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Liberate · 01-12-2014, 05:29 PM

I would really appreciate your thoughts on the following sales tax issue.

I have a condo lease in CO that has a sales tax rate of 5%. I consider this a second home. I live in my mortgaged home in MO that has a 8% sales tax rate.

I am buying a new $90K RV and when I told the Finance Manager I would be registering the MH in CO for the lower sales tax he said that should be fine.

The difference is a $2,500 savings!

Now here is the dilemma, because I intend to not renew my CO lease in February (lease ends March 7th) my DW somehow thinks that paying CO the 5% is not right and that I should instead pay MO the 8%, particularly since the MH will be garaged (NOT driven) in MO.

The RV dealer will be issuing me 30 day temp tags, which does allow me to use the RV these 30 days. But, because MO law says a new vehicle is used after 90 days, my plan is to NOT use the MH and park it after the 30 days for the remaining 60 days and then register the MH as a used RV thereby avoiding any MO sales tax.

Now, even though my DW made calls to both the CO and MO DMVs to confirm that this approach will work, she is now saying her conscience tells her that doing this is somehow wrong, yet she can't explain. And, I see nothing wrong with me saving $2,500 in sales tax by doing this.

Any thoughts and/or opinion on this interesting husband and wife tax dispute? Am I wrong? Is she correct in her thinking?

docj · 01-12-2014, 05:44 PM

Missouri Law
Motor Vehicle Titling
on the subject says:

NOTE: If the vehicle has been owned and operated in another state for at least 90 days prior to titling and registering in Missouri, no sales tax is due.

IMHO you would have to at least purchase CO tags in order to claim that you have actually operated the vehicle in another state for at least 90 days. Depending on the cost of CO tags and whether or not they can be turned back in for a partial refund, that still might be a good deal.

An additional problem with your current approach is that your insurance company may not be happy with the vehicle not having an active registration for the 60 days it wouldn't have tags.

**JohnRR** · 01-12-2014, 05:44 PM

Nothing wrong with not paying taxes you are not legally required to, now that said using advice for this from any on line forum rather than a qualified accountant could lead you in to troubled waters.

Dick Noble · 01-12-2014, 06:10 PM

Have you compared CO vs MO registration costs? I live in CO and it is very expensive to register my 5er here.

wnytaxman · 01-12-2014, 06:58 PM

There is one major whole in your logic. The Missouri law refers to BECOMING a Missouri resident. Oops, you already are a Missouri resident. It looks to me like you are going to owe the Missouri tax no matter what.

Whenever someone comes up with a way to try to dodge the sales tax, they always seem to try to ignore the residency laws. If you have a Missouri driver's license, vote in Missouri, and file a Missouri resident income tax, then you are a resident of Missouri. Your long term cheapest route is probably going to just pay the tax.

Liberate · 01-12-2014, 08:19 PM

Thanks for the comments and let me add some more info that should further clarify. First, re...

"IMHO you would have to at least purchase CO tags in order to claim that you have actually operated the vehicle in another state for at least 90 days."

Yes, I would title and register the MH in CO, which is not that expensive. It's when you get your lic plates that it gets expensive, which I would NOT do. My plates would eventually be MO plates after the 90 days.

With respect to incomes taxes, for 2013 and part of 14 I will be paying income taxes in both CO and in MO, as I work in both states, hence the reason for two home. My driver's lic is MO however.

hogdriver · 01-12-2014, 08:38 PM

I grew up in CO and later worked in MO. When I entered the military in my 20's I identified with CO but liscened my vehicles in my working state because CO got crazy on taxes. Both states have high automobile fees but CO is far worse.

targaboat · 01-12-2014, 08:54 PM

I think you are missing that when you register you ARE getting tags. I do not know what you mean by registering. MO will know every move you made, for example when you bought the MH and where is is titled. When you buy it you will have to title it somewhere. No state will let a vehicle be stored titled and without a tag. Since you are buying it from a dealer they will send the paper work into the state you tell them. I on the side of your wife. But is not a moral issue. The states are away of people trying to do what you are thinking.

If you are going to continue to work out of state you could become a resident in a different state. One issue there is you can continue to own property in AR and be a nonresident. Also watch out because AR has, or used to have a high yearly registration renewal on RVs or some call it an excise tax. TX does not, KS used to but changed many years ago. It can be close to the sales tax. We ran into that on airplanes in KS where a $12000 airplane cost over $1000 every year and is based on the market value of the plane.

Crabby Mike · 01-13-2014, 06:16 AM

Some states specifically allow what you're trying to do; I just don't know if MO and/or CO are among them. I lived in MD and owned vacation property in DE. DE specifically allowed non-resident property owners to register one or more vehicles there, with the stipulation that the vehicle(s) be principally garaged there. While living in MD, we purchased both a motorhome and a boat w/trailer, and registered them in DE, which has lower sales tax (no sales tax on most things, but a 3.75% tax on vehicles). There was a special form used, which was basically an affidavit asserting property ownership in the state. We eventually moved to DE full-time, so never needed to change our state of registration.
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On edit, I see a difference -- you are renting, not owning property, in CO. Might matter or not, depending on what the states allow.

docj · 01-13-2014, 06:19 AM

Quote:

Originally Posted by Liberate

"IMHO you would have to at least purchase CO tags in order to claim that you have actually operated the vehicle in another state for at least 90 days."

Yes, I would title and register the MH in CO, which is not that expensive. It's when you get your lic plates that it gets expensive, which I would NOT do. My plates would eventually be MO plates after the 90 days.

I've registered vehicles in more than half a dozen states and I've never seen any that would register and give you a title without issuing plates. The temporary plates provided by a dealer are to tide you over until you get the vehicle registered; they are not evidence of registration.

I actually think you can use this approach because the "bringing a vehicle to MO" section doesn't preclude you having vehicles in more than one state and deciding to bring one to MO. However, I think if you do what you are planning to do you will end up having to pay MO the full tax. JMO

Chiefbvfd · 01-13-2014, 06:40 AM

I would buy the MH and register and license it in Colorado (saving the $2,500). Come March 7th transfer it to Missouri. The sales tax has been paid in CO and all you should have to pay Missouri is the transfer fees, which I assume would be substantially less than $2,500. Good luck...

wnytaxman · 01-13-2014, 07:50 AM

Your situation is definitely unique in the fact that you live and work in both states. Most states use a 183 day rule to determine residency which may place you into Missouri as a resident. This gets magnified by the fact that you own property in Missouri and you have a Missouri driver's license. You mentioned that you file tax returns in both states, but do you file resident returns in both or non-resident in one?

Be aware that most states are hurting for money and will go to extremes to get those funds. You may be correct in your assumptions that you can license the rig in Colorado to save the sales tax, but you may end up incurring substantially more in costs to defend your position regarding residency. You may also end up opening yourself up to Colorado seeking to tax your Missouri income due to your new "resident" status in Colorado. It gets really dicey when it comes to residency. I'm fighting two cases right now with NY trying to tax someone who lived in British Columbia for two years and another person who lives in Florida and has lived there for eleven years.

When you are dealing with taxes being right may still be costly when you are trying to defend yourself.

wa8yxm · 01-13-2014, 08:08 AM

Quote:

Originally Posted by JohnRR

Nothing wrong with not paying taxes you are not legally required to, now that said using advice for this from any on line forum rather than a qualified accountant could lead you in to troubled waters.

I fully agree, and from what others have posted in this thread, Buy it in CO, pay the 5% and in 3 months (plus a few days just to be safe) Bring it home to your 8% state. Also stab Ceasar. (The last time people paid taxes that high Brutus stuck a knife in Ceasar). No don't do that.. Might cause repercussions.

I might add.. JohnRR is the first poster in a Tax thread who nailed it.

I know of many who have purachased a Motor home in, say Montanna, and titled it to a LLC they formed for the specific purpose of paying taxes... only to get a knock on the door from their home state. AND one BIG tax bill (including interest and penalty)

But you actually have a CO residence. even if it is part time...
Thus I agree with JohnRR.. Buy it in CO, pay the tax, register it to your CO address and.. wait 90 days to move and re-title/register it.

Liberate · 01-13-2014, 08:10 AM

Thanks again for all the comments. Re...

"Your situation is definitely unique in the fact that you live and work in both states. Most states use a 183 day rule to determine residency which may place you into Missouri as a resident. This gets magnified by the fact that you own property in Missouri and you have a Missouri driver's license. You mentioned that you file tax returns in both states, but do you file resident returns in both or non-resident in one?"

I actually worked longer in the State of CO than MO in 2013 (75% of the yr in CO & 25% of the yr in MO). In 2013, while in MO, I had an apt. But this will be reversed in 2014, hence in late December of 2013 I bought my new MO home, which is were I am sitting right now. So for 13 I plan to file as a resident of CO and for 14 I will be filing as a resident in MO.

Sorry this is so complicated.