Registering Your Coach In Montana Just Got More Expensive

[nebster]

Originally Posted by Stuart W

Ok now you are purchasing vehicle insurance with the representation that it is stored at a location that is not, rated to drive in an area it’s not driven and you get in an accident or it gets stolen. And the insurance company finds out.

If you misrepresent the facts regarding your RV, yes, the insurance company could certainly use that as a justification to avoid paying a claim.

However, there are several insurance companies that will write an RV policy for MT LLC-held RVs that are not garaged in MT, and for those that are used both full-time and part-time. There are lots of these coaches, and the insurers in these cases clearly understand what they are underwriting. I know because I have secured several of these policies over the years and have gotten the agents to confirm this understanding, in writing, beforehand.

If you think about it, it's not as if the garaging location for a high-end coach (the only kind that really make financial sense to mess with the LLC in the first place) that is used to travel all over the country has much impact on the underlying risk. Indeed, these coaches tend to be well-cared-for and driven very safely for relatively small amounts of mileage anyway. The exposure is pretty well understood.

[ghaynes754]

It's getting so strange these days. Wyoming just notified the concession operator at Yellowstone Natl Park that any of their seasonal employees will need to pay a $50 per month permit fee for their vehicles. And that it they are working in the Wyoming part of the park for more than 4 months will need to also register their vehicle and get Wyoming plates.

Yellowstone's summer workers will soon have to buy temporary per - KULR8.com | News, Weather & Sports in Billings, Montana

[joes2901]

Was that a Wyoming state or Park County ruling?

[Stuart W]

Originally Posted by nebster

If you misrepresent the facts regarding your RV, yes, the insurance company could certainly use that as a justification to avoid paying a claim.

However, there are several insurance companies that will write an RV policy for MT LLC-held RVs that are not garaged in MT, and for those that are used both full-time and part-time. There are lots of these coaches, and the insurers in these cases clearly understand what they are underwriting. I know because I have secured several of these policies over the years and have gotten the agents to confirm this understanding, in writing, beforehand.

If you think about it, it's not as if the garaging location for a high-end coach (the only kind that really make financial sense to mess with the LLC in the first place) that is used to travel all over the country has much impact on the underlying risk. Indeed, these coaches tend to be well-cared-for and driven very safely for relatively small amounts of mileage anyway. The exposure is pretty well understood.

Is having your insurance policy basically state that you are working the system, subject to discovery in state legal proceedings. After all you will be in Possession of a document that states you are registered in one state but parking it in another. Again if you don’t have any sticks and bricks, not working and moving around all of the time, I’m sure your odds are better to get away with it.

[RVPioneer]

Originally Posted by Mr_D

Oregon does have an income tax though. I paid it while I lived in WA and worked in Portland. Not sure why but the forms requied all family income to be reported, even though earned completely out of state, then deducted out.

Yep. And property tax. I have a friend in NH where there is no sales or income tax, property tax is astronomical. They're going to get you one way or another, some get you every way and then some.

I trust your accountant worked things out for you since WA has no income tax?

[RVPioneer]

Originally Posted by BRex45

RV Pioneer, unfortunately the Oregon legislature passed a new vehicle registration law that took effect the first of 2018.

Buying and registering a Moho in OR could cost you 1.0% as a privilege tax. This new tax affects just about anything a person could buy if it weighs less than 26,000 lbs
That can add up fast depending on how much $ you spend. A 1.0% tax this year is just a start IMO.

refer to OR HB2017

Yes, I believe that was posted earlier. Fortunately, as John Cleese once said "I already got one." If I do get another it will either be over 26K or have at least 7500 miles so per the current law, not subject to the tax. Seems they're targeting the lower end of the MH world. Maybe because Marathon and REV are in Coburg? Or maybe they're smoking something.

One thing is for sure, 1% is better than 9%.

[RVPioneer]

Originally Posted by tnedator

When I researched it with legal experts for my cousin for the Renegade Ikon he was purchasing, that's what I shared with him. He's in a southern state, but they were also apparently also actively looking for the out of state plates in his state. He opted not to once he fully understood all factors.

It seems Orwell was on to something.

[nebster]

Originally Posted by Stuart W

Is having your insurance policy basically state that you are working the system, subject to discovery in state legal proceedings.
After all you will be in Possession of a document that states you are registered in one state but parking it in another.

No, also incorrect.

One insurer I used does not capture an address where the RV is parked with a full-timer's policy. The other insurer used the address of the LLC as the "garaged location" but clarified, in writing, that that was a placeholder value that was needed simply to shoehorn the policy into their policy management software and that it was NOT a requirement that the vehicle ever sit in a garage or parking spot in that location.

Again if you don’t have any sticks and bricks, not working and moving around all of the time, I’m sure your odds are better to get away with it.

There's no "getting away with" anything, in the right scenarios. In mine, specifically, I was working, not moving around all of the time, I had a sticks and bricks home, I was fully insured, and I did not owe property tax to my state of residence on an RV purchased and used in other states.

My point is, you're taking your moralism and applying it with too broad a brush. The precise circumstances are very important, and your blanket statements are objectively incorrect in light of the real laws, rules, and market offerings.

Is it possible to commit fraud and/or evade taxes? Sure. Is it possible to be well-intentioned but screw it up and still owe taxes? Also, sure. But in the right situations, it's neither of those. Moreover, it's incumbent upon the individual to minimize his or her tax liability, should he or she choose. Some would also say it's downright patriotic, but one's feelings are largely irrelevant when it comes to abiding by the law.

[Coarsegold]

Your still cheaper than here in the peoples republic of Kalifornia.

[nothermark]

Originally Posted by nebster

This is objectively not true.

For example, we lived in Colorado and purchased a motorhome exclusively for travel around the country. We put the RV in a MT LLC, purchased it in another state, and kept it out of Colorado, save for only a few weeks a year when passing through to a total of less than 30 days.

At least in that state, the rules for paying registration fees and other taxes are very specific about the requirements for how long the vehicle is present in the state.

There are quite a few other scenarios where your statement also is incorrect; this is but one example.

Not really. You are a resident of of Colorado but using the LLC to avoid Colorado taxes. In your case you did it legally by following the states rules. It's clear that all the states have ways to do that. The only interesting bit is that Colorado lets you visit for 30 days. Some states are not so generous. The real issue is folks who get a Colorado LLC then expect to bring the RV into their state and keep it there.

[nebster]

I only waded into this debate to attempt to correct some of the factually-inaccurate statements. Your first sentence is another one:

Originally Posted by nothermark

Not really. You are a resident of of Colorado but using the LLC to avoid Colorado taxes. In your case you did it legally by following the states rules. It's clear that all the states have ways to do that.

If you go back and look at the post I quoted when I wrote mine, you can see that the author stated it was unequivocally tax evasion. Tax evasion is illegal. What I did -- and others have done, though of course most are not posting here -- was not evasion.

That is why what he wrote is objectively not true. Really -- not, not really.

The only interesting bit is that Colorado lets you visit for 30 days. Some states are not so generous.

Yes, every state can be different, and a taxing authority's stance or willingness to pursue could change over time. Also, longer intermittent visits have not been tested in a Colorado tax court as far as anyone I consulted with is aware, so it may be okay to be in the state for a higher number of days, but probably not contiguously. The attorneys I spoke with feel that sub-30 days is defensible based on precedent in other vehicle tax cases (namely, airplanes).

The real issue is folks who get a Colorado LLC then expect to bring the RV into their state and keep it there.

That's absolutely right, and you could substitute almost any state in that sentence, really.

[Hit_the_Rhod]

Originally Posted by Mr_D

Oregon does have an income tax though. I paid it while I lived in WA and worked in Portland. Not sure why but the forms requied all family income to be reported, even though earned completely out of state, then deducted out.

Here's as it was explained to me. The reason that many states want all family income reported, even if earned out of state, is that although they won't tax you on that income per se, they will use it to establish your tax bracket. Doesn't apply to ALL states with income tax, but some.

Example, you make 100k taxable income in one state, 50k in 2nd state. 2nd state can't tax the 100k, but they can use it to establish that you are in the 150k tax bracket, then they can tax the 50k at a 150k TAX RATE that is higher than the 50k rate. Even though they only tax the 50k, they do it at the higher RATE, therefore, you pay more taxes . . .

[RVPioneer]

Originally Posted by Stuart W

So if it’s over 26,000 lbs it does not apply?

While I have not read the text of the bill, the answer to your question appears to be "Yes" based on published summaries and a FAQ document provided by the State. It is a vehicle tax on the purchase of any new vehicle up to 26,000lbs. Ironically, however very typical, the funds from the new .5% tax will be used to fund subsidies for buyers of electric and hybrid cars. To add to the irony, the electric and hybrid cars will be charged addition registration fees based on the vehicles rated MPG. The better the mileage the higher the tax. So they get money up front and then pay extra fees because they are not buying fuel and paying the fuel tax. Wait, I know a harder way.

That portion of the bill, the .5% tax, is currently under litigation from AAA of Oregon and Idaho and the Oregon Truckers Association. They claim it violates the State Constitution based on a law passed in 1980 that said all vehicle taxes must be used for road improvements. Who knew?

[wnytaxman]

Originally Posted by Hit_the_Rhod

Here's as it was explained to me. The reason that many states want all family income reported, even if earned out of state, is that although they won't tax you on that income per se, they will use it to establish your tax bracket. Doesn't apply to ALL states with income tax, but some.

Example, you make 100k taxable income in one state, 50k in 2nd state. 2nd state can't tax the 100k, but they can use it to establish that you are in the 150k tax bracket, then they can tax the 50k at a 150k TAX RATE that is higher than the 50k rate. Even though they only tax the 50k, they do it at the higher RATE, therefore, you pay more taxes . . .

Scot, not meaning to stray completely off topic, but I did want to comment on your post. I know of no state, and we do returns in about 27 states, that requires you to report ALL family income. If you are filing jointly on the federal then most, but not all, states will require you to file jointly on the state return also. States require you to report and pay taxes on money earned both in and out of your resident state so that they get their pound of flesh for you to have the "privilege" of living in that particular state. All states that have income taxes will tax you on money earned in the state. Surprisingly that can be a contentious issue because of the definition of earned. If I retire from a business in NY but move to Alabama should I be paying taxes on that retirement from NY in NY? It gets to be an interesting and frustrating discussion at times.

As to the Montana LLC, using one is not tax evasion if the owner of the LLC complies with the laws of their state. It's no more tax evasion than taking a deduction for sales tax or RV interest on your federal taxes. The law allows it so it is not tax evasion.