Montana LLC not such a good deal anymore?

[RVNewbie55]

Mont. Luxury Motorhome Owners Facing Fee Hike | RV Business

[CWSWine]

I was told this by two different people in two different camp grounds so I don't know if just a fire side chat or fact.

They said on the east coast they are running the plates on Motorhomes with Montana plates checking for registration shows LLC then check for DOT numbers on the side of the Motorhome. If there isn't DOT numbers they pull them over and wright them a ticket saying that it is register to LLC business and above 33,000 pounds and requires a CDL to drive since it not for personnel use only.

Like I said I don't know if is fact or just fire side chat so I would do the research though a reliable source before doing it.

[Adoyle52]

If the motor home is more then 299,999.99 msrp there will be a 800.00 a year tax

[Busskipper]

Originally Posted by CWSWine

I was told this by two different people in two different camp grounds so I don't know if just a fire side chat or fact.

They said on the east coast they are running the plates on Motorhomes with Montana plates checking for registration shows LLC then check for DOT numbers on the side of the Motorhome. If there isn't DOT numbers they pull them over and wright them a ticket saying that it is register to LLC business and above 33,000 pounds and requires a CDL to drive since it not for personnel use only.

Like I said I don't know if is fact or just fire side chat so I would do the research though a reliable source before doing it.

NOT

[wnytaxman]

Originally Posted by CWSWine

I was told this by two different people in two different camp grounds so I don't know if just a fire side chat or fact.

They said on the east coast they are running the plates on Motorhomes with Montana plates checking for registration shows LLC then check for DOT numbers on the side of the Motorhome. If there isn't DOT numbers they pull them over and wright them a ticket saying that it is register to LLC business and above 33,000 pounds and requires a CDL to drive since it not for personnel use only.

Like I said I don't know if is fact or just fire side chat so I would do the research though a reliable source before doing it.

Sounds like someone who just wanted to spread rumors and didn’t have even the most remote clue of what they were talking about. Fact number 1, an LLC is not a business. People see the words Limited Liability Company and immediately jump on the idea that this means it is a business. An LLC is an asset protection entity, NOT a business. Fact number 2, any personal use RV doesn’t need a DOT number or a CDL to drive it. Depending on what state you are in, you may need some type of special endorsement such as an R endorsement for NY.

The addition of the Montana Fees to an RV owned in a Montana LLC does reduce the advantages of using the Montana LLC. States are aggressively looking at Montana LLC’s in regards to sales tax issues. If I am incurring ten years of fees at $800 per year along with the cost of forming and maintaining the LLC, the advantages start to slink away pretty fast.

[Pusherman]

And for us who live in the Empire State (NY), once you choke down the 8% sales tax (in my county), annual registration fee is only about $200+ for 2 years for my 27,910 GVWR coach. No additional personal property taxes or fees. No Annual LLC fees to pay.

My 'R' Endorsement to drive a 26,001 lb RV was a onetime cost, maybe $20.

[XBoater]

I don't know, a Montana LLC does not pay say $40000.00 of NY sales tax on a $500k coach but pays $800.00 fee. The savings may "slick" away, but it will take 50 years ...

[BobGed]

Originally Posted by wnytaxman

.....If I am incurring ten years of fees at $800 per year along with the cost of forming and maintaining the LLC, the advantages start to slink away pretty fast.

Ed, when I read the original article citing Montana's reasoning and calculated income from this change, I kind of chuckled a bit.

I got the impression they think these LLC registrations are going to continue unabated, and are already accounting for the millions of dollars of increased revenue they think they're going to receive.

Do you read it the same way, or am I missing something?

[wnytaxman]

Originally Posted by XBoater

I don't know, a Montana LLC does not pay say $40000.00 of NY sales tax on a $500k coach but pays $800.00 fee. The savings may "slick" away, but it will take 50 years ...

If the annual fee of $800 was the only cost then I would agree with you. NYS “only” charges tax on the trade difference so the taxable cost would be only the cash difference. So, for example, a $400,000 coach with a $200,000 trade would result in sales tax of $16,000. You also have the cost to form and maintain the LLC which is another annual cost that doesn’t go away.

To add to those costs you also have the risk cost. It seems that a lot of folks look upon the Montana LLC as a tax version of instant coffee. Just add water and never pay sales taxes again. Various states have long since figured out how the Montana LLC works and have legislated against their use. For a Montana LLC to work here in NYS I would just simply never be able to drive it in my home state. Not a viable option. Other states have similar laws or other variations that hinder the use of the Montana LLC.

[wnytaxman]

Originally Posted by BobGed

Ed, when I read the original article citing Montana's reasoning and calculated income from this change, I kind of chuckled a bit.

I got the impression they think these LLC registrations are going to continue unabated, and are already accounting for the millions of dollars of increased revenue they think they're going to receive.

Do you read it the same way, or am I missing something?

Bob, I think the politicians in Helena look upon their LLC’s as a golden goose which will continue to lay the golden eggs no matter what. For many the break even point moves quite a bit with the added fees. They may generate some additional tax dollars with the annual fee but I do think they will lose a lot of revenue from potential new formations. The formation of Montana LLC’s has turned into a full scale cottage industry in Montana and these fees will hurt that industry in my opinion.

When I saw that Montana had instituted those fees I couldn’t help but think that they should have looked at the name of their Main Street in Helena before they instituted the fees. The street is called Last Chance Gulch Boulevard which may be prophetic for the effect of the new fees.

[XBoater]

Originally Posted by wnytaxman

If the annual fee of $800 was the only cost then I would agree with you. NYS “only” charges tax on the trade difference so the taxable cost would be only the cash difference. So, for example, a $400,000 coach with a $200,000 trade would result in sales tax of $16,000. You also have the cost to form and maintain the LLC which is another annual cost that doesn’t go away.

To add to those costs you also have the risk cost. It seems that a lot of folks look upon the Montana LLC as a tax version of instant coffee. Just add water and never pay sales taxes again. Various states have long since figured out how the Montana LLC works and have legislated against their use. For a Montana LLC to work here in NYS I would just simply never be able to drive it in my home state. Not a viable option. Other states have similar laws or other variations that hinder the use of the Montana LLC.

As you repeatedly say, its not for everyone. Given your response, it's not for you specifically, but to generalize that this will deter lots of people may be a bit of an over statement. If your in the group that the $800 annually is a big bite, you probably are under the $300k threshold. If your in the example you proposed with a trade, you only saved $20k but over 5 yrs most likely still a chunk and if you trade again and still take advantage of this you save again.

I do agree again this is a complicated process and needs to be researched for each specific case, but that's between you and your local taxman. The general preaching and fake news should not deter someone from researching this possibly advantageous procedure.

[nothermark]

I think he is his own tax man as in CPA.

He has some valid points including that many if not most states will check the plates if you have Montana registered RV in your yard. If you live in the state then you can get slapped with tax evasion for using a Montana LLC as a way to avoid paying your home state taxes. Given that you have to leave the RV out of your home state to use the LLC. That may or may not be worth the cost.

[wnytaxman]

Originally Posted by XBoater

As you repeatedly say, its not for everyone. Given your response, it's not for you specifically, but to generalize that this will deter lots of people may be a bit of an over statement. If your in the group that the $800 annually is a big bite, you probably are under the $300k threshold. If your in the example you proposed with a trade, you only saved $20k but over 5 yrs most likely still a chunk and if you trade again and still take advantage of this you save again.

I do agree again this is a complicated process and needs to be researched for each specific case, but that's between you and your local taxman. The general preaching and fake news should not deter someone from researching this possibly advantageous procedure.

Rich, all due respect but I have researched this entity choice from top to bottom for both NY clients and others and I can assure you that there is nothing in anything I have posted that can qualify as fake news. Can a Montana LLC be done legally? Yes, but it requires one to find out the laws of their state for residency, sales tax, and registrations. It requires one to follow those laws and also to document their compliance with those laws. If that can be accomplished then the Montana LLC will work. If not, then one can run the risk of getting caught, which happened to one of my clients, and paying some hefty fines. Some states, such as NY, can also levy criminal penalties which can certainly add to the cost. I am neither a proponent nor an opponent of the Montana LLC. However, many folks try to oversimplify the usage of the Montana LLC and get themselves into a jam.

[BobGed]

Originally Posted by wnytaxman

Bob, I think the politicians in Helena look upon their LLC’s as a golden goose which will continue to lay the golden eggs no matter what. For many the break even point moves quite a bit with the added fees. They may generate some additional tax dollars with the annual fee but I do think they will lose a lot of revenue from potential new formations. The formation of Montana LLC’s has turned into a full scale cottage industry in Montana and these fees will hurt that industry in my opinion.

When I saw that Montana had instituted those fees I couldn’t help but think that they should have looked at the name of their Main Street in Helena before they instituted the fees. The street is called Last Chance Gulch Boulevard which may be prophetic for the effect of the new fees.

And it gets even better Montana Vehicle Registration Fees
In addition to the annual $800 fee there are also annual registration fees as follows:

<2 years old = $282.50
2 years to <5 years old = $224.25
5 years to <8 years old = $132.50
8 years & older = $97.50