Montana LLC's

[phorner]

Just a heads up regarding the Montana LLC registered coaches.

A friend of mine has just recently received notice from the State of Massachusetts. Apparently the state is demanding back taxes, interest, penalties, etc. not only for the current coach, but also for the one owned by them previously. Not a pretty picture as the dollars are very high.

It looks as though the state compared a list of LLC registered vehicles against a list of state residents.

No matter how this turns out, there will certainly be the cost of defending their position as well as many sleepless nights.

Nearly every state is experiencing a fiscal crisis and I'm sure that they have attorneys working overtime trying to figure out ways to add revenues to their budgets.

[Will Garner]

Paul,

Don't you mean the State of Taxachusetts! It was when we lived there in the late 1960's and I don't think it has changed for the better.

[Woody]

Our Montana attorney advised us to get out a year ago.

We are now registered in Fl having only paid sales tax- cheap compared to the penalties.

[merle&louise]

I have a buddy who lives in Colorado; he got the same deal. Boy, was he afraid! The state let him go with paying the tax and a small penalty. He was very happy with the outcome because what they originally were going to do was not good!

They were going to value his $200,000 coach at $575,000 - assess the tax on that amount - calculate the penalty and interest on that amount. When he showed some remorse they lightened the burden. He was lucky.

I formed a Montana LLC two years ago. I did so to try to save some tax money on my next coach. I spent $1100 forming the LLC. In view of these developments, I am going to dissolve the LLC and just pay the tax when I buy another coach.

[truk4u]

Good idea to bring this up again Paul. As I mentioned in the past, the States can now buy the entire list for about $3200.00 and they are doing just that!:eek:

Here's a link to Montana Corporation info:
https://app.mt.gov/cgi-bin/corprecords/corprecords.cgi

If you have your Bus in a Montana LLC, I would be concerned regardless of what the MT Attorneys tell you.;)

[Jon Wehrenberg]

Am I allowed to say "I told you so"?

If you do have a Montana LLC, if you can come up with a legitimate business purpose for the bus you may have a chance to beat the possible financial consequences.

We created the Jamestown Advanced campground equipment product line including fire rings, grilles, picnic tables, and electrical power outlets and the bus was used to attend as many as 30 trade shows annually, carrying the display and providing both our lodging and transportation. It was our ownership of the bus and using campgrounds around the country that inspired the creation of that portion of the business, now its primary business segment.

In later years I put on seminars for a major customer's behalf and the bus carried the seminar materials, samples, literature and AV equipment all of which could only be reliably expected to arrive at the seminar location via our bus or my plane.

As second benefit to having a legitimate business purpose is the bus can be claimed on the tax return. There is not much recapture involved if you expense a depreciating asset, although you will need some paperwork between you and the LLC for personal use.

[GDeen]

When I was at Prevost FW a month ago, I saw 2 motorhomes and 3 entertainers with Montana plates. Going to be lots of unhappy folks.

[jack14r]

If the LLC has a Montana address,wouldn't it be impossible for a state to figure out who owns the coach?Bennett Law uses their address in Montana for the LLC.

[James]

Move to Alaska, tags and registration is $134.00 for our bus, $12.00 if you're over 65.

[JIM CHALOUPKA]

If the LLC has a Montana address,wouldn't it be impossible for a state to figure out who owns the coach?Bennett Law uses their address in Montana for the LLC.


I would think your right Jack and I wonder the same.

If a corporation is created in Montana and a Montana attorney performed the task for an out of state client and that attorney was the statutory agent keeping the corporate "book" for that corporation, the attorney would be the only one shown on any record that is public.

The attorney would be the only individual that would know the identity of his client, in other words the only one that could link an out of state client to a Montana corporation would be the attorney that was/is the statutory agent for that clients corporation.

Where I see the possible problem for some is if they choose a corporation name that possibly was their own name that could easily be linked to them.

example; any state buys records showing, xyz corp of Montana, books kept by abc attorney.

How would the state buying that record know it was connected to anyone in their state.

Further, if forming the corporation is legal in Montana and the States involved have reciprocity of their laws then what is the problem, the corporation has done no wrong.

I am theorizing here and do not know for sure if what I have said is true, but it seems so to me.



JIM

[phorner]

If the LLC has a Montana address,wouldn't it be impossible for a state to figure out who owns the coach?Bennett Law uses their address in Montana for the LLC.

I'm not sure how Massachusetts figured it out in this particular case, but they did. I'm sure that with a little digging, it would be easy for them to search every public record involving Montana LLC's and look for out-of-state mailing addresses or such. I have never set up an LLC in Montana, so I don't know what information is collected during the process.

I would guess that if you are full-timing, with only a mail forwarding address of record and little proof that you are a "resident" of another state, it might be more difficult to track you down.

It might also be possible to compare the voting records or DMV records of a state looking for cash against the list of Montana LLC's.

Very little can be truly hidden in this information age. For all I know, if there is an allegation of a crime, it might be even easier for a state agency to get information from the public records of another state.

[gmcbuffalo]

Jim
I know in Oregon is you do a cororation search with the Sec of State you come up with not only the agent but also the corporate officers and their addresses. BINGO got cha.

Also back in the 60s and 70's their where many RV dealers in Oregon that were registering out of state RVs with Oregon places (two years $ amounts in the teens), some of them got closed down with legal action and at that time I think it was the State of Oregon that didn't like it.
Greg

[Devin W]

Am I allowed to say "I told you so"?

If you do have a Montana LLC, if you can come up with a legitimate business purpose for the bus you may have a chance to beat the possible financial consequences.

We created the Jamestown Advanced campground equipment product line including fire rings, grilles, picnic tables, and electrical power outlets and the bus was used to attend as many as 30 trade shows annually, carrying the display and providing both our lodging and transportation. It was our ownership of the bus and using campgrounds around the country that inspired the creation of that portion of the business, now its primary business segment.

In later years I put on seminars for a major customer's behalf and the bus carried the seminar materials, samples, literature and AV equipment all of which could only be reliably expected to arrive at the seminar location via our bus or my plane.

As second benefit to having a legitimate business purpose is the bus can be claimed on the tax return. There is not much recapture involved if you expense a depreciating asset, although you will need some paperwork between you and the LLC for personal use.

John, I'm curious if this creates another dilemma in that the coach is then used for interstate commerce and technically is subject to weigh stations and commercial driver rules. In fact, at minimum, once deemed to fall into this category a vehicle must carry DOT ID numbers.

I was thinking about this because I considered associating the bus with my business, but decided I didn't want to take on the possible associated concerns.

[Reagan Sirmons]

Jim, the taxing authorities know the attorneys involved, make no mistake. Second, these attorneys cannot knowingly participate in a sheme designed to evade the payment of state sales taxes. This is not an act of avoidance, it is an act of evading and circumventing established law. You must make certain assurrances and representations that will come back to bite you badly. Third, if a coach is kept in Texas more than a very brief time, (60 days), the ownership must be transferred according to the law and proof of taxes provided at transfer. Fourth, there is no reciprocity among Texas and other states in this type of transaction according to our lawyer.
At least that is the way Texas sees it. I can not disagree. I am not interested in seeing a fellow motorcoach owner evade taxes that law abiding citizens pay .

Just my thoughts respectfully submitted.
Reagan
Pres

[Jon Wehrenberg]

Devin,

I understand your concern, but the coach was our coach personally. It was never a corporate asset and it's treatment was no different than if I used my car for business purposes. Since the corporation never compensated me, I logged 100% of my usage, and kept accurate records of the personal use and business use, and claimed expenses on my tax return. Business use was not in the sense that I needed a commercial license plate, any more than a salesman needs one for his car. I did not earn money via the use of the bus, but I used the bus to earn money.

For those that have a Montana LLC and want to stay as much below the radar as possible, make sure the toad has Montana plates. Don't piss off the neighbors, have a business purpose for the LLC beyond beating your home state out of sales tax or registration fees, and keep the tags out of sight as much as possible.

As the states continue to run short on cash they are doing almost anything to raise cash. If you have a Montana plate on the bus and a different state on the toad any state official can copy the plate numbers and do a quick check and soon you get a notice. If your neighbor is jealous or mad at you they can turn you in.

The state grab for money in TN has gotten so crazy they want to charge a sales tax on the continental breakfast that comes free with your hotel room. Why wouldn't they go after buses registered in MT?

[Ray Davis]

Calif Highway Patrol are now routinely stopping RV's with out-of-state plates, if they have in-state plates for their towed vehicle.

They will stop and ask a series of questions. Basically they go something like:

1. Which state do you live
2. Whch state do you work
3. Which state do you file income tax
4. Which state are your cars registered
5. Which state is your RV registered

If the answers to 1-4 are California, and #5 is somewhere else, they will cite you, and not only for back taxes, but for fines and penalties. I guess you might be able to fight it, but ....

There is some provision in CA law, that if a vehicle is registered out of state, that it has to physically be out of state for some specified period each year. I believe that it's 6 months per year.

I'm not a lawyer, but this scared me enough to pay the huge taxes. I would like to eventually get out of CA however, as my yearly plate fees are about $3500.00. Yeah, just for plates, it costs me about $0.50 per mile to drive.

Ray

[Jon Wehrenberg]

It is not only CA that is doing this although they have been agressively nailing owners since we bought our first bus in 1990.

You can bet the farm as states treat this as a revenue source the crackdown will spread to every state.

[PLSNTVLE2]

Completely and hypothetically speaking. If one had a Montana LLC and had registered the coach to the LLC, how would you proceed to change it to your home state?

This would be a transfer of ownership from the Montana LLC to ones person or business whether it be LLC, LLP, Sole proprietor or corporate with no dollars changing hands.

The first thing the home state is going to ask is "how much did you pay for the camper"?

The next question is going to be "what is fair market value"?

My answer to that question is that it is only worth what someone is willing to pay for it. In my opinion, if the home state is so anxious to get these vehicles registered in their state that this should almost be some kind of a negotiation.

With that said. How do we value these things in this low market? I don't think the state has any idea what these are let alone what they are worth......

P.S. I told my attorney about what I did and he had a meltdown!

[Jon Wehrenberg]

True story...When I bought our first coach most people did not know what a Prevost was.

I bought the coach from the widow of a gentleman who I believe died without a will, thus the transaction was not as simple as the owner signing the title.

I was provided with the legal documentation of the sale from the estate, including a bill of sale for a value far less than the purchase price, but still substantial. When I registered the coach in my name the lady from the DMV saw the "purchase price" and charged the sales tax based on that. She never even questioned it because it was the largest number she had ever seen.

My point is there are Prevost conversions, Prevost entertainer coaches, and Prevost seated coaches. Every one has a different value based on the year of the coach. Pick a number. I seriously doubt if it will be questioned especially if you can print out an internet example or two to show asking prices.

When we re-registered all of our vehicles in TN from NY there was no sales tax. I am not an attorney, but I know a company incorporated in one state and register vehicles in another. You may wish to check to see if your home state will allow vehicle registration using the LLC address. At that point your toad license plate and your dirver license all match states.

[gmcbuffalo]

I know that when I was in Nashville Prevost facilities in the summer of 2005 there was a guy there that own entertainer coaches, a TN company that had all his buses with Oregon plates. So I guess some states allow it.
Greg

[phorner]

A recent article that is of interest regarding the State of Massachusetts and the Montanna LLC's.

http://www.rvbusiness.com/2010/04/state-looks-to-crack-down-on-rv-tax-evasion/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+RvBusiness+%28RV+Business%29

[Sid Tuls]

I think it's only a matter of time and this will be enforced in every state. I know because I got caught:(

[jello_jeep]

Interesting that Mass. is used in so many of the examples set. When we talked with a Montana attorney, the first thing they asked is where you lived. In our case Ca. He explained the law in Ca, but used Mass. as an example of a state that had made the corporate ownership illegal there, I assume via this 30 day garaging rule.

If you want to do it, find out exactly what YOUR state's law is, and follow it. Period.

You shouldn't be ashamed to research the law, and find ways to save money via LEGAL decisions.

If questioned then stick to your guns, if you have followed the law, you are ok.. If not then you would be wise to just pay up.

[Jon Wehrenberg]

As far as I am concerned a Montanna LLC without a legitimate business purpose was and is tax evasion. It's sole purpose was to avoid the payment of sales taxes or licensing fees. All Massachusetts did was enact a law to state the obvious.

If we as motorhome owners want to claim unfairness however, look at the states on the license plates of semi-trailers. Even in Massachusetts I'd be willing to bet trucking companies register their trailers in OK or TN probably due to favorable fee schedules or cost but it would be impossible for anyone to enforce the law as it is being applied to RVs. The probable difference, apart from proving a trucking company that does operate nationally, houses the trailer and only uses the trailer in MA for example is that the trucking company does have a presence in the state to which the trailer is registered.

This is all about risk versus reward. If I were to spend between one and two million on a coach I would risk doing a Montanna LLC, but I would also test the climate to see how my home state was enforcing its laws. If I lived in a cash strapped state like CA or NY or MA I don't think I would take the risk of it.

[GDeen]

Was in Prevost Ft Worth last week for a day and they were very busy. Week before the race at TMS and lots of pre-race traffic as well as snow birds passing through on their way home. The number of Montana plates was amazing. Meant to do a count while killing time but did not get around to it - guessing though that 2/3 of the motorhome and star coaches at the facility had Montana plates. This is going to amount to a large chunk of change for states to go after which means many of them will do it.

[phorner]

Was in Prevost Ft Worth last week for a day and they were very busy. Week before the race at TMS and lots of pre-race traffic as well as snow birds passing through on their way home. The number of Montana plates was amazing. Meant to do a count while killing time but did not get around to it - guessing though that 2/3 of the motorhome and star coaches at the facility had Montana plates. This is going to amount to a large chunk of change for states to go after which means many of them will do it.

The "resident" state has nothing to lose by going after those with Montana plates on their coaches. All they need to do is come up with a name and address and send out the bill. The burden then falls on the resident to prove that they don't owe the past due sales and/or personal property tax.

In any event, it will cost the resident in either legal and accounting fees or fines and taxes...... maybe even both.

As Jon stated, those with a legitimate business purpose for having their coach owned by a Montana LLC are in the most defensible position.

If it ever came to a trial, I doubt that the average tax-saddled jury member would side with the million-dollar bus owner who will be portrayed as a tax cheat by the prosecutor.

[hobobimmer]

As Jon stated, those with a legitimate business purpose for having their coach owned by a Montana LLC are in the most defensible position.

I might have mentioned this in another thread on this topic. If I did, forgive me. If I didn't, here I go.

When you're checking your state's "Sales" tax laws, also check your state's "Use" tax laws. Usually they are together, and you've all probably heard the phrase "Sales and Use Tax." If you conclude that your Montana registration doesn't require you to pay "Sales" tax on your bus in your home state, then read the "Use" tax section and see if you conclude the same. I will not be surprised if you find out that you owe "Use" tax. I think in TN they are the same rate. It has been a while since I've done anything on this topic, so my guidance might not be sound.

Eric Faires
Huntsville, TN

[Timia]

Hello there,

We met you in Indio a while back. We are just about to cross the border with Canada from Wisconsin and are heading back to Anchorage. I just registered our coach in Alaska and paid around $800.00 or so. Did I miss something or do it the wrong way? We have had a nice time in the lower 48 and are now heading back to fish PWS for the summer. Hope you have happy trails.

Tim and Mia
1999 Marathon XL 40

[HarborBus]

Wow Tim, this is your first post to the asylum. Let me be the first to officially welcome you. I know you have been hanging out so I'm glad to see you finally jumped in. So your headed home, did Beaumont get you bus put right? You guys have a safe trip.

[James]

Hello there,

I just registered our coach in Alaska and paid around $800.00 or so.
Tim and Mia
1999 Marathon XL 40

Hi Tim,

We registered ours in Eagle River and paid $134.00. Our previous one, a 2005 CC was $203.00. Don't know why you're having to pay $800.00.

We'll be hanging out at the Marathon place for the next couple of weeks and will be following in your tracks on the way to Anchorage. Let me know how the road is this year.

[Jim Skiff]

Article about a Colorado RV Owners: http://www.fmca.com/index.php/motorhoming/rv-headlines/312-motorhome-owner-pleads-guilty-to-tax-evasion

[ToyMan]

Yesterday I registered my bus in Florida where I reside. Total cost was $151. I will explain.

When I acquired the bus, I did not buy it outright. I bought the seller's Montana LLC. So I was the owner of the LLC and all of it's assets which included the bus.

I then held a "member" meeting and voted to dissolve the LLC. My registered agent submitted the LLC "Minutes of the meeting" to the Secretary of State of Montana and the request to dissolve was granted.

Now I had a Montana title in hand as well as the letter from the Secretary of State declaring that the LLC was dissolved.

I then took the Montana title, meeting Minutes, and the dissolution letter to my county tag agency. I also took a license tag that had come off of my previous motor home. Although the tag had expired, Florida law allows me to re-instate the tag so I would not have to pay the "impact fee" which, I believe, is $250.

Why no sales tax? Well, Florida has a "Procedure # TL-08", subject "Sales and use tax -- Transfer of motor vehicles and mobile homes". Within that procedure is is a list of situations that are EXEMPT from sales tax.

More specifically, Section C, item 7 which states "Transfer of certificate of title by a dissolved corporation to one of it's stockholders as part of the stockholder's ratable portion of the corporations assets. It does not constitute a sale of a motor vehicle to the stockholder."

This procedure falls under Florida Administrative Rule § 12A-1.007 (25)(a)

http://www3.flhsmv.gov/dmv/Proc/TL/TL-08.PDF

Below is an excerpt from the rule:

C. THE FOLLOWING SITUATIONS ARE EXEMPT FROM SALES TAX:

1. Even trade of another motor vehicle, mobile home or vessel.
2. Trade down.
3. Divorce, a copy of the Divorce Decree must be submitted with the application for certificate of title.
4. Inheritance.
5. Gift (No lien assumed).
6. Transfer of a certificate of title from a partnership to one of the partners as part of the final dissolution of the partnership.
7. Transfer of certificate of title by a dissolved corporation to one of its stockholders as part of the stockholder's ratable portion of the corporation's assets. It does not constitute a sale of a motor vehicle or vessel by the dissolved corporation to the stockholder.
8. When a Florida licensed motor vehicle dealer or a vessel dealer applies for a Florida Certificate of Title in the dealership’s name with or without a lien and the motor vehicle or vessel is being held in inventory for sale in the regular course of business, or is being operated in connection with such dealer’s business with a dealer’s license plate pursuant to section 320.13, Florida Statutes, if applicable.
9. Transfer of a certificate of title into the name of the surviving corporation by reason of corporate consolidation or merger in accordance with Chapters 607 or 617, Florida Statutes, or a reorganization as defined in Section 368(a)(1), of the Internal Revenue Code, solely in exchange of stock.

[Jon Wehrenberg]

Ron. you should go to the legislator that created that regulation that allowed you to own a former corporate asset (as a private individual) with no tax consequences and kiss him on the lips. I don't know of another state that would be so generous.

[ToyMan]

Jon,

Some other states might have the same law. The Florida rule is certainly buried in a menagerie of laws.

It probably would be difficult finding someone to own up to this rule.

[Gary Carmichael]

N.C. is not bad 1500.00 max tax on purchase price, and the vehicle tax each year is very small they refer to all motorhomes and coaches as house cars. also in checking on drivers liscence a class c is all that is required for private ownership, of course it depends on who you are talking to with the state

[sawdust_128]

In NC if you are talking to anyone who tells you other than a class C you are talking to people who think that they operate at a higher pay grade than the one they get paid with. We here at POG have our own NC DOT connection. What say you Will?

[phorner]

Just a heads up regarding the Montana LLC registered coaches.

A friend of mine has just recently received notice from the State of Massachusetts. Apparently the state is demanding back taxes, interest, penalties, etc. not only for the current coach, but also for the one owned by them previously. Not a pretty picture as the dollars are very high.

It looks as though the state compared a list of LLC registered vehicles against a list of state residents.

No matter how this turns out, there will certainly be the cost of defending their position as well as many sleepless nights.

Nearly every state is experiencing a fiscal crisis and I'm sure that they have attorneys working overtime trying to figure out ways to add revenues to their budgets.

This situation was resolved this past summer. The owner of the bus ended up writing a check for $105,000. The "original" tax liability was about $35,000. Interest and penalties added $70,000 to the tab.

Commonly most states will negotiate the amount owed seeking primarily the original tax.

Not in this case.

[truk4u]

Paul,

That is scary stuff and will only get worse in our economic times. I mentioned this before, but the states are buying the data base from Montana and then matching the names. Here's the website to order the data base just for fun: https://app.mt.gov/cgi-bin/corprecords/corprecords.cgi

[Reagan Sirmons]

Further to this discussion on Montana LLC's, in the State of Texas on motorcoaches, the tax is not a sales tax but a road use tax. THe road use tax is calculated at 6.25% while the sales tax is an 8.25% fee. The Business Analysis REsearch Team is active on this subject and the assistant to the Comptroller of Texas is heading up the initiative. I talked extensively with them on this just 10 days ago. In addition, in Texas, a 1% surcharge has to be paid on the full sales price if a vehicle weights over 14,000 pounds.
Ron's case in Florida is interesting in that he dissolved a LLC that was outstanding. The legislative process is thorough and the tax planning authorities know their business. I would postulate for discussion that if the LLC existed on a motrcoach and the LLC was indeed originally set up with the obvious intent of evading a tax that was due on the coach in the state of the previous owner of the LLC, then the LLC was void by definition and had no standing in the transaction.
Pres

[MIsheeTX]

Has anything changed in this regard in TX?