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Lumberguy · 08-10-2017, 12:54 PM

Been reading a lot about Montana LLC strategy for registration and legal tax remediation. Is this real, what are pitfalls...experiences ? Looking at buying last DP next year and hate the thoughts of $$$$$ taxes.

wnytaxman · 08-10-2017, 12:59 PM

Quote:

Originally Posted by Lumberguy

Been reading a lot about Montana LLC strategy for registration and legal tax remediation. Is this real, what are pitfalls...experiences ? Looking at buying last DP next year and hate the thoughts of $$$$$ taxes.

There have been tons written on the subject here and elsewhere. A simple search will probably generate enough reading material for you to last until you make the purchase next year.

A lot depends on your particular circumstances. Will you be full timing or just vacationing in the rig? If you are full timing what state will you use for your tax residence? If you are not full timing, then what are the rules for residency, registration, and sales and use tax in your state?

Can it legally be done? Yes, but it can be tricky, particularly if you are not full timing. Even if you comply with the law and documentation you should still be prepared to defend your position and the time and money it may cost.

Lumberguy · 08-10-2017, 01:45 PM

We will be fulltime but it may be a year after purchase.

wnytaxman · 08-10-2017, 02:39 PM

Quote:

Originally Posted by Lumberguy

We will be fulltime but it may be a year after purchase.

That may present a problem to you. The sales tax would be due upon purchase and, depending on what state you are in, you may find that your path of least resistance is to pay the tax and not worry about it. Some states are much more aggressive than others. If you are in a high tax state then you should pretty much plan on your state taking an aggressive position with your use of the Montana LLC.

You will need to do some pretty sound homework. You need to know the registration laws of your state, the residency laws of your state, and the sales and use tax laws of your state. Those three sets of laws will dictate whether or not you can use the Montana LLC legally.

epj · 08-10-2017, 06:27 PM

It's a tax dodge. However, there are many states you can get away with it. My MH is owened by an LLC which is located in Wyoming. I own the LLC. I don't advertise this to the local revenues , but so far it's worked for me. No difference from all the corporations that are headquartered in Delaware.

GEM1N1 · 08-10-2017, 08:52 PM

https://www.49dollarmontanaregisteredagent.com/

Highly recommend these people. Reach out to them and they will answer every question you have.

Lumberguy · 08-11-2017, 04:53 AM

Thanks all very valuable feedback.

wnytaxman · 08-11-2017, 06:48 AM

Just be very careful because the pitfalls are many. The attorneys will tell you that you are perfectly fine going the Montana LLC route and then when the fertilizer hits the ventilator (to paraphrase the old expression) they will tell you that they are not licensed to practice in your state. That is exactly what happened to one of my clients.

As to the comparison with Delaware Corporations, that comparison doesn't work. Whether a corporation is incorporated in Delaware, Wyoming, or Montana, it doesn't matter. They must file taxes in any state in which they have operations. It's called Nexus (not related to the RV company) and it is a very big issue. Vehicle registrations and sales taxes are a different issue than corporations.

OLYLEN · 08-11-2017, 09:39 AM

A reach out to the drug dealer to see if it's OK. If it's illegal pay the tax, for you going full time there MIGHT be a legal way. Big ? Are you keeping a home that could be construed as YOUR residence where a tax would be do during the transition or keeping a residence, home base.

LEN

Deep Water D · 08-11-2017, 10:13 AM

Yup, eventually states like Montana will want to know why you're not paying income taxes in their state. Or the state you do pay taxes in will want to know why your RV is registered to a MT LLC. As states get hungrier for revenue streams, this scam will come to an end

wnytaxman · 08-11-2017, 10:44 AM

Quote:

Originally Posted by Deep Water D

Yup, eventually states like Montana will want to know why you're not paying income taxes in their state. Or the state you do pay taxes in will want to know why your RV is registered to a MT LLC. As states get hungrier for revenue streams, this scam will come to an end

Entities such as LLC's, Corporations, and Limited Partnerships are formed in different states all the time. Most of those states are able to collect registration fees and maintain rather nice niche businesses of catering to those out of state businesses. An entity formed in another state does not subject the owners to taxes in that state unless they are pass through entities that have operations in that state. For example, if you own Ford stock you are not required to pay Michigan taxes on your earnings. Same with an LLC or corporation formed in another state.

It is legal to form an LLC in any state and for someone to have that LLC own an asset such as an RV. The problem with the LLC's arises when they are not in compliance with the laws of the state where the owner has a residence. The implication that anyone who owns a Montana LLC is a tax cheat is simply not true. Full timers can use the Montana LLC to their benefit assuming they are in compliance with whatever state they choose as their tax home. Non-full timers can also use the Montana LLC providing they comply with the laws of their resident state. They are no more tax cheats than someone who takes a deduction for the sales tax paid on their RV or one who deducts the interest paid on their rig. As long as it is allowed under the law then no one is cheating anyone.

aguablanco · 08-11-2017, 12:53 PM

Quote:

Originally Posted by wnytaxman

Entities such as LLC's, Corporations, and Limited Partnerships are formed in different states all the time. Most of those states are able to collect registration fees and maintain rather nice niche businesses of catering to those out of state businesses. An entity formed in another state does not subject the owners to taxes in that state unless they are pass through entities that have operations in that state. For example, if you own Ford stock you are not required to pay Michigan taxes on your earnings. Same with an LLC or corporation formed in another state.

It is legal to form an LLC in any state and for someone to have that LLC own an asset such as an RV. The problem with the LLC's arises when they are not in compliance with the laws of the state where the owner has a residence. The implication that anyone who owns a Montana LLC is a tax cheat is simply not true. Full timers can use the Montana LLC to their benefit assuming they are in compliance with whatever state they choose as their tax home. Non-full timers can also use the Montana LLC providing they comply with the laws of their resident state. They are no more tax cheats than someone who takes a deduction for the sales tax paid on their RV or one who deducts the interest paid on their rig. As long as it is allowed under the law then no one is cheating anyone.

And there is the problem! Most of the potential MT LLC folks have no reason, other than to avoid home state laws and taxes, to form any type of LLC. I would venture to guess that most of them have never been to MT prior to forming their LLC. Everybody loves government services but only some see it as their obligation to pay for said services.
RichH

Lumberguy · 08-11-2017, 01:23 PM

I pay my fair share of taxes trust me but paying 15000 in sales tax for the privilege of owning a MH and then paying another 6000 in property taxes seems to be a little lopsided I doubt my services will improve especially when most all my travels are outside my home state.

wnytaxman · 08-11-2017, 01:38 PM

Quote:

Originally Posted by aguablanco

And there is the problem! Most of the potential MT LLC folks have no reason, other than to avoid home state laws and taxes, to form any type of LLC. I would venture to guess that most of them have never been to MT prior to forming their LLC. Everybody loves government services but only some see it as their obligation to pay for said services.
RichH

Just as a point of reference, LLC's are mostly an asset protection entity so forming an LLC is not necessarily a tax dodge. It could be a way to protect one's assets from the famous law firm of Dewey, Cheatum, & Howe!

Compliance with the laws of your home residency state is critical. No compliance equals taxes, penalties, and interest and maybe some lawyer fees.