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Beware of Ceremonial Off Shore Deliveries
In a recent communication to a taxpayer, a Tax Compliance Specialist denied granting an exemption for a vessel. The stated reason for the rejection was, “It appears the ‘offshore delivery’ by the broker. . . was merely a ceremonial delivery.”
A quick perusal of Webster’s Dictionary revealed the following:
ceremonial Of, marked by, or involved in ceremony. Usage: As an adjective ceremonial is applicable only to things and means “having to do with ceremony” (ceremonial occasions). By contrast, ceremonious, when used to characterize persons, means “devoted to forms and ritual” (ceremonious courtiers). -1. A set of ceremonies prescribed for an occasion: RITE. 2. A ceremony.
ceremony 1. A formal act or set of acts performed as prescribed by ritual, custom, or etiquette. 2. A conventional social gesture or act with no intrinsic purpose. 3. Strict observance of formalities or etiquette.
delivery The act of transferring to another.
It seems quite a folly to me that a broker would deliver (the act of transferring to another) a vessel in a ceremony (a conventional social gesture or act with no intrinsic purpose).
I believe that yacht brokers have more important things to do than arrange to meet another ship outside the three mile limit for no reason. In fact, if brokers began to regularly conduct such meetings outside the three mile limit I suppose the DEA or the INS would want to know what was really happening. Of course this would mean they would, by suspicion, attach a meaning of a “real transfer” of some subject-matter to any broker who claimed he was making a ceremonial delivery (a conventional social gesture or act with no intrinsic purpose). Government agencies always seem to gravitate toward some sort of conspiracy theory, especially when it comes to taxpayers.
It is simple to comprehend a ceremonial (a set of ceremonies prescribed for an occasion) delivery (the act of transferring to another), where a broker agreed to an off shore delivery and then actually performed on his agreement. However, if the broker had a legitimate purpose he would contradict the day dreams of a tax collector. Obviously this Board staff member reached deep into his collections of Obfuscated Methods of Denying Exemptions Volume Number 101.
I decided to move my research into Black’s Law Dictionary. Maybe a new concept had been published without my noticing it. However, I could not find a legal definition for a ceremonial delivery. The closest thing I found was:
Symbolical delivery
The constructive delivery of the subject-matter of a sale, where it is cumbersome or inaccessible, by the actual delivery of some article which is conventionally accepted as the symbol or representative of it, or which renders access to it possible, or which is the evidence of the purchaser’s title to it; as the key of a warehouse, or a bill of lading of goods on shipboard.
This obviously does not qualify here. In this case the broker actually delivered the subject-matter (the vessel) to a specific location. In fact, the broker signed a statement under penalty of perjury affirming the off shore delivery.
This so-called tax “specialist” created a reason out of thin air to assert the tax. While sitting in a gray cubicle day after day reviewing claims for an exemption, it appears that the depths of suspicion begin to overtake an otherwise normal homo sapien. The point of this article is to bring into view what can happen to tax collectors who refuse to alter their preconceived opinions even after reviewing the facts.
Even though I believe the taxpayer will ultimately prevail in this case, many precautions could have been taken to insure the document trail didn’t allow this detour into fantasy land. When it comes to supporting your claim for an exemption, DOCUMENTATION BECOMES EVERYTHING. The tax agency always reviews your transaction in the past, never in present time. Your representation of the past is the documents that you submit with your tax return.
How you handle your document responsibilities while you are in the present time of the particular test period you have chosen for your vessel determines the ultimate score you receive during your final test. In a vessel use tax case you either get an “A” or you pay the tax. Not doing your homework during the test period will generally add around eight percent to the price of your vessel. |
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If you have any questions regarding this article, other sales and use tax issues, or want to know if you qualify for an exemption contact Joseph Micallef at (916) 369-1200 or visit us on the web at www.ASTC.com.
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Audit Division