Does using a boat broker prevent a private vessel sale from qualifying for Louisiana's isolated or occasional sale exclusion?

Plain-English summary

Louisiana Revenue Ruling 15-001 said hiring a broker did not automatically destroy the isolated-or-occasional-sale exclusion for a private boat or vessel sale.

The exclusion could still apply when the owner:

• did not hold themselves out as being in the boat-selling business;
• had no history of frequent, regular, and repeated boat or vessel sales;
• had bought the boat for personal use;
• kept title to a titled vessel, or possession of an untitled vessel, until the sale to the buyer; and
• supplied documentation showing the private-owner-to-buyer transfer.

But an untitled vessel moved to the broker's lot could lose the exclusion. On the ruling's second scenario, transferring possession to the broker in exchange for payment—or conditioned on finding a buyer—created a presumption that the broker became the owner and seller.

The isolated or occasional sale exclusion

Louisiana's retail-sale definition excluded an isolated or occasional sale of tangible personal property by a person not engaged in that business.

The business definition likewise distinguished occasional and isolated sales from frequent, regular, and repeated selling activity.

The ruling focused on the true seller. A broker acting only as the owner's marketing intermediary did not necessarily become the seller, but a transfer of title or possession could change that result.

Scenario 1: titled vessel remains with owner

The owner hired a broker to advertise the vessel and find a buyer, but:

• title stayed in the owner's name until direct transfer to the buyer;
• the owner had purchased the vessel for personal use;
• the owner did not present themselves as a boat dealer; and
• the owner had no repeated-sales history.

That transaction qualified if the buyer documented the facts.

The ruling identified supporting records such as a canceled check between the buyer and seller, a bill of sale showing direct title transfer, and the prior owner's registration certificate showing transfer to the buyer.

Scenario 2: untitled vessel moved to broker's lot

The owner again used a broker and otherwise met the personal-use and no-repeated-sales facts. But the vessel was untitled and the owner transferred possession to the broker's lot for customer viewing.

The ruling presumed the broker had taken ownership because possession moved to the broker in exchange for payment or on the condition that the broker find a buyer.

The broker became the seller, so the transaction did not qualify for the private owner's isolated-or-occasional-sale exclusion.

Four-part test from the conclusion

Using a broker did not disqualify the sale when:

1. the owner did not hold themselves out as selling boats or vessels as a business;
2. the owner did not frequently, regularly, and repeatedly sell boats or vessels;
3. the owner retained title for a titled vessel or possession for an untitled vessel; and
4. the owner had purchased the vessel for personal use.

The buyer also needed sufficient proof of the direct owner-to-buyer transaction.

What this means for you

Private boat owners

Use the broker as an agent for marketing rather than transferring ownership or possession to the broker. Preserve title and sale records through closing.

Brokers

Document whether you are merely finding a buyer or have taken title or possession as an owner. The legal role changed the tax result in the ruling.

Buyers

Louisiana boat registration required satisfactory proof of tax payment or a qualifying exclusion. Obtain the prior registration, bill of sale, and payment records.

Common questions

Q: Does paying a broker automatically make the sale taxable?

A: No. The ruling looked at the owner's business activity, personal use, title or possession, and documentation.

Q: Why did moving an untitled boat to the broker's lot matter?

A: The ruling treated the transfer of possession for consideration or a conditional sale arrangement as evidence that the broker became the owner and seller.

Q: What if the owner frequently sells vessels?

A: The isolated-or-occasional exclusion did not cover frequent, regular, and repeated sales.

Q: What documents supported the exclusion?

A: The ruling listed payment evidence, a bill of sale, and the prior owner's registration showing direct transfer to the buyer.

Citations and references

• La. R.S. 47:301(1) — business and occasional-sale distinction
• La. R.S. 47:301(10)(c)(ii)(bb) — isolated or occasional sale exclusion
• La. R.S. 47:301(12) — sale includes transfers of title or possession for consideration
• La. R.S. 47:303(D) — boat registration and proof of sales or use tax
• R & B Falcon Drilling USA, Inc. v. Secretary, Department of Revenue, 31 So.3d 1083 (La. Ct. App. 2010) — repeated sales treated as business activity
• LAC 61:III.101(C) — Revenue Ruling authority and reliance statement

Source

• Landing page: Louisiana Department of Revenue Policies
• Original PDF: LA Revenue Ruling 15-001

Original ruling text

Revenue Ruling No. 15-001
January 16, 2015
Sales Tax
Isolated or Occasional Brokered Boat or Vessel Sales
Purpose: The purpose of this Revenue Ruling is to address whether the use of a third-party
intermediary to broker the sale of a boat or vessel will disqualify a transaction from qualifying as
an isolated or occasional sale under La. R.S. 47:301(10)(c)(ii)(bb).
Law:
La. R.S. 47:303(D) provides, in pertinent part, “Except as provided for in R.S. 47:305(D)(1)(i),
the Secretary of the Louisiana Department of Wildlife and Fisheries shall not register or issue a
certificate of registration on any new boat or vessel purchased in this state until satisfactory proof
has been presented to him that all sales taxes provided by this Part…have been paid, nor shall he
register or issue a certificate of registration on any boat or vessel brought into this state until
satisfactory proof has been presented to him that all use taxes required by this Part…have been
paid.”
La. R.S. 47:301(10)(c)(ii)(bb) provides that “the term “sale at retail” does not include an isolated
or occasional sale of tangible personal property by a person not engaged in such business.”
La. R.S. 47:301(1) provides that the term ““business” includes any activity engaged in by any
person or caused to be engaged in by him with the object of gain, benefit or advantage, either
direct or indirect. The term “business” shall not be construed to include the occasional and
isolated sales by a person who does not hold himself out as engaged in business.”
La. R.S. 47:301(12) provides, in pertinent part, that a ““sale” means any transfer of title or
possession, or both, exchange, barter, conditional or otherwise, in any manner or by any means
whatsoever, of tangible personal property, for a consideration…”
In R & B Falcon Drilling USA, Inc. vs. Secretary, Dept. of Revenue, 2009-0256 (La.App 1 Cir.
1/11/2010) 31 So.3d 1083, the Court held that a barge owner was deemed to be in the business of
selling meals for the benefit of customer personnel and customer third-party personnel who were
on the barges. In so holding, the Court found that “neither former La. R.S. 47:301(10)(c)(ii) nor
La. R.S. 47:301(1) excludes from the definitions of “sale at retail” and “business” the frequent,
regular, and repeated sales by a person, whether or not he holds himself out as engaged in
business.”
Facts/Analysis: La. R.S. 47:301(10)(c)(ii)(bb) provides an exclusion from sales tax for isolated
or occasional sales of tangible personal property by persons not engaged in such business.
Occasionally, the use of a third-party intermediary to broker the sale of a boat or vessel is
utilized. In such a scenario, the seller of the boat employs a third-party broker to market the boat
or vessel on his/her behalf and to find a willing buyer. Below are examples of how the isolated or
occasional sales exemption would apply when a broker is utilized.

Revenue Ruling No. 15-001
January 16, 2015
Page 2 of 2

Scenario 1
The seller of a boat or vessel employs a broker to market the boat or vessel on his/her behalf. The
boat or vessel is titled in the name of the seller and remains titled in the name of the seller until
title is transferred to the buyer. The seller does not hold him/herself out to be in the business of
selling boats or vessels nor does the seller have a history of frequent, regular and repeated sales
of boats or vessels. Finally, the boat or vessel was purchased by the seller for his/her own
personal use. Such a transaction would qualify for the isolated or occasional sale exemption
provided the buyer could provide sufficient documentation to establish the above criteria.
Sufficient documentation includes, but is not limited to, a canceled check from the buyer to the
seller and a bill of sale indicating title is being transferred from the seller to the buyer or the prior
owner’s certificate of registration showing his or her transfer of ownership to the buyer.
Scenario 2
The seller of a boat or vessel employs a broker to market the boat or vessel on his/her behalf. The
seller does not hold him/herself to be in the business of selling boats or vessels nor does the
seller have a history of frequent, regular and repeated sales of boats or vessels. In addition, the
seller purchased the boat or vessel for his own use. However, the boat or vessel is not titled and
has been relocated to the brokers’ lot so that it may be viewed there by interested buyers. Under
these circumstances, it is presumed the broker has taken ownership of the boat or vessel because
the seller has transferred possession of the boat or vessel from him/herself to the broker in
exchange for payment-consideration-either beforehand or on the condition that the broker find a
willing buyer. As such, the broker has become the seller of the boat or vessel and the transaction
will not qualify for the isolated or occasional sale exclusion.
Conclusion:
The use of a broker will not necessarily disqualify a transaction from qualifying as an isolated or
occasional sale as long as the seller meets the following criteria: 1.) the seller does not hold
him/herself out to be engaged in the business of selling boat or vessels; 2.) the seller does not
have a history of frequent, regular and repeated sales of boats or vessels; 3.) the seller maintains
title, if the boat or vessel is titled, or possession, if the boat or vessel is not titled; and 4.) the
seller purchased the boat or vessel for his/her own use. Further, to qualify a transaction as an
isolated or occasional sale under the provisions of La. R.S. 47:301(10)(c)(ii)(bb), a buyer must
submit documentation, such as a cancelled check from the seller to buyer and a bill of sale
indicating title is being transferred or the prior owner’s certificate of registration showing his or
her transfer of ownership to the buyer.
Tim Barfield
Secretary

A Revenue Ruling is issued under the authority of LAC 61III.101 (C). A Revenue Ruling is written to provide
guidance to the public and to Department of Revenue employees. It is a written statement issued to apply principles
of law to a specific set of facts. A Revenue Ruling does not have the force and effect of law and is not binding on
the public. It is a statement of the department's position and is binding on the department until superseded or
modified by a subsequent change in statute, regulation, declaratory ruling, or court decision.