Ruling Request No. 95-01

Declaratory Rulings

Ruling Request No. 95-01

Re: Request for Ruling Regarding the Sales/Use Tax on Boats

Request for Ruling

On behalf of your client, ("Utility"), you request a declaratory ruling regarding the application of the sales/use tax to the purchase, use or resale of a vessel in Rhode Island


Utility is a regulated public utility engaged in the business of generating electricity. Utility currently contracts under a time charter with the present owner of the vessel to transport coal from ports in the mid-Atlantic states to Utility's power plants in Salem and Somerset, Massachusetts.

On November 1, 1994, Utility gave notice of termination of the time charter. Pursuant to the time charter termination, Utility has entered into agreements to purchase the vessel and simultaneously resell it. The vessel is a 38,234 Long Tons total deadweight capacity Self-Unloading Bulk Carrier and is 665 feet long, 95 feet wide, 56 feet deep with a draft of 34 feet.

The purpose of the purchase and simultaneous sale is to terminate the related time charter contract with the present owners of the vessel who will be replaced by the new owner. Utility acts as purchaser and seller only to facilitate the transaction. The vessel is intended to be received from the present owner and simultaneously delivered to the new owner in the State of Rhode Island.

Ruling Requested

Utility respectfully petitions for a declaratory ruling that neither the purchase nor the simultaneous sale of the vessel will be subject to Rhode Island sales or use taxes.


Rhode Island General Law 44-18-30 (XX) entitled "Boats or vessels generally" exempts from taxation the sale, storage, use or other consumption in this state of any new or used boat. "Boat" is defined in Webster's Dictionary, second edition (unabridged), as including "ship" or "vessel." Therefore, the purchase of the vessel falls within the exemption granted by R.I.G.L. 44-18-30 (XX).


Neither the purchase nor the simultaneous sale of the vessel will be subject to the Rhode Island sales or use taxes.

This ruling may be relied upon by this taxpayer and shall be valid until the applicable statutory provisions are amended in a manner requiring a different result.

R. Gary Clark

Tax Administrator

March 28, 1995