Virginia goes after Out-of-State License Plates

That's perfectly legal as far as Montana is concerned. Virginia law is pretty specific about this however, and it's definitely not legal to keep a car here long term while it's registered elsewhere in order to avoid taxes. If you'd like to try a similar test of state law, light up a joint while strolling through Arlington. When you get arrested just show the cops your Oregon driver's license. They'll let you off the hook, guaranteed!

 

I did once, but only because they recorded my 1979 coupe 'de ville as a 2009 STS. You need to fight the assessment when you get the initial letter confirming you own the car and their estimated value around April. If you wait until you get your bill it is too late for that year.

 

When the sign shows that pricing, I KNOW it will be worth every darn cent of it. But usually when I am on 495/95 at that time of the day I have folks with me, so it is free anyhow. The building of the express/toll lanes did not take away any main line lanes. The tolls are set to try to maintain the speedlimit in the express lanes. We can gripe about the price, but it seems to be working as designed.

 

If you have two residences but driver's license is the same as the vehicle and different from current your secondary address, do you go scot free?

 

And, on what basis does VA's laws supersede MT's?

CW

 

The car is in Virginia, and is there for a period of time that matches the registration requirements in the Commonwealth. It has stood up in the courts.

 

Who's courts? VA's?

CW

 

Well I'm no lawyer, but I suspect that when you're in Virginia, Virginia law supercedes Montana law. I can't imagine why Virginia courts would care if something is legal or not in Montana.

Not sure I follow, but I think it depends. I own property in FL and used to travel back and forth every week from there to VA/DC. I had my 355 registered in FL since I owned the property there, had a FL drivers license, and was renting a corporate apartment in VA. I drove my car up to VA in April/May and drove it back to FL in November every year, so I was fine as far as the time-spent rule was concerned and no one in VA ever hassled me about it. By the time I replaced that car I was staying in VA full time and the dealership/bank/insurance company wouldn't complete the deal on a new car unless I registered it in VA.

Unfortunately 66 inside the beltway is going full congestion pricing in all lanes starting in December. They put the cameras up while I was out of town and I nearly had a heart attack driving along at night with cameras flashing behind me every couple of miles. It will be interesting to see how this system works out...

 

I am a lawyer. Of course VA's courts are going to argue that they have jurisdiction. But, then again, they're EXPECTED to.

What's most disturbing is that VA's courts haven't really wrestled with the fact that a legally-registered MT car has every right to drive on VA's roads. So, on what basis can they require someone to register (or re-register) their vehicle in VA? By what right? The States do have the power to tax, but I'm not sure this issue (which would appear to be one of reciprocity) has ever been raised in a Federal court. And, really, it should, because the issue is state v. state. MT has the right to register and tax vehicles as they see fit. The vehicle is owned by a corporate entity with a domicile in MT. This is perfectly legal. The vehicle doesn't necessarily have to remain in the state, however, to suit MT. So, again, perfectly legal.

Where I have a problem is when VA unilaterally declares that a vehicle that is legally-registered in MT is in some way violating VA's laws. VA made up a law to suit its' own needs. It does not give full faith and credit, so to speak, to MT's. Thus, I really see this as a Constitutional law issue.

Federal tax code dictates that tax residency is determined to be 6 months plus one day. I don't know that that's an appropriate comparison, however, because the corporate entity in MT is domiciled there for 12 months of the year. I don't believe the fact that the asset(s) of the entity are located outside of the state changes that domicile status in any way.

So, really, I think VA has grossly over-stepped their legal authority. I can see this ending up in Federal court at some point, as taxes (and fines on unpaid taxes) on expensive personal property can add up. So, it may be economically justifiable to fight the issue.

Personally, I have found that VA cuts a lot of corners. Legally-speaking. That may not be unique, but I think we, as taxpayers, should demand more of them. And, as the relative 800lb gorillas, they ought to be held to a higher standard than that.

CW

 

Ah... yea driving a MT car in VA is of course no problem, the issue is allowing MT cars to reside in VA long term in order to avoid VA taxes. The car tax is a personal property tax. If the property resides in state X, it should adhere to the laws of state X. I don't think anyone would attempt to buy a house in VA using a MT corporation and expect to pay MT taxes on it. The fact that a car has four wheels and can move around doesn't really change the fact that it's a piece of property kept in a specific location. The six months + 1 day rule seems pretty reasonable to me, but I don't know how the state can really enforce it unless they swing by your house every couple of weeks to check on things. Along those lines, the number of expensive MT plated cars that have been showing up to our local C&C for years lead me to believe that the police don't really care too much about enforcing this.

 

Well, remember, as I said, VA has its' own conflict of interest in all of this. It's really a money-grab on their part. They pass a rule saying that if car is in the state for more than x days, it's taxable personal property? How is this not a usurpation of MT's laws to legally register and tax a vehicle? And, while you want to minimize it, a car (personal property) is indeed distinct from a home (real property) exactly because it can move across state lines. So, what you consider to be reasonable, I can easily argue to be arbitrary, capricious and self-serving.

But, to use another example, VA-registered vehicles must be inspected to ensure that they're safe to operate on the roads, right? Presumably, this is a public safety issue and not one of mere revenue generation (or annoyance for VA owners). However, what requirements are there for out-of-state vehicles to be inspected so as to ensure the safety of VA residents? None, AFAIK. Wouldn't that be something that VA would have an interest in, though? Yet, they give them all a pass. So, if a legally-registered vehicle from anywhere else is apparently safe enough for VA's roads, then, really, how is this any different? Again, IMO, it's nothing more than a tax revenue grab with a thin basis and is a undermining of MT's (or any other state's) vested powers.

At the core, I suppose, this really is nothing more than an on-going debate to determine if this is tax avoidance (legal) or tax evasion (illegal). Generally, from the Federal tax code perspective, if there’s no other purpose for the scheme other than paying less or no taxes, it’s considered tax evasion, even if the letter of the law is followed. As this isn’t a Federal matter, it’s maybe influential, but not dispositive, thinking for a resolution. But, there are differing opinions on the point, but I don’t think we should gloss over the state’s own conflict of interest issue, either. States are, in essence, in competition with their tax rates. States with no/low tax rates attract Americans at the expense of higher tax states. And, really, as long as the legal formalities of the LLC’s residency are sufficient for MT, then the assets can freely travel wherever within the United States (without limitations on their duration) as afforded by our freedoms of free movement across state borders. Again, I just don’t see a sufficient basis for VA to UNILATERALLY declare that it has the power to tax it as VA property if it's legally registered elsewhere.

As for enforcement, I don't disagree. As these may be criminal offenses, the burden is higher (beyond reasonable doubt) for VA to prove that these vehicles were a) subject to VA's law and b) that they didn't comply with it. And, as noted, it's easy enough to have multiple residences and establish a legitimate link to another domicile (this would likely go a long way to negating the tax evasion argument on the basis that the foreign registry is not "solely" for the purpose of avoiding taxes). MT may be popular for having no sales tax and very low property taxes, but, as suggested, what if you own property there? Or, what if you own property in another low-tax state? Heck, DC has no vehicular property taxes, right? Rent a mailbox or closet and register it there. EASY to do. Virtually IMPOSSIBLE to enforce. So, why even bother? Revenue.

The bottom line is that it is utterly foolish on the part of VA to impose high taxes and then try to enforce. It would be better if VA got reasonable on taxes so they didn't have to be a bunch of d*cks. But, hey, that's VA...

CW

 

BTW, though on RVs, I thought this was an interesting read. In particular, the legal analysis, by MT counsel, in the letter provided. It seems to boil down to the reciprocities granted. I can't say what reciprocities VA has with other states, but if it wants reciprocities for its' own residents, it must grant them to theirs. It's certainly likely that VA has reciprocities, but I don't know which other States. So, more research would be required. I don't know, either, if the Federal Government has anything on point on this, but, honestly, I think it ought to. Again, as citizens, we enjoy certain rights and freedoms, and crossing borders is one of those. And, as I suggested, I view this more as a state v. state issue that could easily be clarified and resolved by Federal rules of reciprocity.

http://www.myrv.us/Pgs/RV/montana.htm

CW

 

Well yea I guess all taxes are just a money grab in the end. Gotta pay for roads, cops, schools, etc right? Each state has their own way of balancing things between sales/property/income taxes but it seems like all the effort to avoid forking over money to the state can lead to more complications than I'd care to deal with.

For example, I'm still not clear on how people register vehicles to an LLC that doesn't actually do anything. If you own a landscaping company and have a big truck with a trailer full of tools that makes perfect sense as a business vehicle, but what are the rules regarding a lawyer in NoVA who has a Ferrari registered to a Montana LLC that has zero income and has never actually conducted a single piece of business? How can that legitimately be treated as a business vehicle? How does insurance work in that case? They always want to know where the car is garaged and the state/feds want to know what percentage is personal vs business use. Do people just lie about this on all their forms? I'd hate to get into an accident and have my insurance company start asking questions about why my MT "company" Ferrari got wrecked in the parking lot of a VA golf course. Maybe they wouldn't care but that's not something I'd want to test.

 

The level of frustration you're willing to tolerate (and the hoops you'll jump through) may be directly correlated to the value of the vehicle in question. If it's a $20K Honda, maybe it's not worth it. But, if it's a $250K Ferrari...

An LLC is *just* a legal entity like any other. It has all the legal rights of a person. Relevantly, it can own property. There's no requirement, per se, that it do anything, and many don't. Nothing illegal there. Your questions are getting into the question of tax evasion, though, in the sense that there's no other connection and the sole purpose is to avoid the taxes.

I can't tell you what people say to their insurance company, but unless there's some basis to argue a material fraud, I'd argue that an insurance company would remain on the hook. First, they'd need to establish that there was a misrepresentation. Second, they'd need to show that it's material. That may not be how insurance companies see it, though. I'm sure they'd argue that lying on the form is grounds for recision and the policy was invalid from the get-go. I'm also sure they'd argue that it's material because the risk of loss or damage are so different from state to state. One of the problems an insurance company will have, however, is that insurance companies operate in bad faith all the time. And, frankly, I think that they don't really have unclean hands themselves. But, that just muddies the issue of contracts with equitable defensive theories. So, let's not get into that.

You raise good points, though, and I don't disagree that, potentially, these are issues that may be unresolved or, worse, could be interpreted against the insured. Anything's possible give the state of the judiciary these days. All of this just serves to remind me of why I no longer live in VA. If TN's laws works with MT's in such a way as to allow for MT registration, why can't VA do the same? Clearly, because they don't want to. And, they don't want to make it easy for people to circumvent them, which is why the pass their own legislation and prosecute in their own court systems. Only when these issues end up in Federal court or wind their way up to SCOTUS will they be rationalized. And, generally, those are the types of cases SCOTUS grants certiorari on: cases that involve differences between state laws. They often hear the case on the basis of conforming them so as to be consistent (and fair?) across the land.

CW

 

Agree with the LLC comment. For example, with airplane ownership, it is very common to own the plane inside an LLC to limit the liability issues if there is ever a major accident involving the plane.

So, titling a vehicle inside an LLC should be viewed as a common thing. Another example is when people re-title their assets within a living trust for estate planning purposes. It is just a legal entity that provides certain advantages versus direct personal ownership.
.

 

True but because you choose to drive a more expensive car than your neighbor who has use of the same resources then you must pay an exponentially higher amount. If you own multiple vehicles then you are screwed that much more. The system is senseless and until it is adjusted to be more "fair" people will find a way around it.

 

This is pretty much my line of thinking when it comes to the Montana plates on cars that reside in Virginia. The only purpose in doing this is to avoid paying certain taxes, so whether or not it's completely legal I can see how the general public or the state would find it annoying that someone who obviously has the means to pay for expensive things feels the need to avoid the comparatively minor associated costs in such a public way. The optics are bad as they say downtown. I appreciate your input from a legal perspective though, as it's obviously more complicated than it appears. As someone who is not involved in law, my infrequent jaunts into that realm have given me a much better appreciation of the gulf that exists between it and what could generally be accepted as common sense.

I think the key word here is "choose"... Assuming the rules are clearly laid out and equally applied to everyone, you're free to make choices that will affect the impact these laws have on your situation. If your goal is to minimize your tax burden you could simply choose not to buy a Ferrari. No one needs one. I guess you could say it's discriminatory toward people who like Ferraris but convincing people of that could be tough It's also a linear rather than exponential increase for the Ferrari owner vs Ford owner since it's a flat tax of ~5% regardless of the vehicle. While I don't like this tax, I can't say it's unfair since it's applied equally across the board... ie, if I'm paying more than my neighbor it's because I chose to buy a fleet of exotics while they chose to buy a minivan.

 

What I think is fair, is to use some kind of "average", as the average vehicle down the street uses the same roads and infrastructure as me... Only with many vehicles, I pay much more for those privileges.

As an example:

"With rising MSRPs, however, shoppers are still paying more. In the first quarter of 2016, the average price after incentives was $30,900, J.D. Power said. In early 2015, it was $30,500."

 

Except, in this case, it's not just a paper sham, and, as far as MT is concerned, as long as the formalities are observed, it's legal and legitimate. Unfortunately, I'm afraid that VA prosecuting the matter in a VA court would have predictable results. This is why I think the unbiased Feds need to step in, as it's really a squabble between states with different laws that are, in ways, at odds. Arguably, VA's law infringes on MT's (or, vice versa?). So, while VA would argue that it's tax evasion (of VA's laws), MT could argue that their authority to promulgate laws is being subverted, because VA doesn't recognize MT's right to register vehicles beyond some arbitrary number of days. If corporate fleets can register vehicles and move them around at their pleasure, then why not a LLC with a single vehicle? The unavoidable fact is that it's legally-registered by a government vested with power in MT.

In tax law, perhaps the best indication and level of comfort you can get is a No Action letter from the IRS. All it says is, based on a set of hypothetical facts, that the IRS will take no action. You can then rely on that letter. Well, sort of. There's still risk that the IRS will change its' mind, because they do what they want. I don't know if states issue similar. I imagine they do, but, again, what would you expect VA to say? VA's tax collectors will determine that they have jurisdiction and that their laws were lawfully adopted. You might get a VA judge who's willing to say VA doesn't and didn't, but those would be exceedingly long odds. I think, if you're in this situation, the challenge is to get the case up high enough that an impartial body can rationalize disparate laws and deal with these competing state authorities.

CW

 

no. I'm saying it would be less obvious to local Law enforcement.

 

Okay, I get your point. And, sure. Why not? Do what you can to advertise the origin less. No argument with that. Nothing illegal in it.

But, of course, it doesn't matter to MT if you have an FoW license plate frame and/or a VA inspection sticker on the car. So, it shouldn't matter, legally.

CW

 

I-66 tolls will only be charged to cars that are not HOV 2+ for now during rush hour, it will be HOV 3+ in a few years. It seems to me that it will only add to the congestion on I-66 during rush hour since those using it for HOV will not be effect, but those willing to pay will be able to add to the volume. Only thing that might help is that Hybrids/Electrics are no longer going to be exempt, have 2 or more folks in the car, or pay the toll.

 

Register your vehicles to a business in Montana (or the other few states which are "friendly" like this) and drive away. A business does not, and cannot have a DL, so nothing to match but the registered location of said business, and the plates. Your results may vary.

 

Here's something I saw online. Interesting emphasis near the end...

 

He put it much better than I could thanks for posting!