One of the more interesting but ridiculous tax situations is the personal property tax on boaters brought to my attention by comment submitted by Paul Glasser on Dec in 2006. Apparently in Kentucky they tax boats and the state has the right to collect taxes as far back as 2001.

The taxes have always been owed, but they have not been assessed because it has been difficult to identify and locate boat owners. In the past, some boaters have paid the taxes voluntarily.

The situation has changed recently since the Coast Guard shares information with the state and has helped identify boat owners. Now the State is after the boat owners to cough up the new found loot!!

The taxes are supposed to be included with a tangible personal property tax return. There have already been numerous appeals and protests filed by boaters who say that the state has over-estimated the assessed value of their watercraft. And any boater knows that there is a big difference in price for what you buy and what you sell a boat for.

Besides the boaters are a positive economic and business stimulant who already provide revenue through sales, room taxes not to mention all the personal wages of boat related occupations. In economics it’s called the multiplier effect. The boat targeted tax will have a negative effect on the associated boating industries in Kentucky.

The taxes could also force boaters out of Kentucky, because the taxes are assessed based on where the boats are moored. If they are moored in Indiana, Ohio or Tennessee, they do not pay any taxes.

Any lake or river in Kentucky such as the Ohio River, Mississippi River, Cumberland River, Kentucky River, Green River, Lake Cumberland, Kentucky Lake and Lake Barkley may soon see fewer big boats.