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John Kerry Takes on Water Over Yacht Controversy

"Isabel," the 76-foot yacht owned by Democratic Sen. John Kerry of Massachusetts, undergoing repairs in Portsmouth, R.I., July 23, 2010. AP

Updated 5:03 p.m. Eastern Time

Massachusetts Sen. John Kerry has ridden into a storm of controversy tied to revelations last week that the senator registered his new yacht in Rhode Island, not Massachusetts, potentially saving him some $500,000 in taxes.

The Boston Herald kicked off the debate Friday, speculating that the Democratic senator's decision to register his boat out of state may have been to skip out on paying Massachusetts taxes.

The Boston Globe reports that according to the Massachusetts Department of Revenue, the state's tax code stipulates that if a resident purchases property, including a yacht, out of state and keeps it there for six months, the state will not impose its sales tax on the item. This means the senator could stand to avoid a $437,500 one-time sales tax and $70,000 in an annual excise tax.

Kerry says that the decision was not made for tax purposes, but simply because the boat is undergoing maintenance in Rhode Island.

Speaking with reporters yesterday, he said, "It's under warranty down there," adding: "It's being worked on and it will come to Massachusetts and I look forward to that." He didn't specify when that would be.

His spokesman also told the Globe that the senator will pay any and all taxes that he owes on the yacht.

"Whatever the Department of Revenue determines that he owes in Massachusetts taxes, he will pay,'' Brigid O'Rourke told the Globe last night. "He will absolutely pay any and all taxes that he is found to owe.''

The Department of Revenue said that if Kerry brings his boat to Massachusetts after six months, it would review the matter and determine whether taxes will be imposed.

UPDATE: Kerry said in a statement to the Associated Press late Tuesday that he has informed the Massachusetts Department of Revenue he will "promptly" pay taxes on the yacht as though it were based in his home state.

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