Sales Tax Slice: What an Oar Deal! Rhode Island Exempts Paddleboards as Vessels

Paddleboards, the long, narrow buoyant boards used to paddle across water, may now be exempt from sales and use tax in Rhode Island, according to the Division of Taxation’s latest newsletter

While Rhode Island already exempted boats and vessels from the state’s 7 percent sales tax, the general understanding was that an item could only be exempt if it had a hull identification number, as required by the U.S. Coast Guard. Under that understanding, sales tax has been applied to paddleboards sold in Rhode Island.

However, the Division has reversed course under a new interpretation finding paddleboards to be exempt. The Division notes that the Coast Guard considers stand-up paddleboards to be “vessels” when used “beyond the narrow limits of a swimming, surfing, or bathing area,” such as when used to travel long distances or for going from one point to another.

Now you may be thinking, nobody uses a paddleboard for long distance or point-to-point travel, right? They’re used for yoga and other exercises, or simply for recreational use. But you’d be wrong. 

In Seattle, one entrant into the Downtown Seattle Creative Commute Contest carries her board 5 blocks to the dock, straps her lunch and work clothes aboard, and paddles to work. Likewise, a stand-up paddleboard commuter crosses the Willamette River in Portland, Oregon every day—2.5 miles each way—and that’s when he’s in a hurry.  Other days he takes the scenic route. And a Newport, Rhode Island commuter even documented his daily 4-plus mile trek in a YouTube video, complete with surfer-themed music.

Perhaps unsurprisingly, some paddle-board commuters have the waterways to themselves in the morning. Maybe Rhode Island has the solution to easing traffic congestion and freeing up seats on public transportation. And because this interpretation applies as of July 1, 2014, paddleboard commuters can race out and buy their new boards tax free right now.

Continue the conversation on Bloomberg BNA’s State Tax Group’s LinkedIn page: Should a few ambitious commuters justify an exemption for all paddleboard sales? 

Sign up for a free trialof the Bloomberg BNA Premier State Tax Library and see a detailed discussion on state property taxes. 

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