Boat dealer claims sales tax was underpaid

Have you requested a copy of the notice from the state taxing authority? I am guessing you may have purchased the engine in a state other than the one you live in or more importantly the state where that boat is registered and licensed. Taxes are the responsibility of the person who purchases the product. If I bought a car in Connecticut and registered it in new York and the Connecticut dealer calculated a tax underpayment that's my problem. Speak to a tax attorney since I know very little about tax but my educated guess says you will probably owe the registration state whatever they calculate taxes on the fair market value of that engine no matter how great the price you negotiated was unless it's within a reasonable range of what a similar engine sells for.   A common trick would be to pay a fraction of the cost with a cashier's check and the balance in cash and ask the dealer to write a sales price just on the cashier's check amount. New York state civil servants are way too smart to fall for that.