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Old 05-02-2016, 06:23 PM   #43
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Montana LLC

I chatted with a fellow at the dump station couple weeks back. I was admiring his dp and we got to talking...he was from Illinois but the rig had Montana plates. He set up llc and said the attorneys did everything. Another thing I noticed while at fort wilderness a month ago is either a LOT of folks from Montana with big dp's visit Disneyland, or more people than one might think use the Montana llc...I bet I saw at least 15 dp's with Montana plates....

I might need to check into the va laws as personal property taxes on a dp will be about 8k per year here (ouch).
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Old 05-02-2016, 06:29 PM   #44
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But when you go to register the vehicle they charge the sales tax if you bought in another state and register it in a state that charges sales/use tax.. We bought the Magna in OR, a non sales tax state. But when we registered it in WA we paid the over $25,000 use tax to WA to register it. Glad that was on a used vehicle, I would hate to pay it on a new rig like ours.
Its the use tax that is why most states watch for the Montana LLC. Here in CA, if you are a CA resident, you can get around this if you can prove that you have owned the vehicle beyond a set time period (I think its 12 months) outside the state of CA and that during that time the vehicle never entered the state, with very, very minimal exceptions (brought into state for repair and promptly removed I believe is an exception). But good luck proving that. Because even if you can, CA has a tendency to go deaf and force you to pay regardless. Once you pass the required anniversary date, you can bring the coach in to CA and register it here without paying a sales/use tax.

Even if you buy a vehicle outside of CA as a resident and bring it back with the intention of paying tax...if the state you bought it from had a lower sales/use tax rate, CA will charge you the difference when you register the vehicle.
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Old 05-02-2016, 07:52 PM   #45
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Each state has their own individual laws and regulations. I have one client who got caught with the Montana LLC and it cost him. I have another that went for quite a few years with Oregon plates on a $2 million rig that rarely left NY. Client number 2 just never got caught.

What works for SD may not work for CA or MA, but may work for GA and so on. It comes down to what I have posted every time this subject comes up. Find out the laws of your state and see if you can comply with them and you can document that compliance. If you can then the Montana LLC may be for you. If not then you are taking your chances and it may cost you in the future.
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Old 05-02-2016, 08:04 PM   #46
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Its the use tax that is why most states watch for the Montana LLC. Here in CA, if you are a CA resident, you can get around this if you can prove that you have owned the vehicle beyond a set time period (I think its 12 months) outside the state of CA and that during that time the vehicle never entered the state, with very, very minimal exceptions (brought into state for repair and promptly removed I believe is an exception). But good luck proving that. Because even if you can, CA has a tendency to go deaf and force you to pay regardless. Once you pass the required anniversary date, you can bring the coach in to CA and register it here without paying a sales/use tax.

Even if you buy a vehicle outside of CA as a resident and bring it back with the intention of paying tax...if the state you bought it from had a lower sales/use tax rate, CA will charge you the difference when you register the vehicle.
WA used to allow that but it was 12 months as I remember. Now there is NO exemption for an RV, not even if just moving into the state. Plus they don't go by your contract price. They use an outside evaluation service, which for some reason ($$) seems to run higher than actual price.
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Old 05-03-2016, 07:29 AM   #47
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Use tax and sales tax are the same thing. Almost every state that has a sales tax also piggybacks a use tax provision. Most state tax returns now have a line item for taxpayers to voluntarily report their internet and out of state purchases so that the state can collect taxes that weren't collected at the source. The only difference between use tax and sales tax is the sales tax is collected by the vendor and the use tax is voluntarily paid by the purchaser of the item.

The only state I know of that uses a different mode is Arizona which actually levies a tax on the seller which would seem like a sales tax, but if you buy a rig in Arizona and then bring it home to register it, you'll find that you do not get credit for the tax you paid in Arizona because it is not technically a sales tax.

For those that feel that anyone who has a Montana LLC is a scofflaw, that is not the case. If the owner of the Montana LLC complies with their state's laws then they have done nothing wrong. We have about 1,300 personal tax clients and about 300 businesses and I've never once had a client say to me, "Please let me pay more in taxes than I owe." The key is compliance and documentation.
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Old 05-03-2016, 04:01 PM   #48
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So what "Laws" exactly are we talking about complying with? Vehicle registration laws?
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Old 05-03-2016, 04:20 PM   #49
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Wnytaxman, when I bought mine in AZ and then registered it in CA I received credit for the amount of tax I paid in AZ and just had to pay the rest to CA.
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Old 05-03-2016, 06:28 PM   #50
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So what "Laws" exactly are we talking about complying with? Vehicle registration laws?

wnytaxman
will likely be able to provide a more comprehensive answer, but in general, yes... vehicle registration laws, insurance laws and regulations, laws and regulations pertaining to tax-haven states and the LLC entities formed within them as well as generalizing about the "corporate veil" that protects the personal assets of LLC owners (as well as other types of corporations) from litigation targeting the LLC.

And, speaking of wnytaxman, he said: "For those that feel that anyone who has a Montana LLC is a scofflaw, that is not the case. If the owner of the Montana LLC complies with their state's laws then they have done nothing wrong."

I agree completely. I have owned several LLC's sheltered in different states - though only for business purposes, not for RV's - and I have never cheated anyone nor any state out of anything I legitimately owed them. These laws and regulations were written and enacted by our elected and appointed lawmakers, not by deadbeat, tax-dodging low-lifes. As such, they're perfectly legal and acceptable to use to your own advantage.

Is a Roth IRA cheating? Is a home mortgage tax deduction cheating? If you buy a new RV in the state of Nevada, for instance, the sales tax can be astronomical, but buying a used RV from a private party in that very same state means zero sales tax. None. Nada. Zilch. Did I somehow cheat anyone out of anything by doing just that... buying a used RV from a private party? No, of course not. The lawmakers wrote the tax law that way, I simply took full legal advantage of it. Opening an LLC in a tax-haven state is no different.

The real problem comes when people think they can open an LLC, register their RV, pocket the tax savings and that's that. Depending on which state you open an LLC in, they can range anywhere from being a pain in the butt to being virtually impossible to run without a team of lawyers and accountants on payroll. "Compliance" means you've followed every requirement of law and regulation to the letter and it isn't always so easy to do - especially if you don't know what all the laws and regulations are. If your LLC falls out of compliance, that can pierce the corporate veil protecting your personal assets, and once pierced it often turns into a sieve, potentially costing you many times more than what you initially saved in sales tax on the RV.

That's just a long way around of saying that just because we can legally open an LLC doesn't mean we should. If you're willing to put in the work, good for you! If you're not willing to put in the work, good for you! I wish you all the best of luck whichever your choose
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Old 05-04-2016, 07:21 AM   #51
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Wnytaxman, when I bought mine in AZ and then registered it in CA I received credit for the amount of tax I paid in AZ and just had to pay the rest to CA.

Slemnah, I'm not sure how long ago you purchased in AZ and then took your unit to CA. The discussion came up a few weeks ago about a dealer in AZ selling to an out of state buyer. The seller was going to deliver the coach to the buyer in NM to avoid the AZ transaction tax. It is possible that AZ and CA have some level of reciprocity similar to what NY and NJ use.
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Old 05-04-2016, 07:31 AM   #52
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So what "Laws" exactly are we talking about complying with? Vehicle registration laws?

There are several laws that come into play here. One is the vehicle registration law which is usually very specific as to how long a vehicle may be in a state before it has to be registered in that state. It could be 30 days or even six months. It varies from state to state.

The second big issue that comes up is residency. In which state do you vote, have your driver's license, and do you spend the majority of your time? These are issues that taxation authorities will use all the time. We have run into residency audits fairly often as NYS is very aggressive in trying to obtain tax dollars that may have escaped their grasp. Think about trying to prove your WEREN'T somewhere. That is very difficult to do.

The logic of the Montana LLC is that IT is not a resident of your state so it is not subject to the sales tax laws. However, once that vehicle is a "resident" of your state then the rules change. This is where the fertilizer can hit the ventilator.

It was mentioned earlier that you may be in trouble if you get stopped in a state and you have a driver's license from one state and an RV with Montana plates. I would suggest that situation wouldn't be likely to key a sales tax issue in your state. Traditionally, law enforcement officers are not concerned with enforcing the tax laws. They have enough on their plate with vehicle and criminal laws to not be burdened with tax laws.
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Old 05-04-2016, 09:47 AM   #53
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.........I might need to check into the va laws as personal property taxes on a dp will be about 8k per year here (ouch).
Yes, you should. As a former VA resident moving from S&B in VA to S&B in FL back in 2013, I'm still fighting with VA over personal property taxes they say I owe on vehicles that were no longer garaged in VA for part-year 2013. VA can be very aggressive when it comes to PPT. For your purposes, here's what VA says about title and registration (from the AAA website):

"Non-residents may operate a motor vehicle in the state without registering or paying any fees to the Commonwealth for a period not to exceed 6 months if the vehicle is registered in another state.

Other than for purposes of pleasure (any purpose other than to conduct business), a non-resident regularly operating within the Commonwealth must register his or her vehicle(s) with the Commonwealth.

Any owner who operates or permits to be operated 1 or more of these vehicles either simultaneously or alternately as often as 4 times in any 1 month shall be considered to be regularly operating them in the Commonwealth."

Now, the foregoing has holes, to coin a modified phrase, someone could drive an RV through. In the absence of such language, would a Montana LLC be considered a resident or would it have to be drilled down to the owner of the LLC, whom might be a VA resident? When is the vehicle "operating" within the commonwealth? Only when driven, or could it be in storage? What is "regularly operating?" I know, "regularly operating" seems to be defined, but is it?

To delve further into this, one would have to know the VA Code and what case law might exist, and also what opinions the VA Commonwealth Attorney may have made based on the foregoing. For example, in my scenario, the Commonwealth Attorney has opined that residents moving out of VA who do not immediately obtain title and registration in another state are presumed to still have those vehicle considered "garaged" in their VA city or county of record. This and all the above are the types of things that a Montana LLC company, like Bennett Law, should know when they are advising potential clients. So to you and everyone else, if you want to create an LLC for whatever reason, please make sure your advising attorney has thoroughly researched all the possibilities before making that jump.
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Old 05-04-2016, 10:55 AM   #54
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I'm thinking that won't work for Texas residents.

This is what Texas reciprocity agreement with Montana says: "Visitors may operate under Montana plates for the length of time the plates are valid. Establishment of domicile or place of abode, or gainful employment for 30 days is deemed residence and requires immediate registration."

The rub is that you have to pay sales tax on the purchase price of the vehicle when you register it in Texas for the first time. You get credit for any sales tax you paid to another state. We bought our motor home from a private seller in Louisiana and had to pay Texas sales tax to register it.
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Old 05-04-2016, 02:30 PM   #55
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There is *usually* a Statute of Limitations on when purchasing a vehicle out of state and then having to pay additional tax to the new registering state. In CA its 12 months or 7500 miles, and you are only charged the difference between the tax you paid in the purchasing state versus how much you would be charged had you purchased it in CA.

So, as a CA resident, you COULD purchase something out of state, and then register it in Montana and not pay CA tax on it. But you'll need to keep it out of CA for 12 months or 7500 miles. This doesn't mean you won't be called on the carpet to explain yourself to CA. You will be asked to prove it was out of state for those 12 months or 7500 miles if they find out about it.
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Old 05-04-2016, 05:23 PM   #56
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Yes, you should. As a former VA resident moving from S&B in VA to S&B in FL back in 2013, I'm still fighting with VA over personal property taxes they say I owe on vehicles that were no longer garaged in VA for part-year 2013. VA can be very aggressive when it comes to PPT. For your purposes, here's what VA says about title and registration (from the AAA website):



"Non-residents may operate a motor vehicle in the state without registering or paying any fees to the Commonwealth for a period not to exceed 6 months if the vehicle is registered in another state.



Other than for purposes of pleasure (any purpose other than to conduct business), a non-resident regularly operating within the Commonwealth must register his or her vehicle(s) with the Commonwealth.



Any owner who operates or permits to be operated 1 or more of these vehicles either simultaneously or alternately as often as 4 times in any 1 month shall be considered to be regularly operating them in the Commonwealth."



Now, the foregoing has holes, to coin a modified phrase, someone could drive an RV through. In the absence of such language, would a Montana LLC be considered a resident or would it have to be drilled down to the owner of the LLC, whom might be a VA resident? When is the vehicle "operating" within the commonwealth? Only when driven, or could it be in storage? What is "regularly operating?" I know, "regularly operating" seems to be defined, but is it?



To delve further into this, one would have to know the VA Code and what case law might exist, and also what opinions the VA Commonwealth Attorney may have made based on the foregoing. For example, in my scenario, the Commonwealth Attorney has opined that residents moving out of VA who do not immediately obtain title and registration in another state are presumed to still have those vehicle considered "garaged" in their VA city or county of record. This and all the above are the types of things that a Montana LLC company, like Bennett Law, should know when they are advising potential clients. So to you and everyone else, if you want to create an LLC for whatever reason, please make sure your advising attorney has thoroughly researched all the possibilities before making that jump.


Thank you for the info. Va certainly does seem to be pretty aggressive on the pp tax. I argued with them over a vehicle I sold one month into a year (to no avail)
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