Save money on your RV with a Montana LLC?

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    By Russ and Tiña De Maris

    According to stories published by rvbusiness.com, attendees at the recent Family Motor Coach Association rally in Georgia were greeted by representatives of a Montana firm that promised significant savings on taxes and registrations when buying an RV. You know the catch, simply use a Montana attorney to set up a Limited Liability Corporation to “own” your new rig, and you won’t have to pay state sales tax, and you can take advantage of low RV registration rates in the Big Sky State, regardless of what you call your own state of residence.

    The sales pitch in Georgia came straight from representatives of the Wilson Law Office (Missoula, Montana) through the auspices of Action Services LLC. Quoting the story on the rvbusiness.com website, “We set up LLCs for people to have their vehicle ownership here in Montana,” acknowledged Nancy Damaske, a paralegal for the firm. “It saves them sales tax because Montana does not have sales tax or any personal property tax. Montana requires that a Montana resident is listed on the title and the LLC is then considered a resident of Montana. It depends on what state you are a resident of on how much you are saving.”

    How much can you save? Interestingly, Damaske cited Indiana as a specific example, indicating that a Hoosier-stater would save seven percent immediately on state sales tax; more money could be saved with lower insurance rates and financing.


    But we now ask: How much can it really cost you?

    Shortly after rvbusiness.com released their story, its staff got an email from a representative of Thor Industries – a company who manufactures RVs right in the state of Indiana. “I wanted to make sure you were aware that the State of Indiana has taken the position that forming a Montana LLC and titling a recreational vehicle in the name of a Montana LLC (while perfectly legal under Montana law) is still a taxable event,” wrote Trevor Gasper. Gasper is Thor’s Corporate Counsel. “The Indiana Department of Revenue is on the lookout to assess sales taxes, including penalties, on RV owners who purchase their RV through a Montana LLC.”

    OK, Indiana residents should squirm if they think they can sneak around state revenue and licensing agents. But hang on, other states take a dim view of what they consider unlawful tax evasion. Are you a resident of California, Colorado, Iowa, Massachusetts, Minnesota, Washington, or Wyoming? Those states are on the list of those that prohibit such “backdoor” legal moves.

    Please don’t send us emails that tell us, “I’ve owned my motorhome through a Montana LLC for years and never had a bit of trouble.” Yes, it’s true, there are plenty of folks who’ve made the same argument before when we’ve penned on this issue. You’ve managed to keep your skate wheels turning, but it may not always be that way. Here are a couple of thoughts from Steve Lehto, a practicing attorney with 23 years experience. Writing on jalopnik.com, Lehto raises a hypothetical that should raise concerns in even the most entrenched “save taxes by whatever means needed” advocate.

    “Tell the insurance company the truth (‘I live in Michigan, drive the vehicle almost exclusively in Michigan, store it and park it in Michigan, but have Montana plates on it in the name of a sham LLC’),” suggests Lehto. “If you tell them the truth, will they insure the car? Or you could tell them anything other than the previous parenthetical sentence, which would be a lie.”

    He continues the argument: “You might never get in an accident. But if you do, that Montana plate will pop up. Like, in the police report. And an insurance adjuster, scrutinizing your claim might wonder what false statements you made on your insurance application. False statements which form the basis of the denial letter you will receive shortly in the mail.”

    And then, there’s another thing to consider. How many dollars saved on tax and registration payments will pay for that constant neck-flipping you may have to make when traveling in your RV? California Motor Vehicles has state troopers keep their eyes open for Montana-plated rigs either being towed, or towing, a vehicle with a different state’s plates. Other states have “report a tax evader” hotlines set up for just such scenarios. And while it may be legal in some states now, the visions of new tax-streams becoming available can quickly turn into realities on the books.

    In Washington, we were personally “turned in” by a state park official when we pulled a travel trailer in for an overnight. We’d just bought the trailer from a private party in Arizona, and were taking it to our then-home where we would be registering it. Within 24 hours of leaving the park, we got a phone call from the state DMV, demanding to know what we were up to.

    Yeah, Big Brother is watching – and having a bureau, agency or department breathe down your neck can really take a nice RV road trip and turn it into a stress session … even if you don’t get caught.

    ##RVT847

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    Gaius Gracchus
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    Gaius Gracchus

    People would be less likely to try to avoid the sales taxes on large ticket items if the taxes were more reasonable. South Dakota has a lower tax rate for such purchases vs regular sales tax. This makes sense.

    Charging 10 or 12 percent tax on a large purchase like that is asinine and ridiculous. Shame on the governments that do this in the first place.

    Stewbie
    Guest
    Stewbie

    Hey, wait a minute. Who telling what facts about Romney? Did he register his yacht in Connecticut or the Cayman Islands?

    Keith Harris
    Guest
    Keith Harris

    Hmmmm …. a rv mail service establishes my domicile in Florida as there is no state income tax …. my Montana LLC bought my rv as there is no sales tax ….. according to a progressive representative …. progressive insurance understands there is no garage address for full timers and have provided for this in their full timers rv insurance plan ….

    Don Callahan
    Guest
    Don Callahan

    There are a number of states with outrageous taxes on the purchase and ownership of a RV. It is a deterrent to purchasing or licensing in that state. A friend sold his MH because the annual tax burden in his state was way too much for his usage. A one time tax is one thing, an annual tax based on the value determined by the state is another. Such tax is a deterrent to buying a new or newer RV.

    Mr Disaster
    Guest
    Mr Disaster

    Evading taxes seems to be a great pastime for some folks. Are the savings worth it? I don’t know. I do know that for every dollar of unreported or paid tax increases the tax bill for the remaining population. This un-level playing field is all the incentive many folks need to report possible tax evasion. I rather enjoy the peace of mind that comes with paying my share. I appreciate the benefits I receive.

    Gary R
    Guest
    Gary R

    The world needs more people like you, sir.

    Steve Wheeler
    Guest
    Steve Wheeler

    Former Secretary of State John Kerry (MA) did the same thing and births his yacht off Connecticut to evade MA taxes, The rich taking care of the rich.

    Phil McCraken
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    Phil McCraken

    The John Kerry, who, through his wifes` Heinz golden spoon has multi-million millions. That Kerry. The guy who preaches to us minions, that guy you mean.
    Well who woulda thunk.

    Simon
    Guest
    Simon

    Typical politician. Nothing new.

    Theo
    Guest
    Theo

    Don’t just pick Montana. Same is true with the other states.
    And does not apply for a Full Timer unless he is stupid enough to say Ca or Wa other the others are there resident.
    I cannot understand why anyone would live in California except for its beauty.

    Rory
    Guest
    Rory

    That’s simply because you do not live here. You probably are listening to every unvalidated rumor you hear, and passing them on……..

    Simon
    Guest
    Simon

    That’s fine. Stay where you are. We live in San Diego, the best climate in the nation. Enjoy your heat, humidity, bugs, snow, slush, ice, etc.

    John Passalacqua
    Guest
    John Passalacqua

    Notice to State’s who feel the need to tax its residents to death. Stop it! I was a California resident (born and raised) and have found it necessary and cheaper to move out of this “out of control “ tax and spend state.

    I remember paying a $1400 annual registration renewal fee in California for my Diesel Pusher. I moved to Tennessee and only had to pay $65 to register here.

    And California can’t understand why over 100,000 residents flee this state every year.

    Billy Bob Thorton
    Guest
    Billy Bob Thorton

    Bingo. I say the more you punish the high tax states, the quicker they will go bankrupt. Unless some knuckleheads think they run their high tax states better than low ones

    If your one of the former, contact me about a bridge I own in Brooklyn, it’s for sale! Cheap too.

    Tommy Molnar
    Guest
    Tommy Molnar

    I’ve always wondered about this stuff. If your RV is registered in Texas (like with Escapees) but you actually live in, say, Nevada or California, your driver’s license is from one of those states. If you get stopped for something and have to break out your DL, how do you explain the two different states?

    Billy Bob Thorton
    Guest
    Billy Bob Thorton

    Ok look, I’ll give you guys a quick lesson on how this works. Are you avoiding, or evading the sales tax, by using a state that doesn’t have sales and compensating use tax. Every state that has a sales and use tax, has in their law, provisions to hold it’s residents liable for tax on purchases of tangible personal property (i.e.RV). That means, if they are able to, through documentation, establish you have not given up your residency in your sales tax state, the man will be on the look out. Does that mean you shouldn’t try it, he’ll no.… Read more »

    Lorane
    Guest
    Lorane

    Not every state has a sales tax. Oregon does not and I think there is another state that doesn’t.

    Rory
    Guest
    Rory

    There are several states that don’t have sales taxes, but that may not last for long. Oh and if you heard the msg in the previous comment, it is only 7k to 9k that you pay to a scumbag lawyer (his words) to avoid paying taxes. That fee may be as much or more than the taxes you are trying to avoid, and if the scumbag lawyer isn’t very good and you lose, you pay the lawyer, the taxes, the penalty fee and maybe even interest… Seems like a lot of trouble to avoid paying a tax that you already… Read more »

    Billy Bob Thorton
    Guest
    Billy Bob Thorton

    No, not the scum bag lawyer fees, savings in sales taxes, based on an estimated selling price between 90K and 110K. The legal fees would be in the multiple hundreds, depending on which scum bag lawyer you employ. If you think some lawyer is worth that, I have a bridge for sale, in Brooklyn, NY

    William Johnson
    Guest
    William Johnson

    You are forming a company, LLC, for the sole purpose of avoiding sales tax on a high dollar RV? If you look at it this way it does quite seem like something that I would do. I can’t insure that this is true but over the years I have read of other states coming after people who did this, IA, MA, ID, OH and all three west coast states to name the ones I remember. People have told me that they are legally avoiding taxes and it was alright to do this. It doesn’t pass the smell test.

    Billy Bob Thorton
    Guest
    Billy Bob Thorton

    Ok, so here how’s this works. Periodically, states run what they call special programs, to enhance revenue collections, based on believed non payment of duly authorized tax laws of their respective state. So, based on running data analysis programs crossing vehicle sales, with registration data, they start to narrow down the crosshairs to a workable list. See, since we are 50 autonomous states, they need to try and thwart various attempts to evade their respective taxes. Those higher taxing states, you know the N.E., left coast mostly states, where there never is enough revenue to satisfy their I’ll run govt.… Read more »

    Bob Godfrey
    Guest
    Bob Godfrey

    I’ve always found it interesting that large shipping corporations can license and register their vessels in foreign lands thereby bypassing US Maritime rules and taxes saving their parent corporations millions of dollars, many large US firms keep billions of dollars overseas to avoid paying US taxes and all of that is legal but let a guy/gal license his/her RV in Montana to save a few bucks and suddenly it’s open season on them.

    Mark Hallewell
    Guest
    Mark Hallewell

    Former Presidential candidate Mitt Romney did just that with his private yacht. Registered in The Cayman Islands. There is no incentive to change anything as the people who benefit from this legal loophole are the ones who write our laws.

    Billy Bob Thorton
    Guest
    Billy Bob Thorton

    Payback was Mittens lost!

    Billy Bob Thorton
    Guest
    Billy Bob Thorton

    Hey Bob, they do that because their ship is flagged outside the US. It’s how this works.

    Jim
    Guest
    Jim

    Bob, That is because we, the little guy, do not have the resources to fight them. We are easy money for them.

    Billy Bob Thorton
    Guest
    Billy Bob Thorton

    Well put “Jim”. We are the worker bees.