Advice on registration

[chuydog]

Is it a hassle to register an RV in a state that has lower registration rates than Arizona? We're paying over $800 a year. I'm told you must use a resident agent or set up a LLC in say Montana or Idaho.

Any advise on how to do this and is it worth it?

Thanks

[windydaboo]

If you have a trusted relative or friend that lives in a cheaper state, you can add their name to the title and register in that state. This advice was given to me by a DMV agent for a similar, but different issue.

[mgscott4]

Don,t forget to check on insurance rates for an LLC in the state your applying for, They may differ from private ownership rates.

[az bound]

A word of caution on setting up an LLC. Some states are tracking down persons whom do so to avoid taxes that were residents of Minnesota. Last year Minnesota cought over 20 with average fines of $10,000.

[TXiceman]

The states that are loosing out on the fees are finding ways to go after the folks avoiding the fees.

Be very careful.

Ken

[jzick]

We, legally, used an LLC when we were able, but our circumstances changed and we are now registered in the state where we are required. Unless you are very careful about where you domicile and how often the rv is brought into your resident state, you can get in big trouble. We still get a phone call once in a while from the state tax collector's office asking about vehicles we own and where they are registered. See a knowledgeable lawyer in your resident state and then talk with one in the LLC state. Tax avoidance is smart, tax evasion is illegal and not so smart. JMO.

[ralphie]

Mass. is also going after tax avoiders. Do a search here for "domicile" or "residence" and you will get a lot of background info on which you can base your decision.

[RustyJC]

There's a LOT of information on this site regarding this subject. A search on "Montana LLC" will provide you with DAYS of reading!

Rusty

[erkme73]

I just read most of those threads, Rusty. The recurring theme is that what is legal in MT, does not mean it's legal in the state where you park your rig.

FL statutes say a non-resident entity can bring an out-of-state RV into FL, and leave it here, so long as it does not stay more than 6 consecutive months within the state. Otherwise it must be registered here.

320.37 Registration not to apply to nonresidents.—
(1) The provisions of this chapter relative to the requirement for registration of motor vehicles and display of license number plates do not apply to a motor vehicle owned by a nonresident of this state if the owner thereof has complied with the provisions of the motor vehicle registration or licensing law of the foreign country, state, territory, or federal district of the owner’s residence and conspicuously displays his or her registration number as required thereby.
(2) The exemption granted by this section does not apply to:
(a) A foreign corporation doing business in this state;
(b) Motor vehicles operated for hire, including any motor vehicle used in transporting agricultural or horticultural products or supplies if such vehicle otherwise meets the definition of a “for-hire vehicle”;
(c) Recreational vehicles or mobile homes located in this state for at least 6 consecutive months; or
(d) Commercial vehicles as defined in s. 316.003.

In NY apparently that limit is 30 consecutive days. One guy relayed a story of a client who got 'busted' when he couldn't prove that the rig had left within the 30 day period. I have a real constitutional/liberty issue with that. Since when are we guilty by presumption, and must prove our innocence? Should the burden not be on the state to prove that the rig was there for 30 days, instead of the resident proving it wasn't? I digress.

We're about to purchase a rig that, if registered in FL, will cost us upwards of $14k in sales tax. Ironically, this same rig was sold to the original owner 3 years prior - also in FL, where that owner also paid the sales tax to the state. What a friggin racket. Imagine being able to skim 7% each time the same unit gets sold... It's insane.

The wife is an emergency doctor, and is seriously considering the full-time lifestyle. She'd work through locum tenens, picking up 3-6 month contracts working at hospitals all over the country. Thus, we would likely never spend more than a few months in FL at any given time. So, that technically/legally means we'd meet the requirements of FL's statutes. Yet, I'm considering not going the LLC route, because I don't want to feel like a criminal - getting unfounded accusations by our government, and having to prove that I'm innocent.

I mean, how do you prove your rig wasn't in the state for 6 consecutive months? Stop at a state line to take a picture of you and your rig while you hold that day's USAToday? How do they know it wasn't photoshopped? Crazy, the power and fear that our government puts over us.

[Mr_D]

Originally Posted by erkme73

How do they know it wasn't photoshopped? Crazy, the power and fear that our government puts over us.

Fuel purchase receipts, campground receipts, restaurant receipts, grocery receipts, camping supply receipts. Pretty easy actually.

[erkme73]

Originally Posted by Mr_D

Fuel purchase receipts, campground receipts, restaurant receipts, grocery receipts, camping supply receipts. Pretty easy actually.

Yes, but if I'm in another state for business - or have family in other states - what would keep me from generating any such receipt without ever moving the rig from my property in FL? Just because I have a receipt for any of the things you listed above, only circumstantially ties my activities to camping - but in no way proves the rig ever left FL.

[zeelarry]

We did the Montana LLC thing a few years ago. We used a firm up there that handled everything for us and handles all of our yearly, legal stuff & registration. However, we did go one step further. We have a RENTAL AGREEMENT showing that we rent the motor home from the LLC. Never had a problem!

[wnytaxman]

erkme, the client who got busted was one of my clients. All he had to do was drive the 90 miles to Erie, PA, fill up, and drive home. That would have provided the proof that his rig had "left" the state or even drive across the border to Canada and then drive home. He would have met the requirements of "leaving" the state.

In tax, unless it is a criminal charge, the burden of proof is always on the taxpayer. I have heard all kinds of flack for that statement, but it is true and if you think about it, that is the only way any tax system can work.

Getting back on the subject at hand. Know the laws of your state, comply with those laws, and be able to prove your compliance. If you can do that then go ahead with the Montana LLC. If not, bite the bullet, pay the tax and don't worry about the tax collector.

[Mr_D]

Even if you can legally go with an LLC you may still run into tax problems as you would be required to file and pay IFTA fuel taxes as a business
Here's the FMCA story on it:

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, www.iftach.org, 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.