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Old 11-21-2012, 07:18 PM   #1
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No Sales Tax on RV Purchase

As a recent RV Class A owner I came across a web site company that provide methods for licensing RVs sales tax free through a Montana LLC. There are several companies that offer this service even picking up plates and mailing them to you. Let me explain apparently by obtaining a Montana LLC and registering your RV with the Montana DMV with the Montana LLC listed as the owner and you as the owner of the LLC you can obtain Montana plates, title and registration without paying any sales tax. Testimonies on the web sites attest to thousands enjoying the tax break. Does anyone out there have any concrete information on this process and whether it is legit?
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Old 11-21-2012, 07:31 PM   #2
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Just do a search for "Montana LLC". You'll get enough reading material to keep you busy for days. Whether it's right or wrong, the ultimate decision will of course be yours, but be very careful.
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Old 11-21-2012, 07:36 PM   #3
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Perfectly legit IF YOU LEGALLY QUALIFY. Lots of states (WA is one) have gotten wise to this sham company dodge and are prosecuting for tax fraud.
You have a better chance of being legal if you're a full timer and have no real estate.

CA also views RV registered to an LLC to be a business use of the vehicle and may require a CDL and paying IFTA taxes on the fuel. I have the fuel tax rules on my laptop, I'll have to get it setup and post the info.
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Old 11-21-2012, 07:36 PM   #4
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Quote:
Originally Posted by mrock
As a recent RV Class A owner I came across a web site company that provide methods for licensing RVs sales tax free through a Montana LLC. There are several companies that offer this service even picking up plates and mailing them to you. Let me explain apparently by obtaining a Montana LLC and registering your RV with the Montana DMV with the Montana LLC listed as the owner and you as the owner of the LLC you can obtain Montana plates, title and registration without paying any sales tax. Testimonies on the web sites attest to thousands enjoying the tax break. Does anyone out there have any concrete information on this process and whether it is legit?
Many states have been coming after their citizens who do this. It is unlawful in most states to use this licensing method if there is no reason for it other that dodging the sales tax in the state of residence. If they come after you the back taxes with be the least of the cost.

My advice, and many will disagree, pay the state tax where you live or move to another state. The voters of your state have elected politicians who have elected to finance state government with that particular set of taxes. If you live there you should pay up.
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Old 11-21-2012, 07:41 PM   #5
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And another thread has suggested that finding financing, while not impossible, is more challenging and will require better credit (that thread suggested that lenders vew the LLC as loaning for business purses). IMO, just make sure you know all the angles.
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Old 11-21-2012, 07:52 PM   #6
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Nothing keeps people from having vehicles registered in multiple states. The reason this is "iffy" for most people is that states have laws that require residents to register vehicles if the vehicle is in the state in excess of certain periods of time (typically 90-180 days). So, for example, if you register an RV in MT but keep it most of the year where you live in CA you are violating the law. However, if you are a full-time RVer with, for example, an SD domicile, it might not be at all difficult to demonstrate that the vehicle hasn't been in SD for much, if any, of the year. Your own circumstances will dictate whether or not this a viable, legal strategy for you.
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Old 11-21-2012, 08:47 PM   #7
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Yea, there are bad ideas, worse ideas and then there is this LLC idea. While it SHOULD be legal (since corporations are people) some states will literally throw you in jail for it. See, when the Highway Patrol sees that Montana plate and you produce a separate states drivers license... you're up the tax evasion tree.

The easier way to handle it is to register it in MT, NH etc AND be a resident as defined by that state (SD requires 1 day). After a year you can register it anywhere as your own vehicle and not owe taxes on it. At least then you stand half a chance if you get stopped. But if you live in an area where your MH is i n the driveway with MT plates, it's only a matter of time.

I 100% disagree with the nonsense being pulled by states when it comes to this. Corporations avoid taxes through all types of schemes but the moment us little guys find a loophole it's Betty bar the door -and California requiring a CDL because an LLC owns the rig is nonsense but all too often the CHP believes they are an elected legislature... but that's a whole different thread.

Quote:
Originally Posted by mrock View Post
As a recent RV Class A owner I came across a web site company that provide methods for licensing RVs sales tax free through a Montana LLC. There are several companies that offer this service even picking up plates and mailing them to you. Let me explain apparently by obtaining a Montana LLC and registering your RV with the Montana DMV with the Montana LLC listed as the owner and you as the owner of the LLC you can obtain Montana plates, title and registration without paying any sales tax. Testimonies on the web sites attest to thousands enjoying the tax break. Does anyone out there have any concrete information on this process and whether it is legit?
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Old 11-21-2012, 08:53 PM   #8
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Yea, there are bad ideas, worse ideas and then there is this LLC idea. While it SHOULD be legal (since corporations are people) some states will literally throw you in jail for it. See, when the Highway Patrol sees that Montana plate and you produce a separate states drivers license... you're up the tax evasion tree.

The easier way to handle it is to register it in MT, NH etc AND be a resident as defined by that state (SD requires 1 day). After a year you can register it anywhere as your own vehicle and not owe taxes on it. At least then you stand half a chance if you get stopped. But if you live in an area where your MH is i n the driveway with MT plates, it's only a matter of time.

I 100% disagree with the nonsense being pulled by states when it comes to this. Corporations avoid taxes through all types of schemes but the moment us little guys find a loophole it's Betty bar the door -and California requiring a CDL because an LLC owns the rig is nonsense but all too often the CHP believes they are an elected legislature... but that's a whole different thread.
Well, first off an LLC is NOT a "corporation" it's legally defined by the IRS as a company.
It's not the CHP that believes you need a CDL. It's a requirement for driving a business vehicle and the CA BOE decided that ANY vehicle licensed/owned by an LLC is a business entity.
Here's what was published in the FMCA magazine a while back:
Quote:
Legislative Updates
Requirements For LLC-Registered Motorhomes
Is your diesel-powered motorhome registered as an LLC, or limited liability company? If so, you might be required to possess an International Fuel Tax Agreement license or a fuel trip permit when traveling out-of-state.

The International Fuel Tax Agreement (IFTA) is an agreement among jurisdictions in the United States and Canada for the uniform collection and distribution of fuel tax revenues.

According to the International Fuel Tax Association (IFTA Inc.), which oversees IFTA compliance, an IFTA license or a fuel trip permit is required for diesel-powered vehicles that:

weigh more than 26,000 pounds, or 11,797 kilograms;
have three or more axles, regardless of weight; or
have a combined weight (with towed vehicle) greater than 26,000 pounds, or11,797 kilograms.
The IFTA exempts motorhomes used by private individuals exclusively for recreation. However ...

LLCs Not Excluded. LLC-registered motorhomes that qualify under the weight or axle requirements are not exempt from the license/permit requirement — even if owners furnish poof that the LLC was not formed to transact business.

“To determine whether or not a motorhome is a qualified motor vehicle and subject to the tax collected under the International Fuel Tax Agreement, the member jurisdictions will look at how the motorhome is being used,” said Lonette Turner, executive director of IFTA Inc.

“If it is being used in a business endeavor of any kind, it is subject to the fuel use taxes collected under the IFTA, regardless of whether an individual or a company registers the vehicle. Because an LLC is a limited liability company, the term alone indicates that it is a business. This may cause jurisdiction enforcement officers to look more closely at the vehicle.”

About The IFTA. The 48 contiguous U.S. states and 10 Canadian provinces are members of IFTA. Jurisdictions set their own tax rates, and are only required to notify other base jurisdictions of the proper tax rates to collect.

An IFTA license allows the holder to file one tax return for travel in all IFTA jurisdictions. A fuel trip permit allows out-of-state registered vehicles to travel in a state for a limited time without obtaining a license for fuel tax purposes.

Fuel trip permit fees and IFTA license fees, as well as fines and penalties, vary across jurisdictions.

Qualified vehicles driven solely in one state are not required to have an interstate fuel permit or an IFTA license. (A few jurisdictions may require intrastate reporting or licensing for qualified vehicles. Check with individual jurisdictions for more information.)

License Or Permit? IFTA Inc. doesn’t make suggestions regarding licensing, Ms. Turner said. “It usually comes down to a business decision for the operator of the vehicle, whether it is more cost-effective to license or to simply purchase trip permits.”

If you usually operate your vehicle in one jurisdiction only, but make occasional trips outside that jurisdiction, you may wish to consider purchasing trip permits for that occasional travel.

If you plan to travel out-of-state before receiving your IFTA license, you must purchase fuel trip permits for each jurisdiction in which you travel. Permitting services typically can be contacted from any major truck stop.

To obtain an IFTA license, contact the jurisdiction where you are based; that is, where your motorhome is registered. You must complete a form specific to your base jurisdiction. If you qualify, you will receive an IFTA license, two decals, and information about IFTA compliance and record-keeping.

The International Fuel Tax Association Inc.’s Web site, IFTA, Inc., contains a Links page that lists the Web sites of every IFTA base jurisdiction. From the One Stop Shop page, you can select contact information for any IFTA member state or province.

“My best advice,” Ms. Turner said, “is to contact each state you’re going to, or that you’re from, and just make sure to get information ahead of time.”

About LLCs

A limited liability company is a business structure that limits the owner’s personal liability for the debts and actions of the LLC. At the same time, it simplifies the taxation of income by passing profits or losses on to individuals.

Owners of an LLC are called members. Members may include individuals, corporations, other LLCs, and foreign entities. Most states also permit “single member” LLCs, those having only one owner.

All 50 U.S. states allow the formation of LLCs. Applicants must file articles of organization with the Secretary of State and pay the required fees.

Each state has different rules regarding LLC formation. For more information, check your state’s requirements and federal tax regulations.

California and the IFTA

IFTA talk began to circulate in the motorhoming community after an FMCA member reported that California was enforcing the IFTA permit requirement for vehicles entering the state. On Internet forums opinions began to circulate, including whether inspection stations were checking motorhome registrations for LLC ownership.

The California State Board of Equalization (BOE) administers the diesel fuel tax program and the state’s participation in the IFTA. Several inquiries to the BOE produced the same response: Qualified diesel-powered motorhomes registered as an LLC will be considered a business. They must possess a permit or IFTA license, or risk a $100 fine.

Business Endeavor? FMCA member Allan Griefer of Las Vegas, Nevada, heard about the IFTA rumors. He contacted the BOE in California to verify that the IFTA applies to LLC-registered motorhomes even if they do not transact business.

Mr. Griefer received a written reply from Margaret Shedd, legislative council for the BOE.

“Such an (LLC) ownership of the motor coach is considered a business endeavor,” Ms. Shedd wrote. “The individuals that make up the LLC are business partners with limited liability when the motor coach is used by one of the other members of the LLC.”

In her response letter, Ms. Shedd said the BOE will examine the ownership of a qualified motorhome only if visual evidence indicates the vehicle is being used in connection with a business endeavor.

Visual evidence includes business logos displayed on a motorhome or towed vehicle. In such cases, Ms. Shedd said, the board will examine the registration and the specifics of the case to decide whether the vehicle should be registered under the IFTA. "Staff will not examine the registration of a motor coach that does not have visible signs of business endeavors."

Obtaining A Permit, License. In California a fuel trip permit costs $30 and is valid for four days of travel in the state. The permit also allows California-registered vehicles to re-enter California after traveling out-of-state if they are unlicensed for fuel tax purposes. The permit must be obtained prior to entering or re-entering the state.

To order a permit, send $30 (check or money order) for each permit to the Motor Carrier Section, State Board of Equalization, 450 N. St., MIC: 65, P.O. Box 942879, Sacramento, CA 94279-0065.

For a listing of locations that sell California fuel trip permits, visit the BOE Web site, California State Board of Equalization.

To apply for an IFTA license valid for travel in all IFTA member jurisdictions, California residents may call the State Board of Equalization at (800) 400-7115 or (916) 322-9669.

Getting A Refund. In California, if a motorhome owner is assessed a penalty for not possessing valid IFTA credentials or a fuel trip permit, the person may seek relief of the penalty by following the directions on the back of the assessment. If relief is granted, the penalty will be refunded.

A Request for Relief from Penalty form is available on the BOE Web site, California State Board of Equalization, under “Forms & Publications” as a fill-in form.

Lonette Turner, executive director of the International Fuel Tax Association, said each IFTA jurisdiction has the right to handle administrative remedies, such as penalty relief, according to its own laws. "Only if they don't have such a law would IFTA appeal provisions apply," she said.
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Old 11-21-2012, 08:53 PM   #9
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Hi and welcome to the forum.

All good and accurate advice so far IMHO.... except I can say that Texas does require that ALL of your vehicles be registered in that state if you are a resident. Although I guess if an LLC owns the coach then the individual doesn't.... but then if a business owns the coach isn't it a commercial vehicle?

You can see how complicated and "gray" it can get.

It has been reported a lot that many states look for RVs where the plates of the coach and the plates of the toad don't match. These can be red flags for your home state.

I don't offer an opinion on the right or wrong of the issue but it seems to me that it's worked quite well for years as a way for some folks to keep from paying taxes to their home state which they would otherwise have to pay... but more recently, a number of states are cracking down and the legal battles can be tough.

I considered an LLC before purchasing my new DP in 2007 but decided instead to pay California nearly $16,000 in sales tax.

Best of luck.

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Old 11-21-2012, 09:02 PM   #10
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Quote:
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I considered an LLC before purchasing my new DP in 2007 but decided instead to pay California nearly $16,000 in sales tax.

Best of luck.

Rick
Dont you have to pay annual tag fees as well? And insurance too? All costs that are bound to be "higher" in a state like CA.
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Old 11-21-2012, 09:19 PM   #11
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Dont you have to pay annual tag fees as well? And insurance too? All costs that are bound to be "higher" in a state like CA.
Yep. Sure do. Although I left California as soon as we began to full time in 2009 and became a "Texan". Driver's license (non commercial Class B). Registered to vote. Insurance. Mailing address. All of the legalities as I understood them, to be a legal resident of the state of Texas.

When I left California in 2009, I had just received my bill for next year's plates on my three year old coach at that time. They wanted $2500 for 2010 tags. Texas charged me about $275 which included a transfer fee. I don't think I've spent 90 days total in California since I left.

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Old 11-21-2012, 09:25 PM   #12
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There are also some insurance companies that won't insure a MH owned by an LLC or they will require that you purchase much higher cost business coverage.
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Old 11-21-2012, 09:50 PM   #13
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And then there is that other group some of us have to deal with while operating a Commercial Motor Vehicle. USDOT/FMCSA. Then the fun begins.
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Old 11-21-2012, 10:07 PM   #14
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If your RV is parked on your property and your neighbor, who really doesn't like you, turns you in, or if you are stopped for a traffic ticket and your drivers licence says Calif but your tag is Montana, or in the divorce your Ex drops a dime....you get the idea.
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