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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.”
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.