California Is Making You Pay Property Tax on Sales Tax!
Boat owner Larry McCullogh sent us the following to alert boat owners to what he’s contested as an illegal property tax on boats (and airplanes). We’ve edited his correspondence for brevity and included his video of the issue.
A friend suggested I contact you in reference to my boat’s property tax assessment. The County assessed my 59-ft Nordhavn Coastal Pilot for over 50% more than I’d paid for it five years earlier, although we’ve cruised on it for over 15,000 miles and visited six countries and 22 US states.
I fought the assessment valuation, and what I learned shocked me. Marin County, like other counties in the state, adds sales tax to the value of an assessment every year. This is against the state constitution and California Supreme Court [rulings], and it is hidden!
I also found that the Marin County assessor does not follow the guidelines set forth by the State Board of Equalization. That affected me personally, but it is the inclusion of the sales tax every year that affects just about all boaters in the state. Airplanes too. I filed an appeal for both 2023 and 2024 assessments and had my 2024 hearing on August 15, where I presented evidence that the sales tax [inclusion] is illegal. I have yet to receive the verdict from the Appeals Board.
They add sales tax to the value every year and hide it in what they call “Full Assessed Value.” For example, let’s say your boat’s assessed value is $100,000. They then add sales tax of 8.5% to come up with a “Full Assessed Value” of $108,500, which is what they then tax at 1%. Their justification is based upon the court case of Xerox v. Orange County, where Xerox was fighting Orange County for charging sales taxes on leased copying machines. This ruling, from 1977, is the State BOE’s justification for adding sales tax by saying that if you are going to buy a boat, you have to pay sales tax. The state constitution limits personal property taxes to 1%; in California they are charging 1.085%. That does not sound like a lot, but it adds up to tens of millions extra being charged to boat owners. In my Appeals Board hearing I mentioned all of this; the assessor had no defense when he was questioned by a board member. There are over 600,000-plus in California who are being taken advantage of by 8.5%.
I did a seven-minute video that I posted on YouTube to try to let other boaters know about this, and I have attached the link below.
It doesn’t make sense to us. We also wrote about counties inflating boat valuations for the purpose of property tax assessment in 2022. Has anyone had luck appealing their valuation or contesting the inclusion of sales tax on their boat’s valuation? Add your comments below.
It is an illegal tax just like the Alameda County “possesory interest” tax on the rented slip.
Solano County does something similar. They start with the Personal Property value. Then they add a “Late File Penalty” of 10% to come up with the Net Value. I should note, that my taxes were paid about 30 days before the due date.
It does not make sense that I’m charged a 10% late fee even though I pay before the deadline and have to pay taxes on that “late fee.”
The one statement that is a bit confusing is that they add the tax every year. Is that compounded year after year, or only when the boat is reassessed?
On another point, does this contain the elements for a class action suit? I would bet that the crowd of plaintiffs would be huge! We could even fly a special burgee.
I’ve paid “mud tax” for the patch under my privately berthed boats in Marin, Solano and Contra Costa counties. All three “value estimates” ridiculously overvalued my boats. auto owners aren’t taxed for parking their cars in front of their house on a public street. Since the CA govt. “claims” the mud, even in private marinas, Why don’t they arrange and pay to dredge them regularly?
Yes, just paid my $ 175.
Mud tax, on top of boat tax of $ 559. a 1988 power boat only 37 years old.
Really if I’m paying a tax on the
dirt under my boat don’t they
have a responsibility to keep it deep enough so I can move my boat anytime?
Alameda county does the same thing.
These bloodsuckers are making me sick.