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02-19-2008, 01:24 PM
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#1
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Established Member
Join Date: Feb 2008
Location: Simi Valley
Posts: 15
M.O.C. #8215
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Registering under a LLC
Not sure which forum this belongs in, so hope this one is OK. Currently have a 3295RK Montana. Going to get a 3400RL Anniversary Edition in May. Has anyone registered their trailer using a LLC in Montana?
KJ
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02-19-2008, 02:16 PM
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#2
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Montana Master
Join Date: Aug 2006
Location: Lone Tree
Posts: 5,615
M.O.C. #6109
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If you don't live in Montana, that is illegal.
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02-19-2008, 03:00 PM
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#3
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Montana Master
Join Date: Aug 2004
Location: Cedar Rapids
Posts: 4,876
M.O.C. #1944
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I'm sure it's illegal but there sure are a lot of people doing it. Also, there have been some who have had their lender call in their loan because they registered as LLC.
Orv
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02-19-2008, 03:38 PM
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#4
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Montana Master
Join Date: Nov 2002
Location: Oceanside
Posts: 20,028
M.O.C. #20
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On the other hand, if Montana lets you register the LLC with the state, which you'd have to do (right?), then I don't see how it could be illegal for that corporation to own property, even on wheels, and register it in that state. The key is whether you can charter an LLC without having a residence in the state, assuming the poster is not a Montana resident. The state would be the best source for that but the poster is asking if anyone has done it and probably would appreciate help on the details from those who have. I'm also curious so I hope someone here has done this and will come forward.
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02-19-2008, 04:17 PM
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#5
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Montana Master
Join Date: Aug 2006
Location: Lone Tree
Posts: 5,615
M.O.C. #6109
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It is FRAUDULENT to establish an LLC for the purposes of avoiding sales tax in your residing state. It is illegal in Colorado. It is illegal in California. It is unethical. It is self-serving. People are watching you. There are numbers to call.
http://www.9news.com/rss/article.aspx?storyid=68847
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02-19-2008, 04:40 PM
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#6
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Montana Master
Join Date: Nov 2002
Location: Oceanside
Posts: 20,028
M.O.C. #20
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That's likely true for those maintaining a residence elsewhere but for those of us who have no residence not on wheels that's not relevant. We can establish residency in any state that will allow it. Like South Dakota. Or Texas. Or Florida. And probably others. I'd like to hear from those who have done the LLC thing in Montana.
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02-19-2008, 05:22 PM
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#7
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Montana Fan
Join Date: Feb 2006
Location: Lawrenceville
Posts: 279
M.O.C. #5356
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My thinking reading the original post is there are two diffrent issues here.. Part of the the original post said
Quote:
quote:Going to get a 3400RL Anniversary Edition in May. Has anyone registered their trailer using a LLC in Montana?
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So, "Going to get" i take as purchase.. as in Sales Tax. the other part would be License as in Plates and Titles.
You can purchase anything anyplace and you would pay sales tax applicable for that State.
If you are talking License the trailer in Montana under an LLC and operating it in another State and your drivers license reflects your not a resident of Montana, then the question of 'Purpose' starts.
The questions begin with, why are you operating this vehicle, you rented it, your an employee of the LLC, your transporting it as an agent for the LLC, and then Can i see your insurance card with the address on it. You better have everything in order, and thats a lot of work and time.
I would not go throught all the hassle to make this loop hole work on something priced as a Montana Coach, on the other hand, if it were a $500,000.00 or greater motor coach, i might go with the LLC Option. Notice i said MIGHT...
The Federal (35,000 Pages)and State Tax codes are full of loop holes, the question is how do you feel about exploting them.
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02-19-2008, 06:21 PM
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#8
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Montana Master
Join Date: Aug 2006
Location: Lone Tree
Posts: 5,615
M.O.C. #6109
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Quote:
quote:Originally posted by Leaseit
You can purchase anything anyplace and you would pay sales tax applicable for that State.
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Incorrect. Sales tax on a title vehicle is home rule. Regardless of where you buy, you pay state and local sales taxes for where your reside or "adobe". It is unlawful for an out of state vendor of a titled vehicle to collect taxes for that state. If taxes are not collected at sale, they are paid at registration in your home county. Technically, nomads are not exempt. Adobe is where you "primarily" reside the majority of the time.
Here is Colorado's law - punishable by up to $50,000 and 1 year in prison (I think my sales taxes were about $2,600)
Quote:
quote: As a general rule, Colorado residents are required to register their motor vehicles in this state. At the time of registration all applicable taxes and fees must be paid. Setting up a limited liability corporation in another state for the purpose of evading Colorado taxes and fees is tax evasion. These are not legal methods for eliminating sales tax on vehicle purchases.
Vehicles must be registered where the individual purchaser is domiciled.
The Colorado Department of Revenue considers this type of activity to be illegal tax evasion pursuant to CRS 39-21-118(1) and CRS 39-21-118(3). The Department issues inquiry letters and assessments to those believed to be participating in these illegal activities. Review the reference material below, and direct any concerns you might have to our representative.
http://www.revenue.state.co.us/Fairshare_
Dir/wrapprnt.asp?title=Unknown&incl=
special_purchases_recreational_v4
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Interesting how taxes are only a percentage of what you felt you could afford to begin with - so why should you feel inclined to skate the obligation because you paid $500K for a rig?
It might be a free country but Colorado is an expensive
State and if you choose to share my space, you need to share the cost. Otherwise, you are just another illegal alien!
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02-20-2008, 12:23 AM
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#9
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Montana Master
Join Date: Apr 2007
Location:
Posts: 992
M.O.C. #7128
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There are several attorneys in Montana that will provide good information on which to base an informed decision. Caveat Emptor or something like that.
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02-20-2008, 01:53 AM
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#10
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Montana Fan
Join Date: Feb 2006
Location: Lawrenceville
Posts: 279
M.O.C. #5356
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KJ.... Ole dude makes a great point about contacting a Montana Attorney and see how its is handled. Might be interesting, let us know the outcome.
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02-20-2008, 01:56 AM
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#11
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Montana Master
Join Date: Aug 2006
Location: Lone Tree
Posts: 5,615
M.O.C. #6109
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Just remember an Attorney practicing in Montana cannot legally advice about your home state nor can he defend you in your home state. He has a different agenda.
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02-20-2008, 02:11 AM
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#12
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Montana Master
Join Date: May 2006
Location: Oakland
Posts: 887
M.O.C. #5811
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I have a friend that bought a MH in Montanan the dealer recommended a attorney to set up a LLC for him. Personally I don't' think the amount of sales tax saved on a 5th wheel purchase would justify the expense of a attorney and the hassle of the process.
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02-20-2008, 05:06 AM
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#13
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Montana Master
Join Date: Nov 2002
Location: Oceanside
Posts: 20,028
M.O.C. #20
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Quote:
quote:Originally posted by bsmeaton
Quote:
quote:Originally posted by Leaseit
You can purchase anything anyplace and you would pay sales tax applicable for that State.
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Incorrect. Sales tax on a title vehicle is home rule. Regardless of where you buy, you pay state and local sales taxes for where your reside or "adobe". It is unlawful for an out of state vendor of a titled vehicle to collect taxes for that state. If taxes are not collected at sale, they are paid at registration in your home county. Technically, nomads are not exempt. Adobe is where you "primarily" reside the majority of the time.
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Partially but not totally correct. It may be illegal for one state to collect sales taxes for another state but some states collect sales taxes on their OWN behalf regardless where you have your residence. We went through this last year in Indiana. The state law in Indiana is they will collect sales taxe on the sale, if sold in Indiana, no matter where the buyer lives.
I absolutely refused to pay those sales taxes. The dealer told me I could get credit for those taxes in my home state of South Dakota. I told them South Dakota does not collect a sales tax on vehicle purchases. I called SD and they said they would not refund because they didn't collect so there's nothing to refund. When the deal was about to fall through the dealer decided to give me an additional discount on the truck equal to the Indiana sales tax. And the deal was finalized.
Years ago as a Kansas resident we purchased a vehicle in Missouri. We had to pay Missouri sales tax. Kansas then gave me credit for that sales tax and I had to pay the additional to equal the Kansas sales tax in the area we lived.
Twice since becoming South Dakota residents we bought a new truck in Kansas. Kansas did not collect sales tax because we were not Kansas residents at that time. South Dakota doesn't have a sales tax on vehicles so we didn't pay there, either, although SD does have a 3% excise tax on the trade difference and we paid that to SD.
So, this is not uniform among all states.
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02-20-2008, 05:20 AM
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#14
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Montana Master
Join Date: Apr 2007
Location:
Posts: 992
M.O.C. #7128
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When I looked into the Montana LLC thing I visited with a Montana attorney, one question he asked was where I resided, I told him Texas, he sent info on Montana LLC and also laws for State Of Texas. Let me make up my own mind, didn't do it, seemed like it was going to weave a tangled web. A lot has to do where home base is. Brad, me thinks our home states are very much alike when it comes to this program. The attorney was going to charge $1000.00 to set up corp, this has to be renewed each year, the renewal fee at that time was pretty reasonable. Again my decision was that it was not worth it, atleast for me.
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02-20-2008, 05:59 AM
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#15
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Montana Master
Join Date: Jul 2004
Location: Manhattan
Posts: 1,144
M.O.C. #1846
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In-Laws run several LLC businesses in New Mexico -- all legit and profitable businesses for the the family. When we purchased our 5er in ABQ a couple of years ago they 'offered' to put it into the LLC and 'loan' it to the wife and I. Would save several percentage points in Sales Tax, and then annual property Taxes that Kansas collects.. I called Kansas and local Treasurer said that they look at where the 5er is 'garaged'. Since that would be Kansas, I had best have Kansas plates, title, etc.. or else fines could accumulate. There was also an issue with insurance. We declined the In-Law's offer and have never regretted it.
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02-20-2008, 06:04 AM
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#16
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Montana Master
Join Date: Feb 2008
Location: Lincoln
Posts: 860
M.O.C. #8154
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Just as an aside, if you title your Montana (or anything else for that matter) make sure your insurance is issued in the name of the LLC. To be specific, the LLC must be the 'Named Insured'. This is extremely important especially for full-timers as the LLC (or corporation) is the owner and thus needs the liability insurance. To be safe, the individual should also be listed as an additional insured.
I have never dealt with this issue on an RV policy in California but I run into similar circumstances all the time with auto, homes and rental dwellings. Simple rule of thumb: Named insured must match registered owner or title. Be very careful!
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02-20-2008, 06:28 AM
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#17
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Montana Master
Join Date: Aug 2006
Location: Lone Tree
Posts: 5,615
M.O.C. #6109
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I cannot even think of a LLC - RV situation that could be described as legitimate, and it would be extremely hard to defend. Montana/South Dakota, etc. is not going to defend you, all they did was help you facilitate a business.
It is cheating, nor more - no less. You aren't cheating your government as much as you are cheating your neighbor, and I have very little respect for that type of person.
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02-20-2008, 06:43 AM
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#18
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Montana Fan
Join Date: Feb 2006
Location: Lawrenceville
Posts: 279
M.O.C. #5356
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Steve, Most all States have a Vehicle Sales Tax Reciprocity Agreemets they work under. It comes into effect if the item is titleable, then the State where the item is sold collects the applicable tax amount as prescibed by the State you give as your residence. Under the Agreement you must provide to the seller that information to validate the Sale.
Example, I"m taking delivery in a few weeks on a new Montana in Michigan. I live in Georgia. Michigan will collect 4 percent Sales Tax for the State of Gerogia and remit that tax to them. Don't worry, i've already been to the Georgia State Tax Offices to insure that this is how it is really done. Now the kicker, The County in Georgia where i live has a tax rate of 6 percent. (4 percent State and 2 percent County = 6 percent)
The Reciprocity Agreement between these says only collect 4 pecent. So it is legal for out of State Vendors to collect sales tax under the Reciprocity between States if an agreement is in place.
I already ask, will i be charged the other 2 percent at Titling and registration time. Answer from the State Gov Tax office, "No, we know that happens, but we under the Agreement, thats how it works. Yeppee, i will take the DW to dinner on that money.
I think the original question in this thread was regarding Registration using a LLC, not sales tax.
Quote:
quote:Has anyone registered their trailer using a LLC in Montana?
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02-20-2008, 10:52 AM
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#19
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Montana Master
Join Date: Aug 2006
Location: Lone Tree
Posts: 5,615
M.O.C. #6109
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Are you going to lease it leaseit? just had to ask.
I realize the question was registration, but that is probably must semantics - the efforts would not yield nearly as well if you didn't do at sale. That is the whole purpose. But then I would be assuming.
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02-20-2008, 11:02 AM
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#20
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Montana Master
Join Date: Jul 2004
Location: Manhattan
Posts: 1,144
M.O.C. #1846
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LeaseIt: OK, we bought our 5th wheel in Albuquerque NM.. 8.75% sales tax but as I recall RVs only had 3% (2 - almost 3 - years ago so don't remember the exact numbers.) Don't know anything about reciprocity but when we got the unit back here to Kansas I went to the Riley County Treasurers office to register it. They charged me 7.85% (KS state, county, and city) taxes again -- even though I had proof that I had paid taxes in New Mexico. County Treasurer said that I needed to get back with the dealer and get a refund from them because Kansas tax is paid at the time of registration. Took several months and a lot of phone calls and letters but did get it back. Bottom Line -- best check with the state you are going to register with because it appears to be different everywhere.
Now, back to the original item of LLCs; there is a gentleman that teaches with me. He is also an Insurance adjuster for several companies and has his towing vehicle, trailer, ATV, and several other items titled and registered in the name of the LLC. When he does his taxes they are all depreciated as business expenses because he uses them when he goes out to tornado / flood / other sites when needed for insurance adjusting purposes.... This, I feel, is a valid use of the LLC and what it is intended for. The use to avoid taxes is not and we, as ethical and moral taxpayers should abide by what is right... Those that don't should pay the taxes and coincidently, any fines delved out by the proper taxing authorities!! That is my soap-box item for the day.
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