LLC Registration

[Railroader]

I have heard of three people that got cought using the LLC and they had to pay big time. Fine plus the tax. The states are really cracking down on this. A few years ago you could get away with it. The states need all the money they can get at the present time. They also can get you for fraud. Myself I would not take the chance. If you can't afford the taxes you can't afford the coach.

[Mike Canter]

I think one needs to separate Urban Legends from facts. First of all it is totally legal according to lawyers and is not fraud if done correctly. One will own a legal LLC company in Montana and the MH will be owned by that Montana company. If the MH is not licensed in another state then they cannot give you a ticket for it doing it. Now if you registered the MH in another state without establishing a LLC then that is against the law. The only two things you have to check is that your loan company allows it and your insurance company will insure it. I don't think that I should have to pay $3000 a year Ad Valorem tax for my MH in the state of Georgia. That is a rip off. I don't mind paying the road tax to renew my tags, thats OK. Also, in the State of Georgia there is no sales tax for a private sale so nobody is getting ripped off on the sales tax.

[11595gulf]

Let's assume for argument sake the LLC angle is legal. What many are not factoring in here, as ExtenderFE noted, is that you must buy commercial insurance for a vehicle titled in a company name. I recently bought an RV licensed in a company name and the insurance quotes I am receiving are FIVE times the rates of personal insurance, with worse coverage. If you choose not to insure commercially, you are exposing yourself to the risk of your insurer finding that you misrepresented status during application and denying a large claim. I and four brokers have found only two companies that will even write commercial policies on RVs--Progressive & National Interstate--both quoting premiums in the same ballpark. If somebody else has found other companies that will insure commercial RVs, please do share, because I have looked high and low...

Guido

[W4RLR]

By the way, while sales tax is deductible from federal income tax, the fees for REGISTRATION in Florida are not. Only in states that assess personal property tax as part of registration is registration deductible.

[SteveLevin]

Originally Posted by Mike Canter

I think one needs to separate Urban Legends from facts. First of all it is totally legal according to lawyers and is not fraud if done correctly. One will own a legal LLC company in Montana and the MH will be owned by that Montana company.

I don't think anyone argues that's it's legal to have a Montana LLC own the coach. However, various states have varying laws that apply -- for example, it appears that Florida requires any vehicle that spends 6 months or more in Florida to be registered there. The LLC can continue to own it, but it would have to be registered in, and pay taxes to, the state of Florida. Other states have similar laws, where, for example, residents of those states cannot own vehicles registered in other states.

And before you argue the "ownership" point, keep in mind that leased vehicles, for example, are not "owned" by the person that signed the lease but by the leasing company. There is significant legal precedent that if you are the sole effective operator of a vehicle owned by an LLC you can be considered the "owner."

I'm all for minimizing taxes and if I were a full-timer I'd absolutely be in Montana, etc. as my residence, but being that I demonstrably the only operator of my coach, and am demonstrably a resident of California, it isn't worth registering anywhere but here.

Steve

[Clay L]

As far as many states go using an out of state LLC to evade fees is illegal if the RV is garaged in the state for more than some defined time.
CO is one state that has successfully prosecuted people.

See RV.Net Open Roads Forum: General RVing Issues: Caution about forming out-of-state RV L.L.C.'s

and http://www.cadaonline.org/enewslette...7/RVLETTER.pdf

[Midniteoyl]

$65 to get mine plated.. Indiana...

Sometimes going older pays

[JimM68]

I've had a Montana LC for a year now. It's a legitimate business, running and owning a website.

When I buy my next RV, I will not hesitate to title it with that LLC, and therefore I will not be liable for Illinois 6.75% sales tax.

I also own a subS corp in Illinois, have had multiple company cars over the years, some driven by employees, all insured in my name by state farm, dirt cheap, and never a problem or question on the insurance.

If a "reasonable period of time" goes by and I still live in Illinois, I'll probably choose to or be required to register the RV in Illinois, but I won't have to pay the sales tax on it, and license platges are cheap in Illinois.

[KIX]

In my opinion the crux of forming an out-of-state LLC and being penalized for it rests on the purpose for forming the LLC. In other words.........if you form an LLC for the purpose of avoidng your State's sales taxes then you are in effect evading taxes and that is what's illegal. Proving that would be much easier if there is but one asset of the LLC and that asset is a motorhome operated by a person that resides in another State.

[Automobilist]

California doesn't care where you own an LLC. They do care where your motorhome (or any vehicle) stays. If it's in California over 10 days, and you have any ties here; as in own property, have kids in public school, pay utilities, have a bank account, etc. it's required to be registered in CA.

No problem though if you live in CA, own an out of state vehicle, and never bring it into CA for more than 10 days at a time.

[11595gulf]

I don't think you have to be a lawyer to know that a vehicle is titled in the name of the business, is a commercial vehicle, and as such, commercial insurance is required, for example; http://www.progressivecommercial.com/web-promos/insurance/dinacap.aspx?num=13&se=bing

Insurance companies today routinely run DMV checks, most certainly when a large claim is made. Your claim of personal use for an RV that is registered to a business, LLC or otherwise, will not hold water legally and I assure you that the lawyers on the insurance company side will look for any loophole to avoid paying a large claim and you are providing one that you could drive an RV through. If someone at Interstate is telling you that you don't need commerical for a commerically owned vehicle, I suggest you get it in writing, and perhaps share it with us.

And by the way, while auto commericial insurance CAN be inexpensive, RV commercial insurance is NOT. If you don't agree, please provide some names of companies that will write commerical insurance on an RV and relative rates for similar coverages personal/commericial. I would like to disproven on these points, but unless JIMM68 or Route66 can provide some facts, I am not pursuaded.

[JimM68]

Originally Posted by 11595gulf

I don't think you have to be a lawyer to know that a vehicle is titled in the name of the business, is a commercial vehicle, and as such, commercial insurance is required, for example; http://www.progressivecommercial.com/web-promos/insurance/dinacap.aspx?num=13&se=bing

Insurance companies today routinely run DMV checks, most certainly when a large claim is made. Your claim of personal use for an RV that is registered to a business, LLC or otherwise, will not hold water legally and I assure you that the lawyers on the insurance company side will look for any loophole to avoid paying a large claim and you are providing one that you could drive an RV through. If someone at Interstate is telling you that you don't need commerical for a commerically owned vehicle, I suggest you get it in writing, and perhaps share it with us.

And by the way, while auto commericial insurance CAN be inexpensive, RV commercial insurance is NOT. If you don't agree, please provide some names of companies that will write commerical insurance on an RV and relative rates for similar coverages personal/commericial. I would like to disproven on these points, but unless JIMM68 or Route66 can provide some facts, I am not pursuaded.

I would happily provide facts... but the facts would contain a bit too much personal info to be spreading around...

All my State Farm vehicle policies are in my name, not my businesses name.
This includes (or has included over the years...)
Vehicles where I told them they were used for business and would travel more than 30,000 miles per year.
Vehicles where the listed primary driver is not related to me and does not live in my home. (Employees)
Vehicles titled to me personally
and vehicles titled to my business.

All the insurance policies are in my name personally, with an accurate listing of the primary driver's name address and D/L #. Insurance rates are (I assumed) figured by the primary drivers zip code and driving record.
Our policy's average $300-$350 semi-annually, for 1000 deductible collision, 500 deductible comp, and state required minimums for liability, PLUS a million dollar umbrella on everything.

No special considerations for "commercial vehicles" and no outragious rates.

[JimM68]

Back to RV stuff...

There are 2 considerations.

Sales tax.
&
Registration and license plates.

In all cases, an "LLC" is a legal entity, and can own property. According to the federal government and all 50 states. An LLC, SubS, or C Corp are legal entities, just as people are.

Different states have different rules, regulations, and fee's regarding sales tax and vehicle registration fee's. I'm only "an expert---sic" in the state I live, Illinois.

Someone above said something about sales taxes being (federally?) deductible? They are not, have not been for 20 years.

"Sales tax" in Illinois is roughly 6.5%, on everything but food. Some counties or municipalities levy thier own sales tax which may add to this. Chicago is up around 12%.

Full sales tax is charged on all vehicle purchases FROM DEALERS, on the purchase price less tradein. This is true if you buy from out of state dealers too.

On private sales, there is a chart based only on age for transactions under $15,000.
Over $15,000, you pay a flat $1500.

Illinois dealers collect sales tax directly. With out of state dealers and all private transactions, the tax is collected by the DMV when you go to title and register the vehicle, and acquire license plates.

You only pay sales tax once, when you purchase a vehicle. On an expensive RV, it can be a big ton of money.

License plates must be renewed annually, and are cheap, roughly a hundred dollars.

If my Montana LLC was to purchase an RV, it would not be liable for Illinois sales tax, period.

Registration and license plates are another thing. Illinois, like most states, does require vehicles that are kept in the state to wear Illinois Plates. And most likely, if I was staying in Illinois long term, I'd transfer the title from Montana to Illinois according to the law, and get Illinois license plates.

Since ownership doesn't change, no sales tax would be due.

Where people have gotten into problems is in states with outragious registration and license plate fees. The states can and do require vehicles be licensed and titled where they are kept and used (regardless of ownership) and the people trying to use the LLC thing to avoid these fees in their home state are probably going to have problems.

[RustyJC]

Originally Posted by JimM68

Someone above said something about sales taxes being (federally?) deductible? They are not, have not been for 20 years.

It is in Texas and other states without a state income tax if one itemizes deductions. Congress allows residents of those states to deduct sales tax (itemized with receipts or IRS-calculated estimate) in lieu of state income taxes in our itemized deductions.

Rusty