Recently, the Department of Revenue (DOR) has issued a new tax on dry-stack moorage. Previously, dry-stack and wet moorages were treated equally, meaning both were exempt from B & O taxes. That apples-to-apples comparison all changed, however, after a recent audit of one of our members.
Recognizing that this tax at this time would hurt our members, NMTA hired a well-regarded tax attorney and lobbied DOR directly. The good news (thanks to our effort) is that this tax will not be retroactive. Also, DOR had originally wanted to charge dry-stack operators a rate of 1.8%, which is the serviceable classification. Additionally, public ports will no longer need to charge the 12.84% leasehold tax. The bad news is that dry-stack will be treated like warehouses and will be subjected to the warehousing rate of .484%.
Here's more info on this development:
o Dry-stack moorage is not exempt from B&O taxation as the rental of real estate because DOR is unable to find the necessary dominion and control where boat owners cannot physically access the spaces where their boats are held.
o As “warehousing” includes all of the services typically provided by dry-stack moorage, dry –stack moorage is not considered a “bundled transaction.”
o DOR’s decisions will be formalized in an Excise Tax Advisory by the end of the month.
o DOR will delay enforcement until the beginning of 2011.
Recognizing that this tax at this time would hurt our members, NMTA hired a well-regarded tax attorney and lobbied DOR directly. The good news (thanks to our effort) is that this tax will not be retroactive. Also, DOR had originally wanted to charge dry-stack operators a rate of 1.8%, which is the serviceable classification. Additionally, public ports will no longer need to charge the 12.84% leasehold tax. The bad news is that dry-stack will be treated like warehouses and will be subjected to the warehousing rate of .484%.
Here's more info on this development:
o Dry-stack moorage is not exempt from B&O taxation as the rental of real estate because DOR is unable to find the necessary dominion and control where boat owners cannot physically access the spaces where their boats are held.
o As “warehousing” includes all of the services typically provided by dry-stack moorage, dry –stack moorage is not considered a “bundled transaction.”
o DOR’s decisions will be formalized in an Excise Tax Advisory by the end of the month.
o DOR will delay enforcement until the beginning of 2011.
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