Montana LLC to save on sales tax

[Mannon89]

We are getting ready to buy a new RV we’re wondering if any of you have experience forming a Montana LLC to avoid sales tax. We live in Texas and we understand the state of Texas is not clamping down on such restrictions whereas states like California pretty much will not allow you to do it. My question is how hard is it to do? How long did it take you to get it ready? And is it worth the expense and trouble?
Thanks for the help!

[wapiticountry]

I know several people who own very expensive coaches. They title and register them with Montana LLCs because they never enter their primary state of residence. Why should their high sales tax and registration state benefit from taxes on a vehicle that never enters the state?

[MNRon]

Montana LLCs for RVs are solely to get around paying taxes that you owe. Clearly it’s not something one would proudly proclaim from a mountaintop. To that end, not sure I’d be talking about it on the web if I were doing something everyone feels is ‘shady’ at best.

Not a popular sentiment, but some of us feel proud to pay our fair share to the society that we all benefit from…stepping off of my soapbox…

[rhagfo]

LOL, Oregon has very low registration fees compared to Washington state. Even after tax payer revolts. It was not uncommon for people to get an Oregon mailing address to register their cars and MH.
The Washington State Patrol, would sit on freeway on ramps to Portland. If an early morning car with an Oregon plate, passed they would stop and check for residence address. If it was a Washington address, then the owner for some big fines.

[pianotuna]

In Canada when a vehicle is registered in a different province for the first time it triggers sales tax, and just for run, an emissions test (in some locations).

What is the state with the lowest sales tax?

[MitchF150]

Wouldn't you also now be required to submit an additional tax return for the LLC? How are you going to show any sale receipts or whatever else the IRS might check for even if you report losses every year?

Seems too fishy to me to try to get out of paying sales/registration taxes which you can of course do, but just not as easy as it was a decade ago.. I think some other high figure person has tried to hide his taxes too.... 🙂

Good luck! Mitch

[valhalla360]

Big question is will it spend time in Texas?
- If you full time and spend little to no time in Texas...just change your residency.
- If you actually live in Texas and the RV will spend most of it's time in Texas, expect the tax man not to take it kindly and if caught, it's guilty until proven innocent.

You might be legal but it will probably cost you more to prove it than you will save.

So what does your tax accountant have to say about it? If you are buying an RV worth enough to bother with an LLC, you probably have one and he's the one who will be on the hook (other than you) if he gives you bad advice, so make sure to be very clear what you are doing and get it in writing from him.

[Splashers3]

x2 on the 3-state conflict.

[Michelle_S]

Yes things have changed, many States have become aware and are going after the cheats. Plus you end up putting yourself the the three state conflict, where you have driver's license from one state, registration in another, and you're now in a third state. They told us in the Military to avoid that issue.

[way2roll]

We could opine all day on the morals and ethics of such a thing, but morals are usually difficult to enforce legally. But LLC's to avoid paying taxes is under pretty heavy scrutiny, and if you pay attention to the media, it's about to get a lot more attention.

But a few things I would ponder. This topic comes up periodically and I recall about a year ago there was some evidence that states were cracking down on Montana LLC's, even to the point of monitoring forums like this one.
Can you or an attorney can provide defensible answers to questions like; "is there a legitimate business need for your RV under your LLC?", "What is your business and it's purpose?", "Can you evidence why you live in one state and have a need for an LLC in another state and further - that need includes RV ownership?", " For what purpose do you need to have limited liability and how does an RV in another state perform in that liability limitation?", " Why did you open an LLC in Montana when your residence is TX?"

I think most times these LLC's fly under the radar. But if you get audited, be prepared to answer questions like the ones above. And if you can't defend it I am sure there are fines as well as back taxes due.

Lastly I would caution asking the question here. Unless some forum members are attorneys familiar with setting up a MT LLC your answers will be all over the map and hardly legally valid. And asking the question, especially the way you asked it, could draw the wrong attention. After all, you stated your purpose very clearly.

[midnightsadie]

x2 you,ll be looking over your shoulder every day for the tax man.

[RetiredRealtorR]

Just do it the honest way. If you can afford an RV you can afford the sales tax on it.

[Tvov]

Pbutler97 wrote:


Sounds like it borders on tax fraud? Cross your fingers maybe?
Probably not a good question to ask on a public forum by an OP that appears to use his real name in his handle and profile lol?

Maybe something has changed, but there used to threads on this forum all the time about creating an LLC or other type of "company" and registering vehicles in different states to avoid various taxes.

[Pbutler97]

Dtank wrote:

Mannon89 wrote:
We are getting ready to buy a new RV we’re wondering if any of you have experience forming a Montana LLC to avoid sales tax. We live in Texas and we understand the state of Texas is not clamping down on such restrictions whereas states like California pretty much will not allow you to do it. My question is how hard is it to do? How long did it take you to get it ready? And is it worth the expense and trouble?
Thanks for the help!

At one time LLCs were a common means to avoid sales tax.
HOWEVER - states want their revenue, and began to (legally) pursue folks who were not paying sales tax to the state where they resided.

YES - it was often litigated. Do your homework.

Honest MT law firms will tell you two things:
1. They will *not* represent you in a state other than Montana.
2. They will suggest you become a legal resident of a state with less (or no) sales tax than where you currently reside - (no LLC necessary).
Of course they will set up an LLC for you....for a fee.

When stopped by an LEO, expect to explain why your DL is from a different state than the plates on your RV. Why isn't the owner of the LLC a resident? (Good luck!).

Suggest you look into South Dakota - plan to have both your DL and RV registration from SD......and SD *does* charge sales tax.

Bottom line: There's no free lunch!

:R

~

Sounds like it borders on tax fraud? Cross your fingers maybe?
Probably not a good question to ask on a public forum by an OP that appears to use his real name in his handle and profile lol?

[Second_Chance]

Triple-posted.