Montana LLC

[JFXG]

AndySally...... It appears you investigate this course of action for the specific purpose of not paying to South Dakota tax moneys to which they would otherwise be entitled.

When you try to skirt the line between tax avoidance and tax evasion you walk a very fine wire. Ask the Wallenda family how that works out. What's your safety net?


John & Diane, fulltiming since '12
'02 DS, FL, Cat, '04 Element
NHSO RVM103

[wnytaxman]

Originally Posted by JFXG

AndySally...... It appears you investigate this course of action for the specific purpose of not paying to South Dakota tax moneys to which they would otherwise be entitled.

When you try to skirt the line between tax avoidance and tax evasion you walk a very fine wire. Ask the Wallenda family how that works out. What's your safety net?


John & Diane, fulltiming since '12
'02 DS, FL, Cat, '04 Element
NHSO RVM103

Tax avoidance is perfectly legal and can be accomplished by complying with the laws of the OP's current state. Many who post about the Montana LLC automatically assume it is illegal. It is not illegal providing one complies with the laws of their state.

The Montana LLC is perfectly legal providing one complies with the laws of their state, properly document that compliance, and comply with any other residency and licensing requirements. It is no different than a taking a deduction on a federal tax return for the interest paid on a motor home, the sales tax paid on an RV, or the solar credit taken for solar panels on an RV. Those deductions are allowed providing one meets the legal requirements of the deductions. That's how the tax laws work.

[JFXG]

Originally Posted by wnytaxman

...... The Montana LLC is perfectly legal providing one complies with the laws of their state, properly document that compliance, and comply with any other residency and licensing requirements....

I agree. Compliance is the key. And proper compliance is often a thin silver wire embedded in a broad gray area. You have to observe it from just the correct perspective in order to see it at all. Else, corporations and individuals would not need to have legions of accountants whose sole function is to monitor and ensure that compliance.

I really care not what games others may choose to play. Personally, I'd rather relax, and not walk too close to the edge of the cliff.


John & Diane, fulltiming since '12
'02 DS, FL, Cat, '04 Element
NHSO RVM103

[slemnah]

Just because it's legal doesn't mean that it is the correct thing to do. As for the attitude of "tough [Moderator Edit] if you don't like it I am going to do it anyways" there's a reason it's called a tax loophole. Good luck with it and if you don't get caught, more power to you. If you do get caught then don't be surprised if they throw the book at you.

[slemnah]

It's not like any of those deductions at all. If it were then no one would be talking about it and states wouldn't be looking for violators that have Montana tags on the motorhome and some other state on the toad.

Originally Posted by wnytaxman

Tax avoidance is perfectly legal and can be accomplished by complying with the laws of the OP's current state. Many who post about the Montana LLC automatically assume it is illegal. It is not illegal providing one complies with the laws of their state.

The Montana LLC is perfectly legal providing one complies with the laws of their state, properly document that compliance, and comply with any other residency and licensing requirements. It is no different than a taking a deduction on a federal tax return for the interest paid on a motor home, the sales tax paid on an RV, or the solar credit taken for solar panels on an RV. Those deductions are allowed providing one meets the legal requirements of the deductions. That's how the tax laws work.

[slemnah]

Just remember you can polish up a pig but it's still a pig!

[wnytaxman]

Originally Posted by slemnah

Just because it's legal doesn't mean that it is the correct thing to do. As for the attitude of "tough [ moderator edit ] if you don't like it I am going to do it anyways" there's a reason it's called a tax loophole. Good luck with it and if you don't get caught, more power to you. If you do get caught then don't be surprised if they throw the book at you.

I think you may be missing the point here. If someone uses a Montana LLC and they have complied with the laws of their state then there is no book to be thrown at them because they are within the law. If, however, someone uses the entity to simply not pay the sales tax and they do not comply with the laws of their state then yes, they can have the book thrown at them and it will be costly. That is exactly what happened to one of our clients. He could have complied with the NYS law, but he chose not to and it was a very costly decision.

I am neither condoning nor condemning the use of the Montana LLC. It may work for some if they have the right set of circumstances. Many of us, myself included, do not see the Montana LLC being something that we can comply with the laws of our resident states and, therefore, will not use it.

[wnytaxman]

Originally Posted by slemnah

It's not like any of those deductions at all. If it were then no one would be talking about it and states wouldn't be looking for violators that have Montana tags on the motorhome and some other state on the toad.

With all due respect, the use of the Montana LLC is exactly like the deductions I mentioned earlier. They are deductions that are allowed by the laws. The same is true if one complies with their own state's laws. It really is that simple.

As to the discussions about Montana LLC's, there is a great deal of misinformation about them. On the one hand you have those that think that all you have to do is set up the LLC and that's it. Voila, no sales tax and no worries. That is certainly not the case with the Montana LLC's. On the other hand you have those that think that the use of the Montana LLC's are illegal regardless of compliance with the laws of their state. Neither side is correct so that's why we have these discussions about every month or two.

[AndySally]

After doing some research and receiving information from all of you, I appreciate all the Help, but it appears that the LLC will is to risky for us, so we will stay with the SD plates until we move to Montana.

THANKS

[barmcd]

I think everyone ought to pay their fair share--but I have no problem with paying as little as possible under the law.

My question is why is the Montana LLC law written as it is? One would have to assume it provides some type of benefit to Montana residents and not just out of state RV owners.

I bought my coach from Louisiana and the PO had it registered under his business name. He said it was for tax purposes, but I don't see a lot of questions about Louisiana LLCs on the boards. It did take a little extra paperwork to transfer the title because we had to have the incorporation documentation to prove the seller was an authorized officer of the corporation.

[wnytaxman]

The LLC law was created in Montana just like it was in all the other 49 states and the District of Columbia. The difference is that Montana does not have a state sales tax and setting up the Montana LLC does not subject the owner of the LLC to any taxes in Montana other than the registration fees. I have also seen Oregon used and I'm sure there are a couple of other states that would be possibilities.

The key is that an LLC is a separate legal entity but it is not separate from a tax perspective. This means that I can set up an LLC in any state which will be separate from me as a person. So I can still live in NY, but technically my motor home "lives" in Montana from a licensing standpoint. The problem comes up with where the LLC assets are situated. Even though I have an asset, say a million dollar motor home, titled in a Montana LLC, it is still subject to licensing and residency laws of wherever I garage that RV.

This is exactly where my client got nailed with his Montana LLC. It was licensed in Montana but garaged in NY for more than 30 consecutive days. NYS knocked on his door and wanted money....a lot of money. He did not comply with the laws of NY and he could not document his compliance.

[Mr_D]

We could set up a WA LLC as WA residents. BUT we would still owe the about 9% sales tax (depends on the county you live in).
Besides that tax money goes to pay part of my WA state retirement so I get some back every month.

[mhbell]

Originally Posted by slemnah

I am one of those people that have a problem with the tax loophole of LLC registrations. I won't turn anyone in but you are using my states roads and Infrastructure and should share equally in paying for it. I didn't like paying $13k in taxes but I did.

I thought that the Gas and Diesel Fuel tax's paid for the roads and not property tax. I am not a resident of Calf.
Mel

[blang]

Originally Posted by slemnah

It's not like any of those deductions at all. If it were then no one would be talking about it and states wouldn't be looking for violators that have Montana tags on the motorhome and some other state on the toad.

And, ESPECIALLY, a Driver's License in the pocket of the driver that does not match the State of one or both of the vehicles. In that situation, the only thing that needs to happen for you to begin your problems is to get stopped for a traffic ticket.

Additionally, what may be legal today could be different tomorrow. Sure, a Montana LLC is legal... it is the "home" State of the owner that is, on an ever-increasing frequency, figuring out how to collect taxes they think rightfully belong to them. In my opinion, that's just too fine a line to walk.

Maybe a lawyer can weigh in here and clarify but, if I'm not mistaken, the Montana LLC popularity began with RVers when someone actually had business to conduct in multiple states and the LLC was for profitable business (using the Coach to help accomplish said business) rather than just a shell in which to hold a vehicle. I would feel much more comfortable defending the first scenario than the second.