Tax Type
Retail Sales and Use Tax
Watercraft Sales and Use Tax
Description
Watercraft Sales and Use Tax and Retail Sales and Use Tax
Topic
Computation of Tax
Date Issued
02-21-1985
Watercraft Sales and Use Tax and Retail Sales and Use Tax
Virginia Code §58.1-1402(1) imposes a tax of two percent (2%) on the sale price of each "watercraft". "Watercraft" is defined as, "any contrivance used as a means of water transportation which is 15 feet or more in overall length measured along the centerline and which is powered by a motor of more than 25 horsepower, or any sail-powered vessel which is more than 18 feet in length measured along the centerline." Excluded from the definition of "watercraft" are seaplanes, and vessels having a valid marine titling document issued by the United States Coast Guard.
Prior law limited "watercraft" to any marine vessel more than 18 feet in length and weighing more than 400 pounds.
Under present law, "watercraft" which meet the above definition are subject to the two percent (2%) watercraft sales and use tax, and are not subject to the four percent (4%) retail sales and use tax. §58.1-608 (42) of the Virginia Sales and Use Tax Code specifically exempts "watercraft" from the four percent (4%) tax. Therefore, any marine vessel which does not meet the above definition of "watercraft", would be subject to the four percent (4%) tax, unless otherwise exempted.
It should also be noted that House Bill 1388 as passed by the 1985 session of the General Assembly exempts "Fishing Boats, Engines and Repair Parts," from the retail sales and use tax. Therefore, if this bill is signed, boats and vessels which are not "watercraft" will not be subject to either the 4% or the 2% tax. The effective date or this bill is July 1, 1985.
It is the intent of the sales and use tax law to tax all marine vessels (unless otherwise exempt) according to one or the other tax rate (2% or 4%) but not both.
Rulings of the Tax Commissioner