Question Montana LLC Registration

[skychs]

I keep hearing about this Montana LLC registration. I have also noticed more and more Montana license plates on motorhomes here in Virginia. Does anyone have any advice on establishing a Montana LLC? Pro or Con? I have always been told ... if it sounds too good to be true, it is. To explain what Im referring to I have attached the LLC website Im looking at.

Welcome to $49 Montana Registered Agent

Full service registered agents and vehicle experts. Start your business or register your vehicle in Montana with confidence!

www.49dollarmontanaregisteredagent.com

Thanks
Chuck

 

[TJ&LadyDi]

This is something you need to think through carefully; here's why. First, the LLC aspect is probably OK and the cost is reasonably low. The annual registration cost for Montana plates, however, is pretty high for newer, larger motorhomes. Below is a quote from the Montana Code Annotated - 2019.

(c) For a motor home with a manufacturer's suggested retail price of more than $300,000 that is 10 years old or less, the annual registration fee is the amount provided in subsection (7)(a) plus $800.

Note the "plus $800!"

So, in addition to the annual registration fees shown below...

7) (a) Except as provided in subsection (7)(c), the annual registration fee for a motor home, based on the age of the motor home, is as follows:

(i) less than 2 years old, $282.50;

(ii) 2 years old and less than 5 years old, $224.25;

(iii) 5 years old and less than 8 years old, $132.50; and

(iv) 8 years old and older, $97.50.

...motor homes meeting the price and age criteria noted above incur an $800 penalty annually. Ouch! The annual registration fee in Washington (where our coach is registered) Is a few pennies under $175. Now, if your coach is registered in a state where annual registration fees are more than about $1,000, then Montana might be fine.

Now, Montana has no sales tax, so buying a motorhome and registering it there can save you a considerable sum of money. You need to factor in the savings you would receive in not paying sales tax against the annual costs of licensing your coach in Montana and paying relatively high annual fees.

Finally, if you register your coach in Montana (or any other state) and then take it back to your domicile state (state of record for voting, etc.), many states will only let you keep it there for a limited time before requiring you to re-register there. Washington is one of those states, and one of the reasons we are not registered in Montana even though we own property there and live there for a significant period of time each year.

The point of all this is DO YOUR HOMEWORK! A Montana LLC and registering your coach in Montana might work for you; but it also might not. You need to do the research first.

TJ

 

[skychs]

Thanks TJ. All good information. Since I just purchased my coach Im looking at all the options. DMV is by appointment only here in VA. The first appointment I could get is late October so I have a little time to look at everything.

 

[J&JD]

I know this topic pops up from time to time and there will be many different opinions. To me it’s pretty cut and dried....if you have a s&b home, and you live the majority of the time in a particular state, then you should register your Rv in that state. I live in California where the cost of vehicle registration each year is extremely high but I pay it as this is the state I chose to live in. If I move to Montana than I will pay whatever the state requires.
i know, others will say that I’m wasting money for no good reason but it just seems to me the only fair solution to Rv registration.

 

[Kevin D Pem]

consider the advantage of the LLC in cost should you have an accident. remember the big flag you have that says sue me.

 

[Neemer]

I consulted with an attorney here in VA on the same topic, plus I looked at registering in South Dakota. If you hold on to a sticks and bricks in VA, forget about it.

 

[sheridany]

I looked into it very extensively as I like @J&JD live in California. Insurance companies and lenders are not fans of RV’s registered to LLC and all LLC’s have to file a tax return which turns into a complicated exercise. If you get caught with Montana plates and a California DL in California you will have to explain that you aren’t trying to avoid the sales tax and registration fees in California and if the state determines you are avoiding, they will hit you with back taxes which could basically wipe out everything you gained plus some. I would suggest consulting your tax advisor and an attorney.

 

[skychs]

Thanks for all the input. Just so you know ... the chances of me acquiring the LLC is slim to none. My post was simply to get opinions and information.

It is interesting to me however ..... in all the "what if's" and "its illegal" I have not found anyone who has been charged and/or prosecuted by the Federal and/or State governments. If that were the case Im positive the practice would end immediately. Is it worth taking the chance, probably not but there are a lot of people who are.

 

[CaptainGizmo]

I’d say that the term “legal” is a big stretch. I, too, did a ton of research (another Californian here!) and uncovered enough evidence to fuel my fear and cynicism of the “you won’t get away with it” opinion.

The article that tipped the scale was one about “California seals the LLC loophole” with a picture of some goofball with a Lamborghini and Montana plates.

Here is an example of one such article (note the source!):

Out-of-state car buyers use Montana LLC's to evade taxes

In December 2007, a man named Robert Thomas bought a $351,800 RV at the Dixie RV Super Store in the city of Hammond in his home state of Louisiana.

www.bozemandailychronicle.com

I even read where a “rat out your neighbor” service was being provided to report anyone you think is an “LLC fraud”...terrific. ?

It’s a huge source of fraud, as far as the state is concerned and I just didn’t want to take any of the risks to save the taxes or license fees. I also sleep better, and won’t have a panic attack every time a cop is following me.

 

[skychs]

Thanks CaptainGizmo for the read. Even though the first guy won his case in court and the second guy had 30 days to re-register in his own state without penalty ... the risks are still there and very real. Thanks again for all the input. I respect all of your positions. I will not be taking the risk.

 

[ARD]

Thanks for all the input. Just so you know ... the chances of me acquiring the LLC is slim to none. My post was simply to get opinions and information.

It is interesting to me however ..... in all the "what if's" and "its illegal" I have not found anyone who has been charged and/or prosecuted by the Federal and/or State governments. If that were the case Im positive the practice would end immediately. Is it worth taking the chance, probably not but there are a lot of people who are.

It really depends on your situation with regards to the legality of buying with a Montana, LLC. I hired a law firm in Montana to do my LLC and I was able to legally buy my coach with the LLC as I was going fulltime. BTW, FMCA has a rather good article on Montana, LLC's ...tax evasion vs. tax avoidance. I was in the process of selling my house and closed on the purchase of my coach after the closing on my house. I reviewed the relevant statutes of Colorado (where I sold my house), and Florida (where I was going to set up my domicile) in order to stay within the statue parameters. It was well worth purchasing it with the LLC. I saved a lot of taxes and though the expenses in MT increased, it was negligible compared to what I would have paid in Colorado. I waited 6 months before bringing my coach into FL and I reregistered the coach and car in FL.

In Colorado, they are aggressively pursuing and prosecuting people who buy expensive automobiles and rv's under a Montana, LLC when they own a home and are domiciled in CO. I believe many states are doing the same. So if you fall in the fulltime category, don't own a house and are knowledgable about the relevant statutes of the states involved, it can be done. Otherwise, quite frankly it isn't worth the risk in my opinion.

 

[skychs]

ARD ... great point of view. Thanks. Tax evasion vs Tax avoidance is a great way to describe it. I can see the difference when it comes to selling everything and going full time vs part time. For me personally ... I think I will always want a physical home to go to. Selling everything still scares me a lot. What happens if you have to give up a coach for an extended period of time? Where do you go? Family, friends, hotels? Maybe down the road (after retirement) with more experience RV'ing it will be different.

 

[Joe Hogan]

The State law provides for Sales and Use tax. Didn't notice any discussion of USE tax which is the state's way of legally taxing your asset even though you purchased the asset out of state. If you use the asset, RV, in the state of residency, as is evidenced by your residency, you owe the tax.
The Sales and Use Tax department of most states are very aggressive. This is why you pay sales tax on some Amazon packages now, even though they are shipped from out of state. BTW, you own sales and use tax on those purchases that are shipped to you at home, even if the shipper, Amazon, might not collect it.
For instance, I paid sales tax on the Dolly we purchased even though we purchased it from a Texas Dealer and took delivery in Georgia. We still paid Florida Sales tax when we registered it. If we had paid sales tax to another state for that Dolly purchase, we would get a credit for that sales tax amount.

 

[Jabber Jaw]

I keep hearing about this Montana LLC registration. I have also noticed more and more Montana license plates on motorhomes here in Virginia. Does anyone have any advice on establishing a Montana LLC? Pro or Con? I have always been told ... if it sounds too good to be true, it is. To explain what Im referring to I have attached the LLC website Im looking at.

Welcome to $49 Montana Registered Agent

Full service registered agents and vehicle experts. Start your business or register your vehicle in Montana with confidence!

www.49dollarmontanaregisteredagent.com

Thanks
Chuck

Chuck,
I live quite close to you, Rockville Va., & have been doing some research of my own.
A little background; ordered a 2020 Newmar Canyon Star & picked it up at Newmar last October. Registered it in Va, as the titling tax was 4.3% And as you know Henrico & Hanover both have a pretty healthy "personal property tax"!
Being retired, I looked into states with better tax situations. And I'm sure not everyone has the same situation.
But for us, relocating to Florida is going to save us substantial amounts of money on an annual basis. The big things being NO STATE INCOME TAX, & NO PERSONAL PROPERTY TAXES. A lesser real estate tax rate, & no tax on "groceries" makes a difference. For those & a couple of personal reasons, we are having a new home built in St. Augustine Florida.
Regards your RV......you must have had your NEW RV registered for a time period of 8 months or more to not incur the Florida 6% tax rate, when changing registration to Florida. Florida does have a "homestead exemption" law which I believe serves to somewhat reduce real estate tax liability.
Florida will have rates about 5-10% higher on vehicle insurance, & about the same for homeowners insurance. Gas/fuel prices will be about 5-15 cents a gallon higher, but this depends on locality.
Someone that currently lives in Florida may be able to provide more information; positive or negative.

I hope this information has given a different perspective; but after my "Montana" research & knowing someone that was "snared" so to speak; Montana would not be something I would consider!

Best of luck, enjoy your Newmar!