Bulletin Number
VTB 81-24
Tax Type
Watercraft Sales and Use Tax
Description
Definition for exemption purposes
Topic
Exemptions
Date Issued
12-01-1981
The text of Department of Taxation Bulletin 81-24, concerning the definition of the term "watercraft' and the tax imposed on such watercraft, is reproduced below.
§ 58-685.40 of the Code of Virginia defines a "watercraft' to mean ". . . every description of watercraft, other than a seaplane on the water, used or capable of being used as a means of transportation on water and which are fifteen feet or more in overall length measured along the centerline and which have a gross weight in excess of 400 pounds, except watercraft which have a valid marine document issued by the United States Coast Guard.'
§ 58-685.41 of the Code imposes a 2% Virginia watercraft sales tax on the purchasers of "watercraft' sold in Virginia on or after January 1, 1982 and 2% Virginia watercraft use tax on the users of "watercraft' not sold in Virginia but required to be titled in Virginia on or after January 1, 1982.
§ 58-441.6(kk) of the Code provides an exemption from Virginia Retail Sales and Use Tax (4%) for "watercraft' as defined in §58-685.40 of the Code.
The purpose of this Bulletin is to point out and emphasize the following facts:
1. Marine documentation is issued by the United States Coast Guard to the owners of vessels or watercraft as evidence of ownership in such vessels or watercraft. Valid documentation becomes void upon sale and must be reinstated in the name(s) of the purchaser(s). Accordingly, no watercraft will be considered to have a valid marine document when purchased either new or used and every watercraft purchased on or after January 1, 1982 which meets the length and weight requirements of §58-685.40 will be subject to the 2% watercraft sales tax.
Watercraft purchased and documented without this State and brought into this State for use in this State on or after January 1, 1982 may have valid documentation issued by the United States Coast Guard. Such vessels with valid documentation do not meet the definition of "watercraft' in §58-685.40 and accordingly will not be exempt from Virginia Retail Sales and Use Tax (4%) under the exemption for "watercraft' provided in § 58-441.6(kk). The 4% use tax will be imposed subject to credit for any similar tax paid another state.
2. Since the exemption from Virginia Retail Sales and Use Tax (4%) for "watercraft' is limited to vessels defined as "watercraft' by §58-685.40, all boats which are less than 15 feet in overall length or which have a gross weight of less than 400 pounds will continue to be subject to 4% sales and use tax.
The owner of any vessel, as defined in § 62.1-167 which provides no length or weight limitations, may apply for a certificate of title but unless such vessel meets the restrictive definition of "watercraft' in §58-685.40 it will be subject to Virginia Retail Sales and Use Tax (4%) rather than Watercraft Sales and Use Tax (2%).
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