Montana LLC /NKK

[Ecker]

""The purpose of this e-mail is for you to inform any coach owners
> that
> you know might have Montana plates about the ongoing investigation
> in
> AZ, AR, CA, CO, FL, GA, IL, IN, IO, KS, KY, MI, MN, MO, MS, NE, NV,
> NJ, NC OH, SD,TX,UT,WA, WI, and WY. If they are IL residents and
> would like more information, have them call Jason Poling, ROT
> Discovery, IL Dept. of Revenue (217-785-7038).
>
> Julie and I were contacted by the IL Department of Revenue at the
> Region 4 Rally that was held at Double J Campground near
> Springfield. The Dept. of Revenue and IRS agents came to the Park
> to
> see if any coaches had Montana plates. They found some and wanted
> us
> to provide them with the IL NKK membership list. We refused the
> request, but they will seek the information from the Klub and
> possibility from us after the Klub and/or us are served with
> appropriate legal papers.
>
> State Department of revenue agents in 26 states plus Montana have
> been working together to determine individuals who have registered
> their coaches in Montana and own property and/or pay income tax in
> IL
> or one of the other 25 states. Many owners of coaches in the 26
> states have enter into contract with Limited Liability Company in
> Montana to avoid paying sales tax on their coach. Since they own
> property and/or pay income tax in IL or one of the other 25 states
> they most likely will receive letters in indicating they are in
> violation of their state revenue laws. In IL they will receive a
> letter in two or more weeks indicating they will be audited.
>
> Some, but not all states, will allow owners of coaches that are
> deemed in violation to submit an voluntary disclosure before the
> letters are sent. IL is one of the states that wants owners to have
> the opportunity to submit a BOA-2, Application for Voluntary
> Disclosure with a check paying the sales tax on the coach during
> the
> next two weeks. If the form is received in time, the owner will not
> be audited and could be eligible for an abatement of some or all of
> the related penalties on the tax, which run from 15-22%.
>
> We have talked with Jason Poling at the IL Department of Revenue.
> He
> is a very professional person who is willing to provide information
> about the violation and provide assistance in completing the BOA-2
> form. He will send the form by e-mail to anyone who wants it. He
> will not record any telephone conservations and people call do not
> have to provide their name if they so desire.""
>
> Greg Beels, IL
>
>

[Ecker]

""The purpose of this e-mail is for you to inform any coach owners
> that
> you know might have Montana plates about the ongoing investigation
> in
> AZ, AR, CA, CO, FL, GA, IL, IN, IO, KS, KY, MI, MN, MO, MS, NE, NV,
> NJ, NC OH, SD,TX,UT,WA, WI, and WY. If they are IL residents and
> would like more information, have them call Jason Poling, ROT
> Discovery, IL Dept. of Revenue (217-785-7038).
>
> Julie and I were contacted by the IL Department of Revenue at the
> Region 4 Rally that was held at Double J Campground near
> Springfield. The Dept. of Revenue and IRS agents came to the Park
> to
> see if any coaches had Montana plates. They found some and wanted
> us
> to provide them with the IL NKK membership list. We refused the
> request, but they will seek the information from the Klub and
> possibility from us after the Klub and/or us are served with
> appropriate legal papers.
>
> State Department of revenue agents in 26 states plus Montana have
> been working together to determine individuals who have registered
> their coaches in Montana and own property and/or pay income tax in
> IL
> or one of the other 25 states. Many owners of coaches in the 26
> states have enter into contract with Limited Liability Company in
> Montana to avoid paying sales tax on their coach. Since they own
> property and/or pay income tax in IL or one of the other 25 states
> they most likely will receive letters in indicating they are in
> violation of their state revenue laws. In IL they will receive a
> letter in two or more weeks indicating they will be audited.
>
> Some, but not all states, will allow owners of coaches that are
> deemed in violation to submit an voluntary disclosure before the
> letters are sent. IL is one of the states that wants owners to have
> the opportunity to submit a BOA-2, Application for Voluntary
> Disclosure with a check paying the sales tax on the coach during
> the
> next two weeks. If the form is received in time, the owner will not
> be audited and could be eligible for an abatement of some or all of
> the related penalties on the tax, which run from 15-22%.
>
> We have talked with Jason Poling at the IL Department of Revenue.
> He
> is a very professional person who is willing to provide information
> about the violation and provide assistance in completing the BOA-2
> form. He will send the form by e-mail to anyone who wants it. He
> will not record any telephone conservations and people call do not
> have to provide their name if they so desire.""
>
> Greg Beels, IL
>
>

[socal114]

<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">Originally posted by ecker:
""The purpose of this e-mail is for you to inform any coach owners
&gt; that
&gt; you know might have Montana plates about the ongoing investigation
&gt; in
&gt; AZ, AR, CA, CO, FL, GA, IL, IN, IO, KS, KY, MI, MN, MO, MS, NE, NV,
&gt; NJ, NC OH, SD,TX,UT,WA, WI, and WY. If they are IL residents and
&gt; would like more information, have them call Jason Poling, ROT
&gt; Discovery, IL Dept. of Revenue (217-785-7038).
&gt;
&gt; Julie and I were contacted by the IL Department of Revenue at the
&gt; Region 4 Rally that was held at Double J Campground near
&gt; Springfield. The Dept. of Revenue and IRS agents came to the Park
&gt; to
&gt; see if any coaches had Montana plates. They found some and wanted
&gt; us
&gt; to provide them with the IL NKK membership list. We refused the
&gt; request, but they will seek the information from the Klub and
&gt; possibility from us after the Klub and/or us are served with
&gt; appropriate legal papers.
&gt;
&gt; State Department of revenue agents in 26 states plus Montana have
&gt; been working together to determine individuals who have registered
&gt; their coaches in Montana and own property and/or pay income tax in
&gt; IL
&gt; or one of the other 25 states. Many owners of coaches in the 26
&gt; states have enter into contract with Limited Liability Company in
&gt; Montana to avoid paying sales tax on their coach. Since they own
&gt; property and/or pay income tax in IL or one of the other 25 states
&gt; they most likely will receive letters in indicating they are in
&gt; violation of their state revenue laws. In IL they will receive a
&gt; letter in two or more weeks indicating they will be audited.
&gt;
&gt; Some, but not all states, will allow owners of coaches that are
&gt; deemed in violation to submit an voluntary disclosure before the
&gt; letters are sent. IL is one of the states that wants owners to have
&gt; the opportunity to submit a BOA-2, Application for Voluntary
&gt; Disclosure with a check paying the sales tax on the coach during
&gt; the
&gt; next two weeks. If the form is received in time, the owner will not
&gt; be audited and could be eligible for an abatement of some or all of
&gt; the related penalties on the tax, which run from 15-22%.
&gt;
&gt; We have talked with Jason Poling at the IL Department of Revenue.
&gt; He
&gt; is a very professional person who is willing to provide information
&gt; about the violation and provide assistance in completing the BOA-2
&gt; form. He will send the form by e-mail to anyone who wants it. He
&gt; will not record any telephone conservations and people call do not
&gt; have to provide their name if they so desire.""
&gt;
&gt; Greg Beels, IL
&gt;
&gt; </div></BLOCKQUOTE>
OUCH!!! This could get ugly...

[Iron Man]

We didn't go the LLC route. I was under the impression that the LLC in Montana owns the coach. I could see the individual states going after owners but wht the IRS? It seems more of a scare tatic.

[Jetsmania]

<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">It seems more of a scare tatic. </div></BLOCKQUOTE>
Hi! Reminds me of when Directv were after the pirating. Lots of scare tatics, no substance. Lots of people payed up because of fear. I have NJ Plates and payed tax. If you have Montana Plates and are worried about this I would be careful what you say on the forums. Paul

[GaryKD]

A lot depends on your state of residence and the purpose for the LLC. For a Florida resident, one can not bring the coach into the state for 6 months from the date of purchase. If you do, you will get caught. Florida has been getting service records from RV dealerships, attending large rallies, etc.

That being said, after the 6 months is up, one can bring the coach into Florida. This begs the question, why would a Florida resident continue with the Montana tags after the first six months? It makes no sense. Annual registration in Florida is under $100 per year. There are no additional fees.

Now for the math. Florida sales tax, on a coach, averages 6.5% of the sales price. On a $500K purchase that comes to $32.5K in sales tax! Assume it costs a total of about $2K to establish the Montana LLC and get the title, registration and tags. Assume it costs another $5K to rent a CG space (in a nice CG with security) in Georgia or some other close by state for 6 months. I'm not going to bother subtracting the fuel that is not purchased by not taking the coach up and down the long State of Florida. After the six months is up, bring the coach into Florida. One can retain the Montana tags or reregister the coach with Florida (no sales tax due). Rounding up, it seems the cost of this adventure is under $10K. This means an approximate savings of $22.5K.

To me, the solution is for Florida and other states to stop ripping off RV buyers (boats too). The states need to determine a tax that is fair and reasonable. History has shown when government becomes unfair and unreasonable the citizens make ways to do what is fair and reasonable. Large purchases need to be treated differently that the every day purchases.

[Aridon]

You are forgetting the use tax that states have. If you didn't pay sales tax in State A and bring your unit to Florida or any other state with a use tax you will pay the difference in tax between the two.

So State A buy RV at 200k no sales tax

Move to floria 6 months later or whenever

You will pay the difference on the blue book value of the vehicle as determined by the DMV at the sales tax rate in florida 6% +$25 for the county i'm in now less any discount for taxes paid in the other state.

[Jetsmania]

Hi! In NJ we paid 7%. With no disrespect intended, was the person who wrote this article someone that any of us know?? Is this a true article or an internet story? Paul

[Tom N]

Gary, how do you propose transferring the title from the LLC to the individual without paying sales tax in FL??? This would be a sale.

In '05 I investigated FL and MT. Taking "internet" advise I tried to register in Citrus Co., FL after the coach was 6 months old but FL wanted 6% sales tax because I had never registered the new coach in ANY state, thus NO sales tax was ever paid. I was driving it for 9 months on an intransit permit from NY. After FL told me they wanted 6% tax I decided to consult with my attorney and financial adviser. They both advised I register in my home state of PA because of lower insurance rates and estate complications created with an LLC.

[Lug_Nut]

It could be worse, you might live up here. It's 14% tax on nearly everything including vehicles. That's $70,000 for the 500k example. I paid the 14%. I spent too much time working for this life to have to look over my shoulder.

Peter

[GaryKD]

Aridon,
I can only speak for Florida. I have brought vehicles (cars) into Florida after owning them for more than 6 months. There was no additional tax to pay. The transfer was simple and straight forward.

[GaryKD]

Tom N,

I also looked into this, at length, when I purchased my signature coach. At that time I was too busy with my businesses to bother with all the details.

My OP did not mention setting up an LLC in Florida. One could do that and just be moving one's business from Montana to Florida. I rounded up several K dollars. The numbers still remain close to what was mentioned in my OP. My OP also did not mention sales tax is deductable on the Federal Income tax return. Florida residents have no state ioncome tax. This means Florida residents gain some of the sales tax back with a reduction of their Federal Income tax.

One could also leave the Montana LLC valid and drive with Montana tags. After six months one can bring the coach into Florida.

One could also become a Montana resident long enough to make the purchase.

There are many ways to not be treated unfairly based on where one lives. The action taken depends upon many individual decisions.

I do not know the details of "selling" a LLC asset to the individual owner. The rules may be different, by state.

Each person must make these decisions for themselves. This would be based on their particular state of residence and individual situation. I do not want to get into the moral implications of doing this. My OP was intended to show there is a huge incentive based on unfair taxation. It is the unfair taxation that drives these discussions. If the amounts were smaller, people might not like it, but pay anyway because the amount is not worth the time/work/risk. The problem arises when taxation is not equitable (from state to state). People feel they are getting the short end of the stick.

The bottom line is what ended my OP. States need to be reasonable and equitable in the taxation of their residents.

[Ecker]

<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">Originally posted by GaryKD:
Aridon,
I can only speak for Florida. I have brought vehicles (cars) into Florida after owning them for more than 6 months. There was no additional tax to pay. The transfer was simple and straight forward. </div></BLOCKQUOTE>

I agree. I have registered several there.

[Dav5942]

Have also heard of people putting their LLC in their trust acccount, then after six months transferred to their trust account in FL with no sales tax required.