I asked Lee Parks at US Sailing, and the answer is kind of complicated.

ISAF International and Recognized Classes are required to have the country code designation on the sail at all times and in all countries.

At the Olympic level the country code must be the country in which you hold citizenship. Below the Olympic level, it can be the country in which you are a resident (if you are living in a country other than where you hold citizenship and if you are representing your resident country in international events).

In practice, at least in the United States, even ISAF Class boats often do not have the country designation on their sails if they are not competing internationally.

There is no rule prohibiting non-ISAF classes (or individual sailors) from having a country code on their sails if they wish.

The country code is not related to the sail number itself. For boats with class associations, the class association of each country assigns sail numbers to boats in its country. So, for instance, you can have boats in different countries with the same sail number.

In the case of some classes, like the Laser, which is controlled by an international organization, there is only one sequence of numbers throughout the world, so every number is unique, which is why the Lasers have such long numbers. (And the Laser is also one of a few classes that are exempt from having to display the country code, despite being an ISAF class, because there simply isn’t room for it with those long numbers.)

It gets more complicated if you have dual citizenship, or are a citizen of one country and a resident of another, or if you, for instance, import a boat to the United States and it has a number that was assigned to it in a different country.

If you are living and racing in the United States and belong to the U.S. Association of your particular class, I would think you would use a sail number assigned by the class association under which you are racing. And if you use a country code, use the country code that goes with that number.

If you a citizen of New Zealand and move to the United States and bring your boat with you, it might say NZL 100 on the sail. If it is a non-ISAF class, you could just leave it as is. You would not want to remove the "NZL" and replace it with "USA," because there may already be a USA 100.

But, if you want a United States number, you should join the class association in the U.S. and ask them to assign you a new number to use here. And then if you move back to New Zealand and take your boat back with you, you could remove the U.S. number and put the "NZL 100" back on the sail.

I hope all this makes sense.

P.S. I don't know what you would do in the case of a Formula Class within which there are also individual class associations. For instance, would our Taipan 4.9 have one number as a Taipan 4.9 and another number as a Formula 16?