Montana registration crack-down

I thought about registering my business in Montana to get the plate for my 599.

I'm glad I didn't.

 

For all the legal chatter in this thread I have not seen one of our resident lawyers chime in. I guess they don't want to touch this with a 10 foot pole.

 

I'm not a lawyer, but:

1. Forming a Montana LLC is not illegal.
2. Transferring your car to a Montana LLC is not illegal.
3. Driving your Montana LLC registered car across state lines is not illegal.
4. The problem comes in complying with your state laws on registering the car. Some states give you 30-days if you move the car to your home state, others don't have a quantitative window. But when you park the Montana LLC car in your driveway for months at a time, this is when the rubber hits the road.

 

just hypothetically speaking but...

if i had a friend here in atlanta that had his ferrari registered using a montana llc. lets say the car hasnt left GA let alone buckhead. suppose he calls his prominent attorney who he used to setup this llc. you'd know that he'd be a reputable and knowledgeable attorney based on his advertisements handling such services in a prominent (likely my favorite) magazine. do you think he'd tell him the gig is up ? go down and pay your fee, penalty and square up ?

 

I think there are two scenarios to consider here. If you buy a high end vehicle, license it in Montana, and live with the car elsewhere, you are looking for trouble. This happens with new vehicles. The way it should and is often done, is buy a very expensive Classic car, license it in Montana owned by your Montana LLC or better yet own a little piece of property in Montana so you have a physical address. ( know several owners that have done just that, after spending a few million on a vintage Ferrari 50K for a few acres is a drop in the bucket), store the car in a climate controlled safe underground garage with a ton of other like cars in Montana. (I know where such a storage place is) When you go to a car show you send a carrier to Montana to pick up your car. Then when the show is over ship it back to it's home in Montana.........and sleep well. The 50K does not apply if you want property in Whitefish!!!!!!

 

I know for a fact THAT attorney will not say that. All he'll say is it is legal in Montana, which technically all he can say seeing how he is not an expert on the laws in other states.

 

To me its not so much the high registration fees, its that California just kills you with the sales tax. I understand paying it the first time when the car comes out of the dealership, but another 10% each and every time the car is resold be it private party or through a dealer? How many times should they be allowed to tax the same item? As someone else pointed out earlier. CA currently has over $.60 gal tax on gasoline which I believe is way more than any other State. That should be more than enough to keep the roads in good repair if it wasn't all siphoned off to the general fund.

Nevada has a way more reasonable auto sales tax program. About 8% (depending on the county) on the new car sales or any sales from a dealer (new or used). NO sales tax due from Private Party sales, regardless of the price. In this case, most cars are only taxed when initially sold (fair enough) but not every time down the line.

From a California perspective, I see literally hundreds of Nevada plated cars on the roads every day. Not just exotics. there is just a lot of cross state traffic. No one raises an eyebrow to a Nevada plate here like they do to an exotic with a Nevada plate. Just glad I have a place in both states.

 

thanks. surprised to hear that only dealers gets to charge sales tax. that really puts them into a disadvantage. why would anyone buy from dealer, when private party is automatically 8% less. dealers are usually well represented, surprised that's possible.

I have places in both states... this sounds like a doable thing then.... thanks.

 

FYI, admitted at the NY bar.

CW

 

theoretically speaking.. he did.

 

You mean like hypothetically he said the Montana LLC is possibly a scam?


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in this hypothetical discussion,

he said the montana llc gig in GA is up. he should register the car, pay the taxes and fines be done with it....

 

Sorry, meant to say no one raises an eyebrow here to an exotic with a Nevada plate like they do to one with a Montana plate. Nevada here in So. CA flys under the "radar".

 

Well said

 

Well maybe someone can challenge it using a cheap car (Sub-$5,000) so if they lose the back taxes and penalties are nil. Find a friendly cop to cite them and go to court. Unless pure cases have already done that and failed.

How far can you stretch coporations are people and this corporation resides in Montana even though its property is driving around Georgia by someone else?

 

Another thought. Forget the LLC for a minute. Suppose you have a relative in Montana who lives there for real. They have a car and they let you use it in Georgia full time, they even tell their insurance company it is there and who is driving it.

Can Georgia force your cousin in Montana to register it in Georgia even though he has never been there? If not, then shouldn't it be the same for the corporation?

I have no idea.

 

Sounds like he would prefer there not be a test case in the courts.


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here's my free legal advice

if your hypothetically using a montana llc to avoid paying taxes, fee, TAVT. etc in GA. get the car out of state and sell it.

 

no i misspoke

i heard the free legal advice going around is to get your car out of the state and sell it

i am not a vampire

 

Yup.

Exactly. That works of course...albeit for a "show car" that you don't keep in another state for an extended period of time.

 

I don't know why I can't resist this "troll" and keep providing the answer to the question you keep asking (or the erroneous statement you keep making). I realize you may not think you are trolling, but you are; you keep asking this question (or making statements about it) despite the answer being provided and plainly obvious and easily available on the internet.

The answer is - once again - physical presence.

You said you are a lawyer, so I can't believe you don't know the definition of nexus in tax parlance:

From the interweb:

Nexus, also called “sufficient physical presence,” is a legal term that refers to the requirement for companies doing business in a state to pay tax in that state.

All states have a slightly different definition of nexus, but most of the time states consider that a “physical presence” or “economic connection” creates nexus.

I see that you don't agree that state's should be able to determine nexus and that these taxes are too high and unfair. Your complaints are noted. That doesn't change the facts and laws This is very highly trodden law...it has evolved and will continue to evolve of course, but its the law that states can determine nexus based on physical presence and even sometimes without it (ask the internet retailers if they believe they should pay taxes in states where they have no physical presence and yet now must collect and pay sales taxes from their customers in those states). There are also laws that govern car registration and use on State roads that allow states to require cars be registered in their State if used there for certain time periods. Its all settled law at this point.

 

its the law in many states. The idea behind it is that only a business has the duty and ability to collect and pay sales tax from its customers. Private citizens selling an item here or there do not. Most states don't enforce sales tax collection onto private party sellers of most goods (think ebay or craigslist or whatever for small items). Cars are big ticket items that also have a registration requirement so they stick out and there is an oppty for the state to collect due to the registration event...so some states (CA of course) could not resist getting sales tax there.

In AZ, where we have the zero tax on private party sales, the car dealers all seem to be doing just fine

(the other sales tax "fairness" issue is the matter of getting an offset (or credit) for sales taxes on a traded-in vehicle. CA - surprise - doesn't offer that. Many states do (AZ once again does).

Look for states that allow full offset for trade-in value and for zero tax on private party for the win!

 

You don't understand;
Its the peoples money and that would be denying them of their rightful share which they worked to accrue.

 

Thank you, but I certainly understand the argument they use to justify their position. I don't, however, believe it's got a solid foundational basis. Other than it's now precedent. As I said, I find it to be a conflict of interest, and, not only that, I find it to be an over-reach.

Trolling? Whatever...

CW

 

That won't work in Massachusetts. If you operate (whether you own it or not) a car for more than 30 days in the state, it has to be registered in Mass. The only exception is if you are active duty military. There may also be an exception for college students, but it does require some kind of registration.

So if you want to avoid the taxes in Mass., join the Army!