Montana/Alaska Tags/NO TAX

If they hassle you, just offer to peal out again

 

Neat. I met them both at a luncheon here in Saratoga last year.

 

Not a single instance?

Wow. Try this one:

John Brown is a rancher in MT. Rancher Brown's business, a C Corp, conceived and incorporated under the laws of the Big Sky state, owns a big pickup and a horse/travel trailer that are registered and tagged in MT. Rancher Brown hates the winters in MT and, every year, he packs up Ma Brown, a couple of trusty horses, his horse/travel trailer and, with his pickup, hauls them all out to a warmer climate to stay for the winter before returning to MT. This year, he chooses AZ.

Rancher Brown definitely is NOT obligated to register the pickup, trailer, or Ma Brown, in AZ.

 

California is very aggressive about this. I have an LLC which made an investment in a corporation with customers (no offices, just customers) in California. Remember, all my LLC did was make an investment in this non-California company.

California made me register my LLC in California, and pay California tax.

 

I don't care about the LEGAL definition of fraud. I care about the MORAL definition of fraud.

That tax money that you are sending to Montana under false pretenses (or some convoluted loophole) is coming from the pockets of your next door neighbors.

You live in a state, your keep the car in that state, you deserve to pay your car registration in that state. You don't like it? Move to another state or fight them at the ballot box.

Sorry, for people who own exotics, trying to get around the system to save a few bucks is gauche.

I say again: If you can't afford the upkeep, taxes, maintenance, and registration of an exotic in your area--- don't buy it.

That's how I feel. Shoot me.

 

This has what to do with someone who lives in NY, buys a new Ferrari, brings it to NY, garages it in NY, and drives it in NY?

Are you saying that such a person can legally avoid owing NY Sales Tax by "Registering" their Ferrari in Montana?

 

For what its worth, I know two collectors who maintain a NYS Dealers license. Neither are actual retail auto dealers. None of the cars in their collections are ever actually registered: when they drive them, they simply affix a dealer plate.

I don't know the legality of this, nor the tax and insurance implications.

 

If someone lives their productive life in Montana but spends months at a time on vacation in Arizona, then my all means register the vehicle and trailer in Montana. You might even make the case for the guy that works in Arizona, but spends a substantial amount of the year at his vacation ranch in Montana registering his property in Montana. BUT, if you live in Arizona, and visit Montana for a week each year to ski at your condo or timeshare at Big Sky, don't try to play the LLC game, and if you don't even visit Montana for that week definately don't try the game. Even if you can play a legal game where the tax authorities computers will not call you out, eventually you will get audited, either by the authorities, or by the dude with the beard at the gate.

 

Here is the general overview of sales tax on personal purchases. If an item is purchased out of NYS and brought into NYS by a NYS resident then a use tax must be paid on the item. It does not matter what the item is. It could be a car, watch, clothing, artwork etc...

There was a case many years ago when Tiffany & Co was selling jewelry to customers in NYC and shipping empty boxes to the customers out of state house/business/address and not charging sales tax. NYS caught Tiffany & Co. NYS also once went to the NJ shopping malls and wrote done the NYS license plates and sent letters to the owners of the cars reminding them to report and pay NYS sales tax on any purchases from stores in NJ. It created a big uproar and NYS stopped doing it.

On the NYS individual income tax return (IT-201 line 59) is a line to report your sales and use tax. BTW sales tax and use tax are the same thing.

You would be entitled to a credit for the sales taxes you paid on the item in the other state. I believe the US Customes duty would not qualify as a sales tax however I have never had to look into this for a client.

Why most people get away with it is that it is almost impossible for NYS to find out about these items brought into the state.

Most states have similar rules.

 

It depends on the state. Some states have a presence test that will determine if a auto needs to be registered in the state. If the truck is required to be registered in the state then most likely there would be a sales tax charge on the vehicle, however most states allow a credit for the sales tax paid in the state the car was originally registered in.

The real issue is not someone who goes on vacation - the issue is where is the person domiciled and where is the auto kept. If you have a vacation house in AZ and keep a car in AZ then that car would be subject to sales tax in AZ (assuming AZ has a sales tax on autos).

Your example also brings up commercial highway use tax. I assume the truck and trailer are commercial so they would be subject to all the Federal and states highway use tax. There are a another whole set of rules for farm vehicles.

Did you ever notice that diesel fuel is dyed a color. It is for tax purposes. If you get caught with the wrong color of fuel in your truck you are in big trouble.

 

Thanks but how does that square with this from an official NYS Gov. site?

Specifically regarding Use Tax tax on a race car under the quoted exemption?

"NYS Motor Vehicle Use Taxwww.nyc.gov › ... › NYC Taxes Administered by the StateCached -
Business Taxes. Motor Vehicle Use Tax.

Who is Exempt from This Tax?
The following owners are exempt from the tax:

Owners to whom the vehicle and traffic law registration requirements are inapplicable;"

 

Hardly, and you know that. If you are incorporated in DE but (e.g.) have a CA presence, you still collect CA sales tax. If you have CA employees, you still pay CA associated taxes. Incorporating in DE is a completely different thing that the subject at hand.

 

NC requires this.

As of a few years ago, NC does not allow non-resident registration. That means if you operate a vehicle 100% in NC but are not a resident (e.g because you are an out of state LLC, or a "multihomed" individual), you cannot, even if you wanted to, register your vehicle in NC.

 

Well, no need to shoot you... yet ;-) ... but I will disagree with you.

IMHO, you grossly misunderstand tax law in general and this issue in particular.

Firstly, one has no moral obligation to pay one cent more in taxes than one must.

Secondly, by your simplified definition, ALL tax deductions, exemptions, credits, trusts, etc. would be considered immoral for they are nothing more than "loopholes" that exist solely to reduce one's taxes, right? But I am sure you, like everyone else reading this post, sees nothing immoral about taking advantage of every federal "loophole" you can to reduce your tax burden. This is no different. It is just happening at the state level instead of the federal level.

Thirdly, there is nothing "false" or "fraudulent" about following the laws as they are written. State lawmakers make choices about their respective tax codes. Some states are tax friendlier than others. Acknowledging that fact and taking advantage of one state's tax code versus another's is hardly immoral. In fact, differences in one state's tax codes versus a competing state's tax codes exist to drive these kinds of decisions. Why does one state charge income taxes on say, pension or retirement income, and another state does not? You think the latter state might be attempting to lure people to retire there? And are the latter state's lawmakers acting "immorally" for luring away another state's taxpayers?

Lastly, the money I send to MT is mine. It doesn't belong to you, or a neighbor or any state government.

 

The Delaware example is entirely germane.

Delaware's corporate laws and court system are far more accommodating to business than virtually every other state. Delaware promotes itself accordingly and corporations exploit this fact for their own benefit.

The point, simplified, is that businesses and individuals have been taking advantage of one state's laws versus another's from the time the states were formed. This is just a very minor example.

 

Here's another one:

Take a guy who splits his time roughly equally between one state and another and owns property in both states.

Is he acting "immorally" for only registering his vehicle in one state even though he uses it in both?

Or, conversely, would he be "more moral" and get to heaven faster if he registers his car in both states?

Sorry, but I don't follow the logic.

 

And legal. The out of state registration scheme is generally not legal.

We're not talking about situations like that! We are talking about residence and use in one state, with vehicle title and registration in another state solely for the purpose of illegal tax evasion. (for states where it is illegal.)

 

"Generally not legal" according to whom? You?

Isn't it odd that lawmakers in the states of Montana and Alaska feel differently? Perhaps you'd like to contact them and explain how they are acting complicity in an activity you have deemed to be "illegal"?

Or, on the other hand, perhaps you would like to acknowledge that you are not an authority on the matter and really have very little idea of what you are talking about? And the following information might shed a little light on this subject:

From the Law Offices of John Bennett, 323 W Pine Street, Missoula, MT 59802 Tel 406-543-5803

Bennett Law Office, P.C is a full-service law firm dedicated to providing a wide range of legal services to owners of recreational vehicles. Since 1998, we have helped thousands of clients minimize sales and use taxes on the purchase and registration of recreational vehicles and other vehicles. In addition, we have helped clients minimize their state income tax burden.

Montana business entity for ownership of vehicles

Forming a Montana business entity (usually a Limited Liability Company) may help you eliminate all sales taxes and minimize license fees upon the purchase and registration of a recreational vehicle or any other vehicles.

A Montana business entity can take ownership of a new vehicle, or a vehicle you currently own, and register the motor vehicle in Montana, which has no sales tax and low registration fees.

By following these steps, a non-resident of Montana may enjoy the benefits mentioned above:
1. Have an attorney establish a Montana business entity for you;
2. Purchase (or transfer the ownership of) the motor vehicle in the name of the business entity - such that the name of the business entity and Montana address of the business entity (the address of your attorney and registered agent in Montana), and not your personal name and home address, appear on the reverse of the “Manufacturer’s Certificate of Origin” (the pre-title document given to you by the dealership from whom you purchased the motor vehicle) or the title, if the vehicle was purchased used or already owned by you; and
3. Operate the motor vehicle in a manner that complies with the laws of the state where the vehicle is located and operated. We help you do so by researching the laws of all states, such that we can provide you with the legal guidance you need to avoid violating the laws of those states.

This can be done quickly and easily. Upon filing, via facsimile, the Articles for the business entity with the Montana Secretary of State, the business entity will be in existence within twenty-four business hours. We will then receive the approved Articles from the Secretary of State within 2-3 days. We can then title, register, and license your business entity’s vehicle or vehicles the same day as we have the Articles from the Secretary of State, the Manufacturer’s Certificate of Origin or Title, and the funds to pay the Montana DMV. It is usually possible for us to overnight the plates and registration to you the same day.

Please note that if you purchase the vehicle before forming the business entity, or the title work is not completed correctly, this process can take longer. If the vehicle is financed, the financing should be in the name of the business entity. If your purchase and finance a vehicle in your own name, the bank must grant permission to change ownership to the Montana business entity, or you will be required to refinance the loan in the name of the business entity.

Montana Law

The purpose of forming a business entity for the holding of a motor vehicle is to take advantage of Montana’s low licensing fees and lack of a sales tax; as mentioned above. A Montana business entity can do so due to Montana’s registration statute, which is found at Montana Code Annotated § 61-3-303, entitled “Original registration -- process – fees,” and which provides, in subsection (1), the following:

(1) Except as provided in 61-3-324, a Montana resident who owns a motor vehicle, trailer, semitrailer, or pole trailer operated or driven upon the public highways of this state shall register the motor vehicle, trailer, semitrailer, or pole trailer in the office of the county treasurer in the county where the owner permanently resides or, if the motor vehicle, trailer, semitrailer, or pole trailer is owned by a corporation or used primarily for commercial purposes, in the county where the motor vehicle, trailer, semitrailer, or pole trailer is domiciled.

(emphasis added)

The Montana Attorney General’s Office, which oversees the Montana Department of Motor Vehicles, has interpreted the above statute. The AG’s office has indicated that a Montana business entity that has taken title to a motor vehicle may make a legal registration of the vehicle in Montana.

In addition, vehicles registered in Montana, with a few exceptions, require no inspection, and never need come to Montana. With Montana’s scenery being so breathtaking, most of our clients do travel through Montana, and we enjoy the opportunity to meet our clients in person and assist them with their legal needs in person.

Motor Home Registration Fee Schedule (As of 1/1/06)

On January 1, 2006, a new fee schedule will go into effect for registering motor homes in Montana. After January 1, 2006, motor homes will be registered for a twelve month period from the month registered (a motor home registered in February will have plates that show the registration expires at the end of February of the following year).

The registration fees will be as follows:

$302.50 for motor homes less than two years old.
$244.25 for motor homes two years old and less than five years old.
$152.50 for motor homes five years old and less than eight years old.
$117.50 for motor homes eight years old and older.

In addition to the above fees, if there is a lien to be file against the vehicle, there is an additional $8.00 fee.

The age of the motor home is determined by subtracting the manufacturer’s designated model year from the current calendar year.

If the motor home is eleven years old or older, it may be permanently registered for a fee of $257.50 and, if applicable, five times the personalized license plate fees.

Fee Schedule for Automobiles, Vans, Sport Utility Vehicles, and Light Trucks

The registration fee for an automobile, van, sport utility vehicle or a light truck is good for 12 months from the month of registration. Montana has a registration fee based on the vehicle’s age. In addition, there is also a property tax of 0.5% of the vehicles depreciated value.

An automobile, van, sport utility vehicle, or a new light truck, that is four years old or less, can be registered for a flat fee of $236.00 plus 0.5% of the depreciated value of the vehicle. If there is a lien against the vehicle, there is an additional fee of $8.00.

If an automobile, van, sport utility vehicle, or light truck is five to 10 years old, it can be registered for $109.00, plus $8.00 if there is a lien, plus 0.5% of the depreciated value of the vehicle.

If an automobile, van, sport utility vehicle, or light truck is 11 years old or older, it can be registered for $47.00, plus $8.00 if there is a lien, plus 0.5% of the depreciated value of the vehicle.

In addition, an automobile, van, sport utility vehicle or light truck can be registered for 24 months, upon payment of two years fees, and vehicles 11 years old or older can be permanently registered.

Trucks rated at one ton or greater expire at the end of December each year, and have a different registration fee schedule based on the rated capacity of the vehicle. Other vehicles, including 5th Wheel/Travel Trailers, snowmobiles, ATV’s, boats, motorcycles, and utility trailers will be permanently registered and need not be renewed for as long as the LLC owns the vehicle.

The Laws of Other States

Some states restrict one’s right to avoid registering a motor vehicle in the state of one’s residence even if one is operating a motor vehicle owned by a non-resident (in this case the non-resident is the Montana business entity). We research the laws of the states of residence of our clients and inform them of the results of our research. Please note that we are licensed attorneys in Montana and our interpretation of other state’s laws may differ from attorneys in those jurisdictions.

It is a good idea to consider purchasing your vehicles in a state other than your state of residence. While this does not change the legal standards regarding your state’s vehicle registration and sales and use tax laws, it may reduce the likelihood of your being audited or scrutinized regarding your vehicle’s registration and use. States have different regulations and procedures regarding collecting or not collecting sales and use tax, which includes out-of-state delivery, affidavits, and time restrictions in which the purchased vehicle must be removed from the state. If you have questions regarding these issues, our attorneys will happily discuss them with you. We recommend you keep a log with receipts to show where the vehicles are located and operated. If you are ever audited or questioned, your log and receipts will provide evidence that you complied with the laws. If you purchase vehicles in your home state, this is even more important since your likelihood of getting audited increases.

For example, Tennessee Law:

You indicated that you are currently a resident of Tennessee.

The general rule for vehicle registration in Tennessee is found in section 55-4-101 of the Tennessee Code Annotated. This section sets forth in part:

55-4-101. Registration required before operation -- Application -- Issuance of registration and license plates -- Rules and regulations -- Temporary permit -- Transfer of registration when changing vehicles -- Fees -- Safety rules for homemade trailers

(a) (1) As a condition precedent to the operation of any motor vehicle upon the streets or highways of this state, such vehicle shall be registered as hereinafter provided.
(2) Such registration and the fees provided therefore shall constitute a privilege tax upon such operation.
(b) The commissioner shall be, and is hereby constituted, the registrar of motor vehicles and, except as otherwise provided in chapters 1-6 of this title, every owner of a vehicle intended to be operated in this state and required by this chapter to be registered shall, before same is operated, apply to the department for the registration of and the registration plates for such vehicle.
There are limited exemptions for nonresidents of Tennessee operating motor vehicles within the state. These exemptions are set forth in section 55-4-120, which provides in part:

55-4-120. Limited exemption of nonresident owners from registration -- Registration required when transporting for hire

(a) (1) A nonresident owner of any regularly licensed passenger motor vehicle not operated for hire registered in any state or territory of the United States, Canada or Mexico may have the privilege of operating upon the public roads of this state for a period of thirty (30) consecutive days, PLUS such additional period of time as a resident of Tennessee would be permitted to operate such passenger vehicles not for hire over the highways of the state of such.

Montana is also a “reciprocity state.” Montana’s statute, MCA §61-3-719, “Automatic reciprocity,” provides the following:

61-3-719 Automatic reciprocity.

Automatic reciprocity. If an agreement, arrangement, or declaration is not in effect with respect to another jurisdiction as authorized by 61-3-711 through 61-3-733, any motor vehicle, trailer, semitrailer, or pole trailer properly registered or licensed in another jurisdiction, and for which evidence of compliance is supplied must receive, when operated in this state, the same exemptions, benefits, and privileges granted by the other jurisdictions to motor vehicles, trailers, semitrailers, or pole trailers properly registered in this state. Reciprocity extended under this section applies to commercial motor vehicles, trailers, semitrailers, or pole trailers only when engaged exclusively in interstate commerce.

Reading the Tennessee and Montana reciprocity statutes suggest that reciprocity is given to nonresidents of both states with no specific time limit mentioned. Thus, a Montana LLC should be able to operate a vehicle in Tennessee as long as it is properly licensed in Montana.

With no case law on point in Tennessee, the statutes are the only authority addressing this issue. It appears clear that there is reciprocity given to both states and there should be no problem with a Montana owned motor home being operated in the state of Tennessee as long as it is not being used for any business purposes.

Lenders

If you finance the purchase of your motor home, your lender must be willing to write the loan in the name of your company.

 

Okay, I get it now. You're a shill for Bennett. I have taken this same letter given to a client of mine and proven that this amounts to fraud in Texas.

Keep it up buddy. Just make sure your malpractice is paid up.

Dale

 

What is the MORAL definition of fraud?

 

Let's not get this thread tossed into P and R.

Everyone has their own definition of morality. I have mine, others have theirs.

I've said many times here that if you live in a state, you should pay the taxes to that state. That's my definition.

Now, if you live in Montana or Alaska, that's a great advantage and I don't see any reason that someone would not register all of their cars there. That's a privilege of living in one of those states.

 

Legal according to whom? You?

It isn't odd at all. Why shouldn't MT and AK allow it? They want as much revenue as possible. All states allow a resident registration and permit you to operate the vehicle outside of their jurisdiction.

lol.

Here, I've highlighted the most important part:

It's not MT's laws which matter. It's always been stated throughout this thread, and the innumerable identical threads which appear every 6 months, that it's not universally illegal. It depends on the laws of your home state. I even presented the example that in NC you must register your vehicle out of state if it is titled out of state; in-state registration isn't even an option regardless of where the vehicle is operated.

There's absolutely nothing interesting, unusual or contentious in the above. Except that it establishes that residency is not a criteria for TN registration, operation is.

.

The statute above is a MT statute and is irrelevant outside of MT. It states that a Tennessee LLC can operate a vehicle in MT. It's not clear that it isn't superceded by other concerns (as such agreements are, in CA).

Being owned by an LLC establishes a business purpose. You didn't quote the relevant TN laws so I don't know if that is correct, but as has always been stated, this is state dependent and many states prosecute folks for it. For example, there are snitch programs in CA to catch folks registering motorhomes out of state. (Motorhomes are the most common offender, but it's generally illegal for all types of vehicles.)

CA has reciprocity and yet

Can you see how the laws of MT are irrelevant? It is the laws of your home state and sure, TN may allow this but most states do not. You didn't post enough info to prove that TN allows it but if you say so, I believe you.

For CA, it isn't even primary use that is the registration test. It's regular use.

 

Here's the test. Will Bennett indemnify you? Answer: no.

 

This touches on this issue:

http://www.9news.com/news/story.aspx?storyid=68847&catid=222

Cheers

 

There is a more famous case: