SENATE BILL REPORT
SHB 1107
As Reported by Senate Committee On:
Transportation, March 16, 2021
Title: An act relating to expanding certain nonresident vessel permit provisions.
Brief Description: Expanding certain nonresident vessel permit provisions.
Sponsors: House Committee on Transportation (originally sponsored by Representatives Chapman, Barkis, Corry, Tharinger and Graham).
Brief History: Passed House: 3/1/21, 97-0.
Committee Activity: Transportation: 3/15/21, 3/16/21 [w/oRec-WM].
Brief Summary of Bill
  • Expands the authority to obtain nonresident vessel permits, primarily regarding nonresident vessels owned by an entity other than a person.
  • Increases the maximum length of permitted vessels.
  • Allows for nonresident charter vessels.
  • Removes the maximum number of individual permits allowed.
  • Extends the authority to obtain permits though 2030.
SENATE COMMITTEE ON TRANSPORTATION
Majority Report: That it be referred without recommendation and be referred to Committee on Ways & Means.
Signed by Senators Hobbs, Chair; Saldaña, Vice Chair; King, Ranking Member; Cleveland, Das, Fortunato, Hawkins, Lovelett, Nguyen, Nobles, Padden, Randall, Sheldon, Wilson, C. and Wilson, J.
Staff: Kelly Simpson (786-7403)
Background:

Nonresident Vessel Permits.  The owner of a vessel who is a nonresident individual or other entity is required to obtain a nonresident vessel permit to operate the vessel in Washington under certain conditions for no more than six months in a 12-month period.  If the owner wants to operate the vessel in Washington for more than 60 days, the owner must apply for a permit on or before the 61st day of the visit to remain in the state for an additional 60 days.  The owner may renew the permit once for an additional 60 days.  When the permit expires, the vessel owner must either register the vessel in Washington or remove the vessel from Washington waters.  If the owner registers the vessel in Washington, the owner must pay use tax in addition to the registration and titling fees, if retail sales tax has not already been paid, and watercraft excise tax may be due.  The process to apply for a nonresident vessel permit depends on whether the owner is a person or an entity other than a person. 

 

Nonresident Vessel Owned by a Person.  If a person seeks a permit, that person must apply to the Department of Licensing (DOL) via the DOL, a county auditor, or a subagent.  The person must show an unexpired boat registration, identification, and the date the vessel first entered Washington waters.  The person must pay a $25 fee.

 

Nonresident Vessel Owned by an Entity.  If the owner is an entity other than a person, the entity must be approved first by the Department of Revenue (DOR); the vessel for which the entity is seeking a permit must be no less than 30 feet in length and no greater than 164 feet; and the fee that must be paid to DOL is from $750 to $6,150, depending on the length of the vessel.  If the entity appears eligible, DOR must provide written approval to the entity and provide a copy of the approval to DOL. DOL may not issue more than two permits to an entity within any 36-month period.  DOR may not provide approval for the permits after November 30, 2025.  The authority to obtain the permit expires in 2026. 

 

If DOR finds the entity ineligible for the permit after the permit has been issued, DOR must assess state and local use tax on the value of the vessel, as well as any watercraft excise tax due.
Summary of Bill:

Nonresident Vessel Owned by a Person.  The authorization allowing a person to obtain a nonresident vessel permit is expanded to include chartering a vessel with a captain or crew, as long as individual charters are for at least three or more consecutive days.

 

Nonresident Vessel Owned by an Entity.  The authorization allowing an entity other than a person to obtain nonresident vessel permits is expanded.  The maximum length of the vessel that may be permitted is increased from 164 feet to 200 feet.  The entities eligible for the permits may include an owner or entity chartering a vessel with a captain or crew, as long as individual charters are for at least three or more consecutive days.  The restriction limiting the number of individual permits that may be received is removed.  The authority to obtain the permit is extended to the end of 2030. 
Appropriation: None.
Fiscal Note: Available.
Creates Committee/Commission/Task Force that includes Legislative members: No.
Effective Date: Ninety days after adjournment of session in which bill is passed.
Staff Summary of Public Testimony:

PRO:  This bill would help bring tax revenues and high-paying maritime jobs to economically distressed rural areas, through increased economic activity.  Local marinas would benefit greatly from this bill.  The bill would help the future of the maritime industry and tourism in Washington State.  DOR has the authority under section 3 of the bill to adequately prevent fraud by ensuring only nonresidents obtain the permits.

 

CON:  DOR is concerned about potential fraud and tax evasion if this bill were enacted.  It could potentially allow in-state residents to establish vessel ownership through a corporate shell in other countries such as the Cayman Islands.
Persons Testifying: PRO: Colleen McAleer, Clallam County Economic Development Council; Dan Worra, Port of Anacortes; Peter Schrappen, Northwest Marine Trade Association; James Weaver, Port of Bremerton.
CON: Michael Bailey, Department of Revenue.
Persons Signed In To Testify But Not Testifying: No one.