Boat Not Subject To Ohio Use Tax Even Though Boat Registered in Ohio

Tuesday, January 28th, 2014


The Ohio Supreme Court recently ruled that a boat used principally in Kentucky and Indiana was not subject to Ohio use tax even though the owner registered the boat in Ohio.

Ohio has a transient use exemption from its use tax. This exemption applies to nonbusiness use within Ohio of property purchased for use outside Ohio that is not required to be registered or licensed in Ohio by Ohio law. Ohio law does not require boats to be registered in Ohio if the Coast Guard recognizes the boat as "temporarily transiting" and the boat's principal use is not in Ohio.

The taxpayer bought a boat and used it primarily in Kentucky and Indiana waters. The taxpayer did take the boat into Ohio waters occasionally. When the taxpayer took the boat into Ohio waters, Cincinnati police stopped, boarded, and inspected the boat and then allowed the taxpayer to continue boating. To prevent further stops, the taxpayer registered the boat in Ohio, indicating that the boat would primarily be used in Kentucky and Indiana.

The Ohio Department of Revenue assessed use tax on the boat.

The Court ruled that the boat qualified for the transient use exemption. Although the taxpayer did register the boat in Ohio, Ohio law did not require the taxpayer to register the boat in Ohio. The exemption applied to property that was not required to be registered in Ohio. The taxpayer's boat was not required to be registered in Ohio even though it was registered in Ohio. The boat therefore qualified for the exemption.

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