No Sales Tax on RV Purchase

[Midniteoyl]

Originally Posted by wnytaxman

I would have to agree that if you live in one state and have a driver's license from that state, you probably shouldn't have a car licensed in another state. Also I don't think I would trade the no income tax state of Nevada for a state income tax that they have in Montana.

There use to be laws against this.. Licence and plates from 2 diff states, and caught driving in a 3rd.

[jerryjoe55]

Where you pay your taxes on your motorhome is where your domicile is located ie. where you vote that is the legal definition, residence is where you are located at the present time, so you may register your motorhome and pay your taxes on your domicile.

[wnytaxman]

For tax purposes, residency is determined by voting, drivers licenses, and time spent in one location.

[jerryjoe55]

Not true I am a travel nurse and work contract assignments for up to one year that does not make a travel nurse a residence of the state they are working in. There are compact professional licence that each state recognizes from the state where the professional is licenced from that the reciprocal state recognizes as legally working in their state (compact license) That does not make them a residence of that state. Review the Federal Legal definition of domicile. There is a legal definition of being a residence and claiming a state as your domicile.

[wnytaxman]

Originally Posted by jerryjoe55

Not true I am a travel nurse and work contract assignments for up to one year that does not make a travel nurse a residence of the state they are working in. There are compact professional licence that each state recognizes from the state where the professional is licenced from that the reciprocal state recognizes as legally working in their state (compact license) That does not make them a residence of that state. Review the Federal Legal definition of domicile. There is a legal definition of being a residence and claiming a state as your domicile.

You are confusing the licensing definition of residence and the definition of a tax home. Temporary job assignments, even those lasting over one year, still would leave your tax home in the same state. What state do you vote in? What state is your driver's license from? Where are the professional and religious organizations you belong to located?

The importance of these issues relate to the exemption for the sale of a personal residence when one has more than one personal residence. As far as reviewing the definitions of domicile, I teach taxation, including domicile, to other CPA's and have done so for 20 years.

[Francesca]

Originally Posted by Magoogle

We also used a Montana LLC for our RV. And eventually all of our cars will go as well. According to VA law from what we were told by the lawyers of Montana, You are required to drive the RV out of state every 6 months to be legal. As long as you follow that 1 law, Montana LLC in VA is good to go

Probably the most common pitfall for folks doing this is accepting the interpretation of a Montana law firm with regards to the laws of other States.

The firms one will deal with are obliged/empowered only to set things up according to Montana law, which has been carefully structured to allow for what has turned into an important industry for the State...much in the same way gambling has for Nevada! (The main difference of course is that in Nevada's case, the industry in question doesn't exist for the deliberate purpose of depriving other States of revenues to which they are entitled.)

Many States are fighting back by tightening definitions per vehicle licensing, in some cases tying them to length of time the vehicle spends in the State rather than to the owner's purported "residency". Folks ARE getting busted for violating those requirements, and neither the State of Montana nor any Montana law firm will/can defend a Montana LLC in such an action.

As is stated in the fine print on every such law firm's website.

Legal advice as to the risks/legality of a venture of this kind should only be sought from lawyers practicing in the potential/extant LLC-setter-upper's real State of residence.

[jerryjoe55]

Ask your laywer of the legal definition of domicile versus residence in regards to license, registration, ownership versus LLC, in regards taxation and registration of your motorhome in the use as a second home being used in working. Domicile means the intent to return to the state. Residence is temporary and the individual has no intent to stay there after there contract for work ends. There are 25 states that participate in multi-state nursing license that the nurse is eligible to work in the other states, what ever state you choose to domicile your compact license dictates your domicile. What state you choose to work in is temporary. Sush as if your compact license is domicile in South Dakota and you work in Colorado as a nurse does not make you a residence of Colorado as Colorado and South Dakota are signatory on the compact agreement s.

[wnytaxman]

Jerry Joe, what I'm referring to is the federal tax definition of a tax home. For example, let's say I own a home in NY State and one in Florida and I like the idea of no state income tax in Florida so I claim that I am a resident of Florida. I file my federal returns with a Florida address. I vote in Florida and I have a Florida driver's license and Florida registration on my car. I have clearly established that I am a resident of Florida.

Now let's say sell my NY home and I want to take the principal residence exclusion of gain of $500,000. I can't take the exclusion because the NY home is not my principal residence.

One's tax residence is the point of this whole thread when the subject of a Montana LLC comes up. It is the critical point of establishing whether or not someone can LEGALLY establish and utilize a Montana LLC to buy a motorhome or other RV and avoid the sales tax. Where is your tax home and can you comply with the laws of the state where you have your tax home? That is the critical question.

[jerryjoe55]

I don't have a stick house, My motorhome is my home and I protect myself through an LLC. I do this to protect my assets. My domicile is South Dakota where my profressional compact nursing license is domiciled and allows me to work as a non-residence of the state I choose to work in as a travel nurse

[Mr_D]

Originally Posted by johnmbeard

Oregon is a sales tax free state too. We own property in Oregon and live in Las Vegas, NV, when we bought our coach we gave a lot of consideration to registering the motor home in Oregon to avoid sales tax, and when push came to shove we decided that that 8.1% sales tax in Clark County was better than looking over our shoulders.

Oregon has specific laws that prohibit this type of tax avoidance...Nevada has big fines for avoiding sales tax, so we paid the taxes and have a clear conscience.

Oregon may be a sales tax free state but they do have income tax and they like to collect it! When I worked in Oregon and lived in Washington I had to pay taxes on all my Oregon income, but my WA state retirement and my wife's pay was not taxed even though I had to report it.

[wnytaxman]

Originally Posted by jerryjoe55

I don't have a stick house, My motorhome is my home and I protect myself through an LLC. I do this to protect my assets. My domicile is South Dakota where my profressional compact nursing license is domiciled and allows me to work as a non-residence of the state I choose to work in as a travel nurse

JerryJoe, you have the ideal situation for the use of an LLC. With no sticks and bricks, the residency/domicile issue becomes one of where are you licensed, voting, and paying taxes. You are in essence a full timer from a tax perspective.

[Mr_D]

Harry: Thanks for the well thought out and documented post!! We aren't full timers yet as we have a 13 yr old grandson still at home so I guess we'll keep working till he's 18.

Originally Posted by amanda_h

Yes, I did see what you posted. I showed that very dialog several years ago to not only our Montana lawyer but to two California lawyers so I could get the best interpretation. The reason I used California attorneys is that the discussion about the IFTA tax pertaining to Montana LLC registered RVs was specifically attributed to California because it "was" the only state known that was rumored to be "misinterpreting" the IFTA laws, i.e. threatening to require Montana LLC RVs to pay IFTA taxes.

First, the information you posted is old. It came out quite a few years ago. From what we understand, California's stance has since changed.

IFTA licensing requirements are determined by the state in which the vehicle is registered. So even if California was interpreting IFTA correctly (which we don't think they are/were in the case of a Montana LLC registered vehicle owned by a non-California resident), then they can only impose their IFTA licensing requirements for vehicles registered in California from what we understand.

The requirement for obtaining an IFTA license is for commercial vehicles (vehicles hauling freight or passengers for profit) engaged in interstate commerce ONLY. It is NOT intended for vehicles used for pleasure. There is NO business being conducted pertaining to my RV; it is being used strictly for pleasure only.

So, I have to abide by whatever Montana requires for IFTA and they don't require me to obtain an IFTA license. Here is the link for Montana IFTA requirements (click) but if you don't want to read through the entire 129 pages, I've attached below the appropriate page presented in simplicity that states "Recreational vehicles are not qualified vehicles"

The three attorneys (one Montana and two California) agree that the California BOE had initially misinterpreted the IFTA guidelines. They also have told us that there is no known case of any Montana LLC registered vehicle getting into extreme trouble while traveling through California pertaining to this IFTA situation. Initially, there were reports that some were being stopped at the agricultural stations by BOE agents and asked to see their registration and then asked to obtain a fuel permit (unnecessarily, as previously stated) but nobody has been cited for breaking any laws from what we've been told. They are all telling us that if by the remote chance we are cited whether it can be upheld in court. We feel comfortable with the legal advice we have been given pertaining to IFTA but I guess we will not be sure unless we have the opportunity to challenge it in court which we do not anticipate having to do.

I've also attached the interpretation of a Montana attorney pertaining to the IFTA controversy.

Again, to all who are preaching that registering your RV in a Montana LLC is illegal and a certain case of tax fraud, it is NOT if you follow the laws of your own state of domicile/residence pertaining to what triggers your having to register said vehicle in that state. Do your homework, get legal advice, obey the laws of your state of domicile, and if you save some taxes along the way you've done it all legally. It doesn't work for everybody but for some, it works quite nicely.

I may have misspoke when I said previously that the Montana LLC only should be considered by full-timers. More accurately, perhaps I should have said it only should be considered by those who might be retired and are able to move around strategically in order to comply with the laws of their state of residence.

@BobGed, yes, we agree that for full-timers, South Dakota is most likely the best state for registration. However, we had other reasons for choosing Nevada that we had to throw into the mix.

-harry


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[EngineerMike]

One issue w/Montana LLC's is that other states change their laws from time to time. As higher taxes become more fashionable, collecting them does also. While an LLC scheme might be perfectly legal with one's home state today, it may not be next year or the year after.

That's not to say don't do it, just that you will want to maintain an annual awareness of the changes in laws affecting your multi-state status.

[Ramzfan]

The bottom line is, all of these posts refer to what is LEGAL to do in various states and what isn't...the word "legal" being the key word. It's all a matter of what you can get away with and what you can't. Some of us like to stretch the rules. good luck to those that live by the letter of the law.