Montana LLC, worth the trouble?

[roboniko]

Looking at a new coach and was wondering if anyone has had any experience with doing the Montana LLC route? Also, financing issues with being in another state?

[KIX]

Here's some good advice. Call John Bennett with Bennett Law Office (google it) in Missoula, MT. The laws can differ from state to state. Answers you get on this forum may not be the correct answer for where you live and your particular circumstances.
Having said that......I formed a MT LLC when we bought our coach. It made sense then.

[racer0624]

Also you can contact Heggen Law in Missoula. I have friends who have used both firms and all are happy with quality of service. I used Heggen.

[Gary RVRoamer]

Some states are actively pursuing residents who purchase an RV through an out-of-state LLC but then keep the RV at their home anyway. Colorado and Massachusetts are two such states. Caveat emptor.

[roboniko]

I am in Louisiana so it sounds like the way to go. Thanks everyone. Just wish I would have done it on my last Coach.

[azloafer]

Motorhome owner pleads guilty to tax evasion Tuesday, 24 June 2008 00:00 Hilary Pruitt of Evergreen, Colo., has a cautionary tale about sales taxes and vehicle registration.
In 2004 he formed a limited liability company (LLC) in Montana to avoid paying sales tax and higher license fees on his $275,000 Alpine Coach, which he purchased at a Colorado dealership. In May 2008 he pleaded guilty to tax evasion charges stemming from this purchase.
It’s illegal for Colorado residents to register their vehicles out of state, but the tax savings can be enticing ….
Looking into LLCs
Before buying the Alpine Coach, Pruitt started exploring the possibility of forming a Montana LLC. He learned that attorneys or registered agents can prepare and file LLC documents for you, based on information you provide via telephone or the Internet. They’ll register the motorhome under your LLC’s name, and mail the license plates and documentation to you. A Montana LLC is considered a Montana resident and, like the residents of Montana, does not pay sales tax. Pruitt contacted an attorney in Montana who regularly advertised LLC services. “I was told that the practice had been working for many years for thousands of people in multiple states, he said. “I even checked with my local attorney and he said there had never been any cases tried. Of course, they both threw in their disclaimers.”
Forming the LLC
On the same day Pruitt arranged to purchase the Alpine Coach, he set up the Montana LLC by telephone. Using a credit card, he paid $1,280 for license plates, LLC filing fees and attorney fees. He received his Montana license plates via postal mail a few weeks later. If Pruitt had registered the coach in Colorado, he would have paid a 4.1-percent sales tax on the $275,000 coach at the time of purchase. That’s the rate the state was collecting in 2004 for unincorporated Jefferson County, where Pruitt lives. In addition, licensing the motorhome in Colorado would have cost $3,200, he said. Three months after buying the Alpine Coach, the Pruitts bought a towed vehicle, a Jeep Cherokee, and registered it under their Montana LLC, as well.
Exposed
Everything went along fine until spring 2007, Pruitt said. "One of the local TV channels did an expose on how much money the state of Colorado was losing due to people illegally registering their RVs out of state. One of my neighbors saw fit to turn me in.” The Revenue Department and Attorney General’s Office launched an investigation, and in summer 2007, agents from the Colorado Bureau of Investigation showed up at this doorstep. In May 2008 Pruitt was one of 12 individuals to plead guilty to charges of failure to pay tax. The court said he must register his motorhome in Colorado and pay $9,720 in unpaid taxes and fees to the state. He wants to make others aware of the implications of forming a Montana LLC to avoid sales tax and higher license fees in their home states.
Trial 'not worth the risk'
Pruitt and his wife, Joy, work for a mortgage company that has branches in 17 states, including Colorado and Arizona, where they are licensed brokers. Although they own a home in Evergreen, the Pruitts actually kept the motorhome out of Colorado for most of the first six months of ownership. “We were looking at conducting the mortgage business from Arizona in the winter and Colorado and other places in the summer.” Pruitt figured the fact that they kept the motorhome out of state for an extended period, on business-related travel, could be used to argue the case in their favor. But things didn’t work out that way. According to Colorado law, a Colorado resident is “any person who owns or operates any business in this state or any person who has resided within this state continuously for a period of 90 days or has obtained gainful employment within this state, whichever shall occur first.” “The way state officials put the case together," Pruitt said, "you just can’t take the risk of going to trial based on the plea offer. The penalties, if you get convicted in court … compared with the deal they offer, it’s just not worth the risk.” Pruitt received a deferred sentence. After two years, if he has made restitution and met all conditions of deferment (e.g., no criminal violations), the tax evasion charges will be dismissed without a conviction being entered. I spent thousands on an attorney and still had to plead guilty to failure to pay tax.”

[SKP Kirk]

The LLC will work if you are a full-timer, or if you do not keep the RV in your home state when not in use. The laws state that you must license and register a vehicle in the location where it is "garaged" or kept when not traveling down the road.

The story posted by azloafer is about a person who was trying to avoid the taxes where he lives, as it sounds that you may be. If so, that is tax fraud and it against the law. If you are full-time and never stay in your home state for long, you will be fine as tax avoidance is quite legal. If you contact Bennett Law Office (Bennett Law Office P.C.), they will explain it to you and they do study the laws of all states on this subject. They are very well versed and they do not charge when the advice is not to do this.

[JimM68]

as far as forming the LLC, you don't need no "spensive lawyers to do that.

I did one that owns an internet forum I run, used "startbizhere.com" to do the paperwork, and a friend who lives in Montana agreed to be my "agent"

Total cost for the LLC and getting an FEIN was $150, the website above did all the paperwork and sent it to me.
Once those were done, my local banker set me up with a company checking account, debit card, and credit card.

Note I didn't form this company to evade taxes or own vehicles. Golden Age Performance, LLC owns my internet forum, Firstgens.com, and other entities to be named later. This is a real company, doing real business.

[wnytaxman]

They have a term for people who evade taxes. The term is three to five years!

Seriously, be very cautious about setting up the Montana LLC. We looked into it also and we felt the risk was much greater than the reward. If you are full timing then the Montana LLC may be a great route to go. If you are going to still be in LA then you should consider all the ramifications before you jump in. I have heard good things also about the Bennett firm, so you might want to check with them and their knowledge of each state's laws

[dajudge]

Roboniko, I wouldn't take the chance on a Montana LLC. As I understand it from La. Dept. of revenue, all personal property kept in Louisiana is subject to taxes. A motor vehicle is easy for them to check on. All they have to do is check the License plate and find out who you are. Then, if you get stopped for a traffic violation of an accident, you may be investigated for tax fraud.

What the lawyers in Montana don't tell you, is that it may be legal in their state, but not in your home state. Take my advice, as a retired law enforcement officer, don't take the chance . You may be taken to court and it will cost you lots more than if you just paid the taxes and register it in your home state

[vegascouple]

Almost every state in the country is having financial problems. I think it's safe to say there will be more problems in the future as states attempt to get more tax revenue. If you go to California you'll need to pay a commercial gas permit as you cross the border. They look for motor homes with Montana plates and consider them a business if they are an LLC.The other issue you'll encounter is getting insurance, your choices are limited.

We are full time and looked at all our options. We decided on South Dakota was best for us. That way our drivers license matches our plates. We do spend about 6 months a year in an ownership RV resort. We have left our mailing address at the RV resort. We are just residents of South Dakota and that is where we license our vehicles.

[Norm4015]

Originally Posted by dajudge

What the lawyers in Montana don't tell you, is that it may be legal in their state, but not in your home state.

Bennett Law Office keeps up with the laws in all states and when I formed a LLC in 2005 they send me 10 pages of Texas laws and court cases. They told me to read it and to contact either them or a lawyer in Texas with my questions before making a decision.

The Montana LLC worked for me because I was a fulltimer, didn't own any property and seldom went to my domicile state of Texas. If I had been a permanant resident of a state I would not have considered a LLC.

[buck62]

Originally Posted by KIX

Here's some good advice. Call John Bennett with Bennett Law Office (google it) in Missoula, MT. The laws can differ from state to state. Answers you get on this forum may not be the correct answer for where you live and your particular circumstances.
Having said that......I formed a MT LLC when we bought our coach. It made sense then.

Best advice here is contact John Bennett and get a legal opinion for YOUR sitiuation and state.

[azloafer]

When we "dumped" the Monaco due to problems that were no longer taken care of by the company we lost all the sales tax that we had paid. Then we bought the present coach and the sales tax and registration came to almost $4700. Then a couple of weeks later we won a travel trailer in a sweepstake. We were required to pay a little over 8% in sales taxes and another registration before we could sell it and then the IRS will hit us next year! We sought a loophole, but the legal advice was that it had to be paid. The sales tax included a State of Arizona tax, a Maricopa County Tax and the Mesa, AZ City Tax. Whether you buy an RV or win it, the government gets their hand in there first! Grrrr Even with all of this we would not sleep well if we had an LLC in Montana. Joe