative Jamie Lee Johnson told the committee the measure was intended to create parity between motor vehicles and motorboats in sales-tax collection. "We finally got a version of this where it's revenue neutral," Johnson said, adding the bill "doesn't create any, tax cut. It just says that if you buy a new or used boat from a motorboat dealership, when you register that boat at DFA, they're going to collect the tax there just like we do on motor vehicles." Senator Justin Boyd and Representative Johnson said the most recent version corrects prior drafting errors and aims to avoid any impact on general revenue.
Paul Gehring of the Department of Finance and Administration explained how the change would operate in practice: purchasers would have 30 days to obtain a certificate of number from DFA and pay the sales tax; if they failed to do so, a 10% penalty would apply. Gehring described existing enforcement tools for assessing unpaid taxes and noted the department could withhold registration renewals from taxpayers who do not satisfy assessments.
Committee members asked about temporary tags and enforcement parallels with vehicles. Gehring said trailers typically receive temporary tags at purchase and that law enforcement may cite expired tags. Senator Justin Boyd read the statutory definition the bill uses for "motorboat," citing the relevant code section and explaining that the definition covers vessels "operated upon water in which [are] propelled by veil or machinery..." and excludes vessels with federal marine documentation.
Senator Boyd moved that the committee give Senate Bill 638 a do-pass recommendation; Senator Crowes seconded. The committee approved the motion by voice vote. Committee members requested follow-up information from DFA about counts of temporary tags and unpaid registrations; DFA agreed to provide a report to the committee.
The committee discussion focused on the collection mechanism, enforcement steps (30-day window and 10% penalty), and parity with vehicle registration. The transcript does not include a final law enactment or effective date.
