Boatcop
01-18-2003, 08:04 PM
Got this through one of my sources:
New U.S. Customs Regulation Interpretation May Wreak Havoc with Boat Use for Business Entertainment
All recreational and commercial boats used for business entertainment may require Coastal Trade Endorsement.
All boats may require licensed captains
Foreign-built boats may be barred from business entertainment use in U.S. waters. Many may lose boatÂ’s business entertainment tax deductions
The United States Custom Service recently has made changes in its interpretation of the definition of “passengers” that may negatively impact boatbuilders selling to the U.S. market; United States service and repair facilities, retail sellers, lenders and insurers; and U.S. boat owners who use their sail or powerboats for business entertainment purposes.
The United States Customs Service now interprets the definition of a “passenger” on a vessel being used for business or business entertainment purposes to mean any person onboard a boat while under way who is not directly involved in the operation, ownership, or navigation of the boat. Vessels carrying “passenger(s)” must be under the command of properly licensed operators.
Under the new interpretation, to carry a business guest (passenger), a boat must be registered in the United States Documentation System with a “coastal trade endorsement;” such an endorsement allows for the carriage of passengers for hire with a licensed captain in command. Only U. S.-built boats qualify for this “trade endorsement,” and must be of at least five net tons in its measurement, which is usually around 26' in length. Any boat built outside of the United States—whether considered recreational or commercial—could not be used for business entertainment purposes, as it would not qualify for a trade endorsement.
If this interpretation—and subsequent enforcement—of these regulations stand, it also calls into question the status of the business expense tax deductions for boats legitimately used for business entertainment.
At this time, the U. S. Coast Guard Documentation Office may not even be able to process the volume of boats that will require conversion into the United States Documentation system under the new interpretation. And, it is also questionable as to whether the licensing branch of the Coast Guard could process the number of applications needed for captainÂ’s licenses.
In English, this means if you take a client, potential client, or business associate boating (or fishing, or a cruise to Calalina, or....?), and claim that trip on your expense account, or report it to the IRS as a "Business Expense", you will be required to have the boat inspected and certified by the Coast Guard, and to have a Coast Guard Captain's License.
If the boat is eligible for certification (ie. over 5 net tons/26 feet) the IRS may require proof of proper certification and licensing before it will accept the expense as deductible.
Also, if your boat (Yacht?) was built in another country (Canada included), you won't be eligible for the certification/License, and therefor precluded from using it for business entertainment.
There are Maritime Attorneys investigating this ruling, and I'm awaiting an explanation from the Customs Service, Coast Guard and IRS.
As soon as I get word of the responses, I'll let everyone know.
[ January 18, 2003, 08:08 PM: Message edited by: Boatcop ]
New U.S. Customs Regulation Interpretation May Wreak Havoc with Boat Use for Business Entertainment
All recreational and commercial boats used for business entertainment may require Coastal Trade Endorsement.
All boats may require licensed captains
Foreign-built boats may be barred from business entertainment use in U.S. waters. Many may lose boatÂ’s business entertainment tax deductions
The United States Custom Service recently has made changes in its interpretation of the definition of “passengers” that may negatively impact boatbuilders selling to the U.S. market; United States service and repair facilities, retail sellers, lenders and insurers; and U.S. boat owners who use their sail or powerboats for business entertainment purposes.
The United States Customs Service now interprets the definition of a “passenger” on a vessel being used for business or business entertainment purposes to mean any person onboard a boat while under way who is not directly involved in the operation, ownership, or navigation of the boat. Vessels carrying “passenger(s)” must be under the command of properly licensed operators.
Under the new interpretation, to carry a business guest (passenger), a boat must be registered in the United States Documentation System with a “coastal trade endorsement;” such an endorsement allows for the carriage of passengers for hire with a licensed captain in command. Only U. S.-built boats qualify for this “trade endorsement,” and must be of at least five net tons in its measurement, which is usually around 26' in length. Any boat built outside of the United States—whether considered recreational or commercial—could not be used for business entertainment purposes, as it would not qualify for a trade endorsement.
If this interpretation—and subsequent enforcement—of these regulations stand, it also calls into question the status of the business expense tax deductions for boats legitimately used for business entertainment.
At this time, the U. S. Coast Guard Documentation Office may not even be able to process the volume of boats that will require conversion into the United States Documentation system under the new interpretation. And, it is also questionable as to whether the licensing branch of the Coast Guard could process the number of applications needed for captainÂ’s licenses.
In English, this means if you take a client, potential client, or business associate boating (or fishing, or a cruise to Calalina, or....?), and claim that trip on your expense account, or report it to the IRS as a "Business Expense", you will be required to have the boat inspected and certified by the Coast Guard, and to have a Coast Guard Captain's License.
If the boat is eligible for certification (ie. over 5 net tons/26 feet) the IRS may require proof of proper certification and licensing before it will accept the expense as deductible.
Also, if your boat (Yacht?) was built in another country (Canada included), you won't be eligible for the certification/License, and therefor precluded from using it for business entertainment.
There are Maritime Attorneys investigating this ruling, and I'm awaiting an explanation from the Customs Service, Coast Guard and IRS.
As soon as I get word of the responses, I'll let everyone know.
[ January 18, 2003, 08:08 PM: Message edited by: Boatcop ]