California Yacht Brokers Tax Headquarters
We are here to ease all of your LLC headaches. We are dedicated to providing you the best possible advice on how LLCs can be used to eliminate California Sales and Use Tax. We are here to help California Yacht Brokers ease their client's tax burden.
Create Non-Taxable Transactions
The purpose of utilizing a Limited Liability Company (LLC) in a vessel transaction is to eliminate California Sales and Use Tax. California Sales and Use Tax are transaction taxes, and as a California yacht broker, you are well aware that every sale and purchase of a vessel in California is subject to one of these transaction taxes.
Over the years you have heard the numerous myths, tricks, and hacks people use to not pay California Use Tax. The problem is these myths are ways to evade California Use Tax, not eliminate it. The keyword is "evade;" tax evasion is illegal and the penalties for it are steep.
We work hard to eliminate California Sales and Use Tax for your clients. We focus on arranging the transaction to ensure minimal tax liability. Instead of evading the tax, hoping the government never catches on, we follow the letter of the law to the "T" and create a situation where according to California Sales and Use Tax law no tax is owed on the transaction.
In its simplest terms, we take a taxable event and turn it into a non-taxable event.
Click the button below if you want to learn more about the difference between California Sales and Use Tax.
Potential for Tax on Every Transaction
You and your client first need to determine whether avoidance is worth the cost. Depending on the vessel, avoiding California Sales and Use Tax may not be economically viable. Transferring a vessel into an LLC (Limited Liability Company) is not free, and there are annual maintenance costs associated with it.
California Sales and Use Tax varies by county, but usually hovers around 10%. That means if you are selling a $10,000.00 jet ski, the buyer will owe roughly $1,000.00 in use tax. The government filing fees alone would render avoidance uneconomical. However, if you are brokering a deal for a million dollar yacht the tax liability jumps up to $100,000.00. In this scenario the cost and effort to create a non-taxable transaction is definitely worth the return on investment. There is no fixed rule on whether it is economical to pursue an avoidance strategy. Depending on an individual's unique situation the added benefits of a single asset entity may swing the pendulum in one direction or the other.
You can review additional scenarios by clicking the button below.
The Truth About the Myths
There are plenty of myths floating around the marina about how to avoid paying California Sales and Use Tax on the purchase of a vessel. From parking the vessel in Mexico for 90 days, to just registering it outside the State of California; boaters are full of "free" advice. This "free" advice will cost your clients more in the long run.
The facts are, your clients need a letter from the BOE (Board of Equalization), now known as the California Department of Tax and Fee Administration (CDTFA), stating that the transaction is exempt from use tax. No news is bad news. The BOE/CDTFA does not need to send a notice of tax due and can come after your clients for almost ten years after the transaction.
There is quite literally no valid excuse when it comes to dealing with the California Department of Tax and Fee Administration. The burden rests with your clients to prove that they are entitled to an exemption. It also does not matter what your clients did, it only matters what they can prove. We provide your clients with a strategy that will survive even the strictest audits. Through our services your clients can rest easy knowing that they did nothing illegal, that they did not evade the use tax, but instead created a non-taxable transaction.
If you want to learn more about the myths surrounding California Sales and Use Tax check out the link below.
Protection from the Tax Man
The tax man is coming. The high tax bill associated with vessel sales creates a strong incentive for auditors to focus on these transactions. The difference between a tax exemption and a massive tax bill can simply be the matter of documentation. Your clients need a paper trail that proves they are entitled to a tax exemption; documentation that proves their purchase was non-taxable.
Being legally entitled to an exemption is one thing, being entitled to one in the eyes of an auditor is another. When you are discussing California Sales and Use Tax with your clients change your viewpoint. Would the advice you are giving your client hold up to the scrutiny of an auditor? Now imagine that auditor is out to make a name for himself; think the advice will still hold up?
There are two parts two every transaction; the substance and the form. The substance is what happened, and the form is what the documentation proves. We make sure both the substance and the form prove your client's transaction is exempt from California Sales and Use Tax. We study the audit manuals and stay updated on the constantly changing rules. We provide the paper trail your clients need to stay out of trouble when the tax man comes calling.
We Are Here To Help
We live and breathe California Sales and Use Tax. We advise clients across numerous industries on how to reduce their sales and use tax liability; with vessels our advice is to eliminate it.
California Sales and Use Tax is a complex area of law that takes thousands of hours of research to master. Your clients need the highly skilled legal advice provided by attorney Ryan M. Parker and the p.Law team to safely guide them through the process. Do not let your clients be fooled by tax advocates, your clients need professional legal advice. Tax advocates guide your clients through the paperwork. We do it for them, taking responsibility for the end result. We fight for your clients. We are not just in their corner, we are the ones throwing the punches.
The rewards are great, but the penalties are steep. The earlier we get in involved in the transaction the better. Our transaction attorneys can help with all aspects of a vessel purchase. Contact us today to find out how we can help save your clients money and help you sell more boats.
We are here to help and make your life easier. Call us today to find out how.