The Alabama Tax Tribunal recently decided the case of DBI Marine Properties, LLC v. Alabama Department of Revenue. For the Final Order, click here.
In that case, the ADOR was attempting to impose Alabama use tax on the purchaser of a 68 foot Hatteras 68 Convertible boat. The boat was delivered to the taxpayer in New Bern, North Carolina, where additional equipment was installed on the vessel. Once seaworthy, the boat was scheduled to be used as a charter fishing vessel in the Caribbean. Unfortunately, on its initial voyage, the boat developed mechanical difficulties and had to be returned to the manufacturer for repairs. Apparently, at some point in the return process, it was briefly moored in Alabama.
The Tax Tribunal accurately determined that because the boat was purchased for first use outside of Alabama, and because there was no evidence that the vessel was ever substantially used in Alabama's waters, the Alabama use tax could not apply.