Community Forums

Route 66 · 05-14-2007, 08:35 AM

There is a discussion on the Escapees forum about California starting to fine RV owners entering the state with the RV registered to a LLC.

It seems that California has decided that RVs registered to LLCs are being used for business purposes, and not personal use.

There is a developing issue, and Escapees is looking into it.

Escapees Thread

Route 66 · 05-14-2007, 08:35 AM

There is a discussion on the Escapees forum about California starting to fine RV owners entering the state with the RV registered to a LLC.

It seems that California has decided that RVs registered to LLCs are being used for business purposes, and not personal use.

There is a developing issue, and Escapees is looking into it.

Escapees Thread

Tom N · 05-14-2007, 09:46 AM

I guess the LLC would be fined as the coach would be corporate owned.

-Tom

Jimbo8264 · 05-14-2007, 11:47 AM

I Think it is far. If you want to screw a state out of sales tax then you should be prepaired to pay the taxes as any corporation would for use of a states highways.

Paul Heuvelhorst · 05-14-2007, 03:34 PM

<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">Originally posted by Jimbo8264:
I think it is fair. If you want to screw a state out of sales tax then you should be prepaired to pay the taxes as any corporation would for use of a states highways. </div></BLOCKQUOTE>
AMEN, brother, AMEN!

Texas Bubba · 05-14-2007, 03:35 PM

I didn't notice anything about anyone screwing CA out of any tax. Also did not know that any corporation had to pay highway tax? I thought commercial trucks paid highway use tax, not every corporation that drive the highways. I know when I had a company car, we did not pay any special tax although it was a commercial vehicle. Please explain???

Jestme13 · 05-14-2007, 04:32 PM

ah ha

Paul Heuvelhorst · 05-14-2007, 05:30 PM

<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">Originally posted by Texas Bubba:
I didn't notice anything about anyone screwing CA out of any tax. Also did not know that any corporation had to pay highway tax? I thought commercial trucks paid highway use tax, not every corporation that drive the highways. </div></BLOCKQUOTE>
I pulled the following from the ESCAPEES post on this subject, by way of explanation:
The following is pulled from the IFTA FAQ on the CA board of equalization website at
http://www.boe.ca.gov/sptaxprog/mciftafaqs.htm
--------------------------------------
What is a "Qualified Motor Vehicle" under IFTA?
A vehicle used or designed to transport people or property is a qualified motor vehicle if it:

Has three or more axles; or
Has two axles and a gross vehicle or registered gross vehicle weight of more than 26,000 pounds or 11,797 kilograms; or
Is used in a combination that has a combined or registered gross vehicle weight of more than 26,000 pounds or 11,797 kilograms.
A recreational vehicle such as a motor home or a pickup with a camper is not considered a qualified motor vehicle when an individual uses it exclusively for personal pleasure. Vehicles used in connection with a business operation are not considered recreational.
-----------------------------------------
There does appear to be room for such an interpretation in the law... However, the intent is clearly to exempt RVs used for pleasure.

My question is, why would someone register their vehicle under the LLC (Limited Liability Corporation)? Are there tax advantages? If so in the state in which it is registered, why would another state (like CA) feel they had an interest in it?

I don't know the answer to these questions... I'm trying to learn. Thanks.

BTW, California quit inspecting travelers coming through the Ag Inspection stations over 2 years ago. They only require commercial trucks to routinely stop. So, you can bring all the produce you want into CA from out of state. However, our local AG inspector (US 395 north of Reno) told us that they may run spot checks "at will" so you may still be required to stop at an AG station, but it is less than a 1% chance.

SacsTC · 05-14-2007, 07:13 PM

This is to try to stop the practice of Californian's registering their new motorhome under a fake LLC in states like Montana in order to avoid paying the sales tax and license fees in Cali. State sales tax here is 7.5% and up depending upon which county. Reg is going to cost you $1800 +- on a coach valued at $200,000. It can add up to a sizable sum when you are buying a vehicle.

JRP · 05-14-2007, 07:58 PM

<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content"> It seems that California has decided that RVs registered to LLCs are being used for business purposes, and not personal use.
</div></BLOCKQUOTE>

hmmm, California has not decided any such thing. That decision was made by those who drafted the International Fuel Tax Agreement (IFTA) and Ca has no authority to decide, define or revise anything in the IFTA. California did not create the IFTA. California is just one of many states who agreed to become a party to the IFTA years ago. Each state that is a party to this agreement, is required to enforce its requirements.

<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content"> IFTA Section 2 Definitions - Recreational vehicles - Vehicles such as motor homes, pickup trucks with attached campers, and buses when used exclusively for personal use by an individual.
To qualify as a recreational vehicle, the vehicle cannot be used in connection
with any business operation or be registered under a business name. </div></BLOCKQUOTE>

An LLC by definition is a business, even if some individuals and their creative lawyers may try to re-define what an LLC is within their LLC operating agreement. The LLC may have no revenue and no income, but it is a business entity, and therefore the vehicles registered under its name are "qualified" vehicles under IFTA and subject to fines in every state it travels through without an IFTA license or IFTA trip permit.

Jim

Gary M. Smith · 05-14-2007, 08:07 PM

JRP,
Thank you for your lucid explanation on this subject!

hrhuggie · 05-14-2007, 08:13 PM

Paul,
you may have a 1% chance of being stopped, but on the way back from Las vegas last week, the inspector stopped us, entered the coach and asked to look in the refridgerator. so I guess they are doing spot checks!

76dc · 05-15-2007, 01:48 AM

I believe that if you check you will find that Calf. will only be applying this code to Calf. residents that come into the state with a LLC.

Tom N · 05-15-2007, 03:06 AM

The LLC is not "fake".

This is no more illegal than filling up you motorhome in a low tax fuel state before entering a high tax fuel state.

In truth, any commodity bought in one state, at a lower sales tax, and taken to a higher sales tax state is supposed to be declared and the difference in sales tax is suppose to be paid to the higher taxing state. The same applies to mail ordered goods.

-Tom