Recently, the Lexington Herald Leader published an article about how registered boats pay 30 times more taxes than documented boats in Kentucky. Boat owners in Kentucky are concerned about the issue of fairness when it comes to taxes because registered boats like fishing boats have a much higher tax rate than documented boats like houseboats.
A registered boat has a state title like vehicle. On the other hand, documented boats are registered with the U.S. Coast Guard which means they pay property taxes. What this amounts to is that smaller boats end up paying more taxes than houseboats do for their property tax.
Local officials also suspect that many houseboat owners aren’t filing tax returns on their houseboats. When the Herald spoke with State Rep. C Wesley Morgan, Morgan claimed the person who sold him his boat said that if he registered with the U.S. Coast Guard, he wouldn’t need to pay property taxes. This however, is not the case.
Whether registered with the Coast Guard or registered with a state title, owners still need to pay taxes on the value of their boat.
The Herald wrote that local tax assessor in Kentucky said that some houseboat owners avoid paying property taxes altogether, which is a problem because it ends up costing the local counties and governments. They pointed out that it is a lot easier for houseboats to slip by without paying because, unlike with smaller vessels, there isn’t anything on the outside of the houseboat to show if the owner pays taxes or not.
With smaller boats that are registered with the state, there is a number and sticker on the hull that shows whether registration is current.
This makes the houseboats that haven’t paid taxes difficult to find. The Herald noted that some Marina operators would not let county tax assessors walk around the docks to look for documented boats that weren’t appearing on their rolls.
All in all, it’s a tough situation. Let’s all make it easier on everyone and ourselves and just pay our taxes. Honesty is the best policy.