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azloafer · 10-29-2010, 01:48 AM

Motorhome owner pleads guilty to tax evasion

Hilary Pruitt of Evergreen, Colo., has a cautionary tale about sales taxes and vehicle registration.
In 2004 he formed a limited liability company (LLC) in Montana to avoid paying sales tax and higher license fees on his $275,000 Alpine Coach, which he purchased at a Colorado dealership. In May 2008 he pleaded guilty to tax evasion charges stemming from this purchase.
It’s illegal for Colorado residents to register their vehicles out of state, but the tax savings can be enticing ….
Looking into LLCs
Before buying the Alpine Coach, Pruitt started exploring the possibility of forming a Montana LLC. He learned that attorneys or registered agents can prepare and file LLC documents for you, based on information you provide via telephone or the Internet. They’ll register the motorhome under your LLC’s name, and mail the license plates and documentation to you. A Montana LLC is considered a Montana resident and, like the residents of Montana, does not pay sales tax. Pruitt contacted an attorney in Montana who regularly advertised LLC services. “I was told that the practice had been working for many years for thousands of people in multiple states, he said. “I even checked with my local attorney and he said there had never been any cases tried. Of course, they both threw in their disclaimers.”
Forming the LLC
On the same day Pruitt arranged to purchase the Alpine Coach, he set up the Montana LLC by telephone. Using a credit card, he paid $1,280 for license plates, LLC filing fees and attorney fees. He received his Montana license plates via postal mail a few weeks later. If Pruitt had registered the coach in Colorado, he would have paid a 4.1-percent sales tax on the $275,000 coach at the time of purchase. That’s the rate the state was collecting in 2004 for unincorporated Jefferson County, where Pruitt lives. In addition, licensing the motorhome in Colorado would have cost $3,200, he said. Three months after buying the Alpine Coach, the Pruitts bought a towed vehicle, a Jeep Cherokee, and registered it under their Montana LLC, as well.
Exposed
Everything went along fine until spring 2007, Pruitt said. "One of the local TV channels did an expose on how much money the state of Colorado was losing due to people illegally registering their RVs out of state. One of my neighbors saw fit to turn me in.” The Revenue Department and Attorney General’s Office launched an investigation, and in summer 2007, agents from the Colorado Bureau of Investigation showed up at this doorstep. In May 2008 Pruitt was one of 12 individuals to plead guilty to charges of failure to pay tax. The court said he must register his motorhome in Colorado and pay $9,720 in unpaid taxes and fees to the state. He wants to make others aware of the implications of forming a Montana LLC to avoid sales tax and higher license fees in their home states.
Trial 'not worth the risk'
Pruitt and his wife, Joy, work for a mortgage company that has branches in 17 states, including Colorado and Arizona, where they are licensed brokers. Although they own a
home in Evergreen, the Pruitts actually kept the motorhome out of Colorado for most of the first six months of ownership. “We were looking at conducting the mortgage business from Arizona in the winter and Colorado and other places in the summer.” Pruitt figured the fact that they kept the motorhome out of state for an extended period, on business-related travel, could be used to argue the case in their favor. But things didn’t work out that way. According to Colorado law, a Colorado resident is “any person who owns or operates any business in this state or any person who has resided within this state continuously for a period of 90 days or has obtained gainful employment within this state, whichever shall occur first.” “The way state officials put the case together," Pruitt said, "you just can’t take the risk of going to trial based on the plea offer. The penalties, if you get convicted in court … compared with the deal they offer, it’s just not worth the risk.” Pruitt received a deferred sentence. After two years, if he has made restitution and met all conditions of deferment (e.g., no criminal violations), the tax evasion charges will be dismissed without a conviction being entered. I spent thousands on an attorney and still had to plead guilty to failure to pay tax.”

cleverlemur · 10-31-2010, 04:33 PM

Not sure why you're so intent on making the same argument over and over, without addressing the issue of where the vehicle is domiciled, which invalidates every one of these tired old scare stories you've dug up, but pound away. I'll just note that having the last post in a forum, even if it's a non-sequitur, is in no way equivalent to winning an argument.

johnsonjm209 · 10-31-2010, 07:32 PM

Just something to think about. I am not really sure about an LLC. Is it a business?
1-If it is a business, then is your vehicle a business vehicle?
2-It it a business vehicle, then is it a commercial vehicle?
3-If it is a commercial vehicle are you required to have a CDL (Commercial Driver's License) to operate it?
4-If you are required to have a CDL and it is over 53,500 lbs are you required to have a Class II CDL?
5-Are you required to have an Air Brake Endorsement?
6- If you are carrying propane are you required to have a Hazmat endorsement?
7- If you are a commercial vehicle are you required to go through all the scales?

This could go on forever, couldn't it. I guess it boiles down to, "Is an LLC a business?"

I don't know!!

Joe from Ct.

cleverlemur · 10-31-2010, 08:05 PM

An LLC is just what the initials stand for, a limited liability company. If you're asking whether an LLC has to make money or own only commercial vehicles, the answer is no, at least for the states I'm familiar with, which include Montana, Delaware, and Wyoming. LLCs are very commonly used by individuals or families as an asset protection strategy, to create a family LLC or trust. Depending on the state you choose, this can offer significant tax savings as well as immunity from creditors and litigants. At least one county in Montana used to require a business license before they would register a vehicle, but this is not required by state statute. Other states and counties may vary. Large corporations, like Google and Microsoft use overseas LLCs as the lynchpin of tax avoidance strategies that whittle their coporate tax down from 35 to as low as four percent. Google "double irish" and "dutch sandwich" to find out how that works.

denochs · 11-01-2010, 05:53 AM

Since you have already paid sales tax on it, the only thing you can save are the personal property taxes each year. That can be substancial, depending on where you live.

You may want to look into titling and licensing in another state like FL where they have no pp tax. You'll have to pay a few hundred to retitle in that state. But the payback may be quickly realized. Thereafter, you save each year. In NC they use the NADA book value to assess taxes on rvs. I've read on this forum of people in MA, CT, and some other states with high tax rates paying several thousand per year in pp taxes on their mh.

We have a split residency and are legally titled and licensed in FL. There may be some legalities you will need to investigate.

Dave

bachler · 11-01-2010, 06:52 AM

Very informative post;; We all want to draw SSI. Madicare/medicade. But no one wants to pay there fair share of taxes;; We have been blessed and the lord knows We're thank full. We have several; 4 rental properties, the the Seattle Wa. area. And we Have 2 in ND, at the Lake Tschida area.. Now here's the interesting thing;; Oh we have looked into Titleing in a different state; Our residence is in Seattle Wa. We travel to ND. 2 or 3 times per year stay there weeks or months at a time; it is 320 achers of farm/ranch land; We were going to regestor our motorhome there. Because it's cheaper and we needed a place to stay when there.; Onless you want to support the court system. . Don't try to beat the Government out of a penny. It will cost you 10 times over; I know there are some that dissagree thats OK. When I lay my head down on my pillow at night I have a clear Conciouse; Life is good ; Don't try to cheat your Brother;;

W5DOK · 11-01-2010, 07:11 AM

I formed an LLC with Heggen Law Firm when I bought my last MH. The savings were substantial. There was never an issue and I was stopped a couple of times by state cops and they never questioned my registration. Insurance was also not a problem. As to not paying my fair share of taxes, I believe that I have paid my share and the share of about a dozen or so illegals. LLC's may not work for everyone, but it sure worked for me.

Happy trails,

Doc, W5DOK

johnsonjm209 · 11-01-2010, 08:57 AM

Hi Clever..., thanks for the indepth definition of an LLC. I was tossing around the idea that because they were a business, then their vehicles would be business vehicles. But, if they do not have a product and are not transporting a product I'm guessing that would be their "free pass".

Thanks again,
Joe from Ct.

p.s.
The only product we are transporting is "living the good life."

azloafer · 01-14-2011, 02:18 AM

What does registration run in Montana? I just renewed for $2,000 ! Joe

a k · 01-14-2011, 05:45 AM

Same here.

Auzzi · 01-15-2011, 05:32 AM

I am an Australian , my investigations have all proved positive.
If a Montana address is required go pay a months camping fee at a park and get a licence.
As previuosly stated there are more RVs in Montana than people. Somethig is working!

Dr4Film · 01-15-2011, 06:03 AM

Quote:

Originally Posted by azloafer

What does registration run in Montana? I just renewed for $2,000 ! Joe

Joe,

What state are you registered in, California?

With that amount of money, you can register your coach for 40 years in the state of Alaska.

All of my vehicles are registered there and the most expensive was my coach and car which was $100 for 2 years on each. My motorcycle and trailer are a little cheaper, like $70 for 2 years. My two sons live there and it is now my domicile too.

I couldn't afford California any longer and the state is still broke. The politicians continue to stuff their pockets while the jobs disappear and the state digs itself deeper in debt.

Dr4Film ----- Richard.

azloafer · 01-16-2011, 02:54 PM

I am in Arizona. Joe

Dr4Film · 01-17-2011, 07:48 AM

Quote:

Originally Posted by azloafer

I am in Arizona. Joe

Thanks for that info, Joe.

I've just checked off one more state where I won't be setting up my next domicile.

During the next few years as we travel around the North American Continent, I am making a list of potential states to buy 10 acres or so and build a combined RV/stick house where the RV is incorporated into the floor-plans to utilize the RV as much as possible. I do NOT want to put the poor thing into storage. The last time I did that, there were too many problems I had to fix before making it livable again.

Dr4Film ----- Richard.