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Old 03-01-2011, 04:07 PM   #99
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The massachusetts thing was an interesting read...
Wonder why they failed to mention under what law they were going after these people?
Jim, the two primary ways that states pursue their case are:

1) That the LLC's sole purpose is to avoid paying sales taxes. Going back to Gregory v. Helvering ( Gregory v. Helvering - Wikipedia, the free encyclopedia ) there is precedent that a corporation must have a legitimate business purpose; that creating a corporate structure for the single and sole purpose of avoiding tax liability is not legitimate.

2) Collection of use taxes. In this case, the first point is not debated at all. Instead, the state simply takes the position that use tax is owed for the time the motorhome is being rented/leased to the state resident.

The third method (which is generally not of interest to state tax boards) would be to address the taxable income of the resident who has a company vehicle available for personal use.

There may be other state-specific laws that can be pursued, but in 99% of all cases the two primary points listed are all that is required since no matter which way the state resident decides to argue, they fall afoul or one or the other.

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Old 03-01-2011, 05:13 PM   #100
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As best I can tell, the reference to Gregory v. Helvering is for Federal Income Tax purposes. A state would need to have a law on the books to prohibit the same activity mentioned in the Gregory v. Helvering case.

Usually, the easiest way for a state to collect sales tax is to ensure the DMV registration requirements for residents of the state is so strict one could not consider a LLC from another state. In states like this about the only way to make an LLC purchase, for a coach, is to ensure the coach does not spend time in the state of residence.
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Old 03-01-2011, 06:00 PM   #101
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Key statement Gary is "coach does not spend time in the state of residence". It would be like trying to collect taxes from you in MA if you owned a house and property in FL or MT or anywhere else.

From what others have said in this thread some states are looking for RVs in the drive way and investigating and/or taking note of how many days.

My question is can you not bring a RV into your state of residence for a period of time without having to worry about paying a prorated tax?

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Old 03-01-2011, 06:04 PM   #102
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Hi denochs,
It all depends on the state. In Florida, the time limit is 5 months and 29 days in a calendar year. If it can be proven the coach was in the state for a longer period in a single calendar year, it will need Florida tags.

One needs to research the law of the state one resides in.
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Old 03-01-2011, 07:45 PM   #103
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As best I can tell, the reference to Gregory v. Helvering is for Federal Income Tax purposes. A state would need to have a law on the books to prohibit the same activity mentioned in the Gregory v. Helvering case.
If there were no further case law since 1935, you might have an angle, but the truth is that in many (if not all) states there's actually a bunch of additional cases that close all the various loopholes.

Again, I urge people to speak with local counsel, but generally speaking, an LLC formed in another state which solely acquires a depreciating asset (a motorhome) to let some other entity use and decrease the value of that asset is not a strong argument to make (and in many states, unlike criminal law, when it comes to taxes, a resident is in fact "guilty until proven innocent" and must convince the administrator or judge why the state's tax assessment is not correct).

And even if you do convince the administrator of the validity of the LLC, you then have to run the use and income tax gauntlets.

All that said, I'd love to hear from folks that have successfully run the gauntlet and beaten a tax assessment case on their LLC-registered RV.

Steve
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Old 03-01-2011, 08:04 PM   #104
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I'm sure the LLC thing works great for many folks who do not store or operate the RV in their state of residence. But here in beautiful California, if the vehicle is in the state for 10 days, we want you to register it here. I want you to register it here, if you're using the amenities I pay for with my 16 vehicles' registration fees. My next door neighbor, (a member of a very well known rock band that took a break for 14 years and now goes on endless farewell tours...) has a place in Jackson, Idaho as well. He got busted in CA for having ID plates on his car, even though his drivers license, insurance, etc. are from Idaho.

No problem with having an LLC own your vehicles in another state, but expect scrutiny if you store or use them for any length of time where you really live...
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Old 03-01-2011, 08:12 PM   #105
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. My next door neighbor, (a member of a very well known rock band that took a break for 14 years and now goes on endless farewell tours...) has a place in Jackson, Idaho as well. He got busted in CA for having ID plates on his car, even though his drivers license, insurance, etc. are from Idaho.

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Inquiring minds want to know..... Glenn Frey or Joe Walsh?
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Old 03-01-2011, 08:36 PM   #106
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Old 03-01-2011, 10:11 PM   #107
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Old 03-02-2011, 02:40 AM   #108
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Old 03-02-2011, 06:47 AM   #109
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Hi denochs,
It all depends on the state. In Florida, the time limit is 5 months and 29 days in a calendar year. If it can be proven the coach was in the state for a longer period in a single calendar year, it will need Florida tags.

One needs to research the law of the state one resides in.
Illinois also requires vehicles stored or used within the state to be registered in the state and to carry Illinois license plates. I'm not sure what the time limit is, shorter than florida but more than 10 days.

But our registration fee's and license plate renewals are still dirt cheap.

Sales tax is another story. Taxed even on private sales. Dealer sales (from anywhere) taxed at 7% (ouch)

My plan would be to purchase and title the rv in the montana LLC, and after a period of time, transfer the registration to Illinois. Since no transfer of ownership will take place, I don't expect any "SALES TAX" will be due.
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Old 03-02-2011, 07:45 AM   #110
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I gave this LLC thing a thought.... once. Has anyone considered the true cost to state governments by this form of 'tax cheating'? If the numbers are correct, 45 states are broke or going broke and some sales tax revenues from the residence sure would have helped avert that. I don't like taxes any more than anyone else, but is it REALLY worth it to save a few thousand dollars at purchase time when it may cost you much more later? Not to mention the time it takes to try and talk yourself out the mess you have gotten in to.
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Old 03-02-2011, 08:56 AM   #111
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First year registration here is common at $3,000 and up for a MH that costs under $150,000. Sales tax is now 9.1, but we still feel better not fooling with an LLC and maybe having legal problems down the road. We just sleep better. Happy trails, Joe
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Old 03-02-2011, 05:07 PM   #112
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I'll bet the people that talk against forming an LLC pays list price for a new car so they can pay the taxes on it. ( OH and they figure they collect sales tax on a new car at least 5 times over the age of the car.)
If someone paid sales tax on the RV when it was new and they repo it in 6 months do you think the next owner should pay the tax again?

Somebody please close this thread.
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