Refit panel helps owners, yards navigate new sales tax cap February 24, 2016
A special seminar on January 29 at the Refit International Exhibition and Conference provided an inside look at how the new $60,000 sales tax cap on refits and repairs will be implemented.
The new law reduces the tax burden on owners and positions Florida to attract even more large refit opportunities to the region. The panel, organized by MIASF, focused on topics including what yards need to include in their contract language to ensure customers are covered under this new tax cap and how yards can use the new law to leverage more work and attract new customers.
The panelists were:
- Karen Lake, a tax specialist with Berkowitz Pollack Brant who has been working withthe state Department of Revenue on how the cap will be implemented
- James Brewer, business development manager at Derecktor Florida
- Parker Stockdale, build manager for Project Anodyne
Lake explained that boat owners can manage a build themselves and that they can hire subcontractors and give them a resale certificate. Because there can only be one bill, yards also can create an entity to manage the project and then bill the owner. “The law is narrow,” Lake explained. “We’ve met with the industry and explained the process. You need to be careful about how you manage it.”
Also, she noted that it’s portable as long as the owner doesn’t take possession of the boat. “Sea trials are OK, as long as the owner doesn’t stop in Bimini.”
Stockdale said the cap was one of the reasons his owner chose to keep the project in the U.S. “It was a no-brainer for us,” he said. We didn’t look beyond South Florida.”
The key to successfully managing a project of that size is to break the project down into pieces and assembling the right team, he said.
Brewer said that some of the challenges with the new tax cap include modifying existing contracts and determining how to apply it in the real world. “The challenge for customers is how to take advantage of it when you have multiple vendors,” he said.
One benefit of the tax cap is that it levels the playing field with other states, like Georgia, he said. “There’s the perception that government is trying to assist instead of being an impediment. It creates jobs, and owners feel like the government is trying to cooperate. The perception is that the government is doing something to encourage business. It gives us a competitive advantage.”
Brewer noted that the more yards there are, the better. “We want to see a vibrant shipyard industry in the entire region, from West Palm Beach to Miami,” he said. “It’s in everybody’s best interest for the shipyards to survive and thrive.”