Montana LLC Pros and Cons

[Rhodesfree2roam]

My husband and I just ordered our new 2009 bus we are expecting delivery in late June. The saleman we are working with said we may want to register it in Montana under a LLC for sales tax purposes. Does any one have any recomendations on the pros and cons of doing this. Thanks for your help look forward to seeing you on the road.

[Rhodesfree2roam]

My husband and I just ordered our new 2009 bus we are expecting delivery in late June. The saleman we are working with said we may want to register it in Montana under a LLC for sales tax purposes. Does any one have any recomendations on the pros and cons of doing this. Thanks for your help look forward to seeing you on the road.

[Rick_CO]

Some states take a dim view of this and have pursued people doing this, so be sure you won't wind up in the worst of both worlds. The potential "savings" is attractive but taxes and penalties aren't.
Make sure you talk with someone (other than the salesperson) who knows what they are talking about relative to your situation.
Good luck!

[alpinerver]

Check w/ Bennett Law in Missoula, they have info on all states and are real square shooters. Larry

[LindaH]

<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">Originally posted by alpinerver:
Check w/ Bennett Law in Missoula, </div></BLOCKQUOTE>
http://www.bennettlawofficepc.com/

[Gary RVRoamer]

There is only one significant pro - the savings in sales tax dollars. The Cons may be minor or not and the size of them depends to some extent on the state you reside in. Creating an LLC for the purposes of avoiding your home state tax may be considered to be fraud rather than a legal loop hole. A few states have hassled LLC owners while others have pretty much ignored the issue. Other cons, which may or may not be minor to you, include: (1) your motorhome has to be titled and registered by the LLC in Montana too, (2) some insurers will consider the LLC-owned RV to be a business use and will either not insure or charge business rates, (3) if you bring it to your home and park it for very long your home state may get on your case for local license plates (usually required after 30 days) or for having an out of state vehicle stored on your property, or for having a commercial vehicle at your home, (4) states like Californian will consider your rig commercial and insist that you have an IFTA fuel tax certificate.

[RustyJC]

If you use the Find function in the toolbar at the top of this thread and enter "Montana LLC", you'll find days of reading material.

Rusty

[LindaH]

<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">Originally posted by RV Roamer:
Creating an LLC for the purposes of avoiding your home state tax may be considered to be fraud rather than a legal loop hole. ... (3) if you bring it to your home and park it for very long your home state may get on your case for local license plates </div></BLOCKQUOTE>
RV Roamer summarized the pros and cons of the Montana LLC, and I only wanted to emphasize a point.

Many fulltimers use the Montana LLC because they don't spend any significant amount of time in their domicile state. It's not clear whether or not you are a fulltimer, though. If not, I think you may want to forget the Montana LLC for the reasons RV Roamer enumerated, particularly having your home state go after you for tax evasion.

You would do well to take the advice of others here and consult an attorney -- not only one in Montana, but also one in your home state and learn all the legal ramifications before taking this step. It may be cheaper in the long run just to pay the sales tax in your home state.

[GaryKD]

Hi Rhodes,
Welcome to iRV2. As a fellow FLoridian I can say to you that you are in luck. The Florida rules are:
1. you must take delivery out of the state
2. the vehicle can not come into FLorida for 6 months and one day from the delivery date.
3. If caught violating either of these rules Florida will prosecute you to the fullest extent of Florida law. And that is costly. The state has been known to subpoena dealer records to prove a vehicle was delivered in the state or has been in the state prior to the six months and one day.

What I will do with my next coach is Montana LLC it. I will take delivery out of the state and obey the 6 months and one day rule (for me it's no problem). I will then bring to coach into Florida and get a Florida title and tag (no sales tax due). I will keep the LLC alive only if it is an advantage for me. Otherwise I will let it expire after one year.

This means the business case is something you need to determine. Sales tax savings - LLC costs and any additional costs for keeping the coach out of Florida for the required time.

With the sales price over $500K there seems to be a considerable net savings.

[cb5300]

I would like to know if Gary actually knows of anybody first hand that has been hassled by a state over a LLC? I hear things like this yet can never find anybody that actually has been.

While some insurance companies might try to charge LLC's a business rate (I don't know of one that does)then just shop aroundand find one that doesn't. National Interstate doesn't do that neither does Farmer's Insurance, nor any others that I looked at when I was shopping. You must of course have your vehicles insured in the state that they are registered in.

The only problem I have found with the LLC is that you may have some problems getting your RV financed. Some banks don't like to deal with the LLCs, however the attorney that I use had a list of places that would, also the RV dealer I used had a list. I had plenty to look at and shop for the best rate.

One thing you need to remember..the LLC is a contract between you and the state that the LLC is formed and therefore protected and must be honored by all other states.

Now with all of that being said I'm not a full timer, I have to work, and I own a couple of business. I have ran my LLC by my company attorney, and my personel attorney, and all agree that it's legal. I use Bennett in Montana to set up the LLC.

Do your homework and see if it will work for you, I did and it's a great thing.

[GaryKD]

Charles,
No, I do not personally know anyone who has had Florida invoke Florida law. The largest Newmar dealer, in the country, is where I buy and have the coach service. I trust these people. I have talked with the owners on many occasions. I can tell you every quarter of the year they are complying with court subpoenas for records about customers. To them, based on their knowledge of the sale, the purpose of the subpoenas is to collect sales tax. They have received feed back, from some of these customers, as to the cost of getting caught. I sincerely hope this closes the inferred doubt in your post as to Florida's vigilance in this matter.

[Route 66]

A friend was sales manager at a Florida RV dealer, and before state's crackdown, they used to help customers with Montana LLCs. No more.

[Rhodesfree2roam]

Hello Fellow RV'Rs
Just wanted to say a big THANKS to all!! I contacted the Fla sales tax dept. and found out that it is legal for us to purchase the RV in fla and register it in Mt. under a LLC and not pay fla sales tax. We must leave fla no later than 45-days after purchase and cannot return for 6-months. Also you should get a IFTA Fuel Tax Cert. for the state of CA. CA law reads that all LLC are considered a business and their for Certifate is required. All other states don't as long as the registration reads LLC Recreation not Commercial! The certificates can be purchased at: Motor Carrier Section MIC:6 , State Board of Equalization, PO Box 942879, Sacramento, CA 94279-0065 for the fee of $30 well worth it to be legal. Thanks again for all the info you all helped us to research and ask the right questions. Hope to see you all on the road some day. Debbie

[brucedelta]

<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">Originally posted by GaryKD:
What I will do with my next coach is Montana LLC it. I will take delivery out of the state and obey the 6 months and one day rule (for me it's no problem). I will then bring to coach into Florida and get a Florida title and tag (no sales tax due). I will keep the LLC alive only if it is an advantage for me. Otherwise I will let it expire after one year. </div></BLOCKQUOTE>

Gary,
I seriously question if this scheme would work because when you tittle it in MT you will do so in the LLC name. When you go to change the registration you will move it from the LLC name to your personal name. From a registration point of view this is no different from you purchasing a used coach from a stranger and thus tax will be due by you, the new owner.

Texas also has the 6 mo rule, and why would anyone keep it in a LLC name if this scheme could work.

I know in NJ when I wanted to move a vehicle from an LLC I owned to my own name so I would no longer have commercial tags, the state considered it a taxable event even though I paid tax when the LLC bought it originally. So I think you better check further on your plan, but I don't believe it is workable.

-- Bruce