Legally avoiding California Sales Tax

[superrayzor]

I've mentioned in a couple threads that I am looking at a Newmar Baystar. Unfortunately the actual price is coming in ~35K lower than MSRP. From what I understand California charges sales tax on MSRP not actual purchase price (which is stupid). I am not against paying taxes, but this is an extra 3K on top of a 9K tax bill.

My wife and I have been discussing a year long road trip for a while. This seems like a good time to not only purchase a new RV but also begin our year long road trip. We would not take the RV into California at all for the year (so many other places to visit). Saving 12K in tax could pretty much fund our whole gas and a significant portion of our lodging bill for the year.

I see no problem in setting up a Montana LLC (or even Oregon) and just staying out of the state for the year. At this time we even still have Washington State Drivers Licenses as we only recently moved here (and will probably get hit with a $300 fine when we do get our DL), but I cannot see an issue even if we had CA DL as long as we don't take the MH into California.

Has anybody tried this, anybody see any issues? I am not looking for legal advice, I understand this is always at my own risk, but would be interesting to know peoples thoughts.

[msmith1199]

DiskDoctr wrote:

toedtoes wrote:
What the H does this have to with legally avoiding sales tax?

Kalifornia is extremely aggressive and many time overreaching in taxing everything. Pertains directly to OP's question about avoiding what is considered by many an overly burdensome sales tax policy on motorhomes.

If you don't like the way California does things then stay away.

If only Kalifornia would be content to keep their "legislative opinions" within their own state. Unfortunately, they are constantly trying to impose their single point of view on the whole country (9th Circuit anyone?)

Therefore Kalifornia's policies and legislative positions are EVERYONE's business/problem. But I digress....

In the interest of respecting the forum's desire for "no politics" and out of courtesy to everyone, I've said my opinion on Kalifornia's taxation and moving on...

Back OT....

I would probably be looking for the same solution as the OP. How to avoid what I consider to be unnecessary taxation, but do it LEGALLY.

Good luck 😉

As a life long California resident I can't defend a lot of what this state does and will be leaving soon myself, but your comment about the 9th circus is not completely accurate. The 9th Circuit is part of the Federal Court System not the California Court system and the 9th Circuit covers nine western states. It just happens to be based in California.

[msmith1199]

DryCreek wrote:

superrayzor wrote:

This.

I plan on living in CA when making the purchase, but do not plan on being a legal resident. I realize that legally because I do not own or rent a home, nor do I send my kids to school, nor have I registered to be a voter, or any of the other requirements, I do not have to get a CA DL.

One other thing you may want to check out when you return to California - licensing requirements. I believe that they may be a bit more restrictive on DL endorsements for larger RV's than your last state. Depending on the overall length and/or GVWR (GCVWR?) you may need a private CDL.

Weight is not relevant on licensing, only length. Per the Vehicle code you can drive ANY motorhome up to 40 feet long with a Class C license. Over 40 requires the special endorsement.

[msmith1199]

toedtoes wrote:

superrayzor wrote:

time2roll wrote:

superrayzor wrote:

lanerd wrote:
All you need to know is on the CA Board of Equalization FORM 52.

Hope this helps

Ron

Thanks, this has been the most helpful.

For purchases beginning October 2, 2004, through June 30, 2007, and on or after October 1, 2008, a vehicle or
vessel purchased outside of California, first functionally used outside of California, and brought into California
within 12 months from the date of its purchase is also presumed to have been purchased for use in California and
subject to tax if any of the following conditions occur:
* Purchased by a California resident as defined in section 516 of the California Vehicle Code1
, or
* In the case of a vehicle, subject to California vehicle registration during the first 12 months of ownership, or
* In the case of a vessel, subject to property tax in California during the first 12 months of ownership, or
* Used or stored in California for more than one-half of the time during the first 12 months of ownership.
Please note: A California resident is defined to include a closely held corporation or limited liability company if
50 percent or more of the shares or membership interests are held by members who are residents of California as
defined in section 516 of the Vehicle Code.

This makes it sound like as long as I do not enter California with the vehicle within 12 months, I am good. If I need to enter California, then I will just park it in AZ and use my tow vehicle.

superrayzor wrote:
Yes I plan on being a CA resident when I make this purchase.

Better read the red section again

Section 516 of the vehicle code defines what is considered a resident, and I don't meet any of the qualifications.

You quote yourself above stating that "I plan on being a CA resident when I make this purchase". In addition, you are considered a resident if you are "renting or leasing a home for use as a residence". What are you living in currently now that you are in California? Are you living in your current MH or are you living in a condo/apartment/house?

Also, since your concern was that you would have to pay taxes on the $35K difference between actual cost and MSRP and now you realize you don't have to do so, is there any reason to go through the trouble of trying to work around it?

I think you are misreading the section in red. It refers to California resident AND bringing the motorhome into the State within 12 months. If you don't bring it into California for over the 12 months it doesn't matter if you're a resident or not.

[BobGed]

Well I think the countdown for closure of this thread is quickly reaching zero. :Z

[tropical36]

noleakman wrote:
Wait till they want to see gas and food and address where kept receipt's I went thru that at the state board of equalization 3 trips I was the one that had to prove to them I had it in AZ for 91 days! What a *****!

Guilty until proven innocent then. so what's wrong with that picture and it does save them a lot of time and money, if you're the one doing the leg work for them. I mean the people do exist for the state, don't they......or is it supposed to be the other way around in America? Whatever the case, many have left over this, from what I heard from various individuals and leaving behind those who have to make up the difference.

[toedtoes]

DiskDoctr wrote:

jplante4 wrote:

DiskDoctr wrote:
Apparently it's the wrong coast to dump tea overboard 😞

Well, Taxachusetts charges sales tax on the price you paid. Arguably the second or third bluest state doesn't even hose their citizens that badly.

Exactly! They can't get away with that over on this end or you guys would be turning the ocean "Lipton Tan" LOL.

California does NOT tax on the MSRP. The OP was told that by an Arizona dealer who didn't know what he was talking about. Most likely a California-basher who was taking an opportunity to talk about the evil ways going on here.

[hipower]

It is always entertaining to follow these threads where people who have zero personal experience with corporate or tax law offer opinions based on fire ring conversations or internet forums read.

The best and only advice someone should follow is that provided by tax accountants and legal representatives. Those people make a living steering people correctly and are paid well to do so. They are also responsible if their advice is wrong.

My personal opinion is simple. Anyone who pays more tax than they are legally required to pay is a fool. If there are legal ways to reduce taxes paid we should do what we can to pay the minimum tax.

[noleakman]

Wait till they want to see gas and food and address where kept receipt's I went thru that at the state board of equalization 3 trips I was the one that had to prove to them I had it in AZ for 91 days! What a *****!

[tropical36]

Passin Thru wrote:
If you own a Tractor Trailer you can register a trailer in Tn Stay with permanent tags but I wouldn't do it with a MH. Pay the taxes. Maybe Ca will fix their crummy roads and get more visitors. I for one lived there and won't go back. I can imagine what I5 is like now.

Funny that my favorite state to visit and to hang out in, is one of the last of places, that I would want to reside in!

[CA_Traveler]

OP, Starting in 2004 there were a series of tax/pub 52 changes besides the change to 1 year.

You've stated you will be a CA resident and as such you may have to pay the use tax. Research required.

But if you become a politician with a critical vote on a bill you can get the rules changed back to 3 months for a short period so that you can keep your boat in Mexico for 3 months and not pay the use tax. This happened about 2006.

[CA_Traveler]

OK, Correcting a prior post I found the AZ registration information from the DVM when I investigated. It’s based on a mfg price which in my case was near MSRP. The base price is 60% of that value which is reduced 16.25%/year. The tax rate is then $2.89 per $100. So a $100,000 valued vehicle would pay $1734 for the first year. AZ registration is pricey.

[DiskDoctr]

jplante4 wrote:

DiskDoctr wrote:
Apparently it's the wrong coast to dump tea overboard 😞

Well, Taxachusetts charges sales tax on the price you paid. Arguably the second or third bluest state doesn't even hose their citizens that badly.

Exactly! They can't get away with that over on this end or you guys would be turning the ocean "Lipton Tan" LOL.

[jplante4]

DiskDoctr wrote:
Apparently it's the wrong coast to dump tea overboard 😞

Well, Taxachusetts charges sales tax on the price you paid. Arguably the second or third bluest state doesn't even hose their citizens that badly.

[crcr]

... and yet Scott that is not the case in your home state of AZ. The tax is based on prices released by the mfg which is MSRP or close. It's then reduced 16 percent/year.

I'm an AZ resident -- what is referred to in the post above that is reduced 16% per year is the annual registration fees on any vehicle licensed in AZ. I'm not sure the original $$ amount AZ bases registration on is based on MSRP or a figure they arrive at on some different basis, so I can't speak to that.

Re purchase of a vehicle by an Arizona resident, if the vehicle is purchased from a private party, there is NO sales tax when registering the vehicle, only the annual registration fee so you have an AZ plate with a current registration. If you purchase from a dealer and trade in a vehicle as part of the purchase, the sales tax is only assessed on the difference paid, no sales tax is assessed on the trade in value. Both scenarios described apply exactly the same whether the vehicle is purchased in Arizona, or out of state and then brought back and registered in AZ. Also, the same rules apply to motor vehicles and RV's of any type, whether towable or driven -- in short, anything that you must register with AZ MVD.

I have resided in AZ for multiple decades and have purchased vehicles and RV's both from private parties and also out of state, so I have learned these rules inside-out. We purchase our RV's late model used and due to the huge savings in sales tax, plus a few other reasons, we always purchase from private parties.