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Montana LLC questions

Discussion in 'Ferrari Discussion (not model specific)' started by Texasrecurve, May 24, 2016.

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  1. Texas Forever

    Texas Forever Seven Time F1 World Champ
    Rossa Subscribed

    Apr 28, 2003
    75,381
    Texas!
    I wrote an article on this issue some time back, where I interviewed the people at the state comptroller's office. There probably should be something about this in the Ferrari Chat archives.

    Bottom line, in Texas, all you're talking about is the 6% sales tax on the purchase. Our annual tag fee is not based on value.

    Texas does not have a 30-day or display exemption. Their position is, if you are a Texas resident and you drive a car on public roads, you have to register it in Texas, which means you have to pay the sales tax, unless you can show you already paid it in another state. To them, a Montana LLC means nothing.

    So if they catch you, they will charge you. Keep in mind, it is a misdemeanor, which can be problematic if you are a licensed professional.

    Granted, they go after the low-hanging fruits, such as planes and yachts. The planes are easy because they are all registered with the FAA. Yachts are a little more work, but there aren't that many places to hide a yacht in Texas.

    Next up are RVs. Here, they troll the RV chat boards to catch people talking about Montana LLCs.

    I have never heard of them going after exotic cars. But, you'd hate to be the first.

    Bottom line? The Montana LLC only makes sense for golf pros who buy a tour bus (or jet) and establish residency in a non-income tax state, like Texas or Florida. They then have to be careful to not to park the bus in their home state.

    Double bottom line? For everybody else, it ain't worth it, at least not in Texas. (California, however, assesses the annual tag fee based on value, which is why you see a lot of Oregon plates in California.) Basically, the sales tax is a one-time hit for getting into the game. From there, you can the sales tax credit through your dealership.

    So pay it and enjoy. Not being a killjoy, my guess is the sales tax will probably one of the cheapest costs you'll pay for owning a Ferrari. My 1998 Maranello cost me $3 a mile round trip, which is one of the reasons why I don't own a Ferrari any more.
     
  2. blackbolt22

    blackbolt22 F1 Veteran

    Sep 25, 2007
    5,751
    Boca Raton, FL
    Full Name:
    Mr. Anderson
    There have been a lot of threads on this subject. It's not worth the headache for me to save a few thousand on taxes.

    It's 6% here but you're done. In SC you pay a sales tax cap of $300-500 or so BUT they get you every year for property tax. They get more that way. I would rather pay once and be done.

    I'm sure the local PD wouldn't notice my red Ferrari with Montana tags running around town constantly. They probably wouldn't pay any attention to me at all.
     
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  3. jippiejake

    jippiejake Formula Junior

    Nov 6, 2012
    977
    Venice Beach
    Full Name:
    Mike Kerns
    Hi everyone,
    Hope you and your families are all well and happy.
    So far so good for us..

    The question I have is can my Montana LLC sell me a car? And then I would just register it in California in my name. Seems like a no-brainer. I know I have to then pay sales tax on the sales price, "wink-wink", plus those high DMV fees, but that's it.

    Am I missing anything?

    Thank you for your time..
     
  4. U-Boat Commander

    U-Boat Commander Formula 3
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    Jun 7, 2008
    1,119
    USA
    You're going to need to wait a year after your LLC sells you the car before you register it in CA. Otherwise, CA will hit you for the sales tax (and penalties).

    If you try to register the car at some stupidly low price they will likely catch it and tax you for the value as determined by DMV.
     
  5. ScreaminRevs

    ScreaminRevs Formula Junior

    Apr 4, 2004
    406
    Chicago
    Register LLC in immediate family member's name, gift car to yourself after a year? Don't think sales tax applies in that scenario.
     
  6. jippiejake

    jippiejake Formula Junior

    Nov 6, 2012
    977
    Venice Beach
    Full Name:
    Mike Kerns

    Thanks for your advice.
    So the Cali DMV can look at the Montana Title and see that it was a recent purchase? No value is indicated on the Montana Title either, so I would have to declare some sort of value that wouldn't be red flagged as being suspect. But if its a new purchase by the LLC in the last few months do you think the Cali DMV would know this?
    Thanks again..
     
  7. RonH

    RonH Formula 3

    May 29, 2016
    1,061
    Newport Coast, California
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    Ron H
    Guys, would you be asking the same dumb “trick” questions about how to get around “income” taxes. Oh, my LLC owes the taxes, not me. Oh my LLC drives my car, not me. Oh my LLC was just passing through in my car, their not staying long. Stop kidding yourself, judges and DAs are not stupid. Bottom line, sales tax evasion is TAX EVASION. Taxes are taxes and even Al Capone couldn’t beat the tax man (sounds like a Beatles song). So yes you will have to pay fines and penalties if caught and yes you will have a criminal record with either a misdemeanor or felony conviction if the DA and the taxing authority want to push it (and the more bold you are like by creating a sham LLC the more likely they are to push it). Why not simply cheat on your income taxes if you want to be a tax cheat. There is much less chance of being caught. Most successful tax cheats don't drive around in expensive flashy cars with Montana plates saying look at me, I am cheating on my taxes, please arrest me.
     
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  8. U-Boat Commander

    U-Boat Commander Formula 3
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    Jun 7, 2008
    1,119
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    I don't have any Montana titles, but I would guess that there's a date of issue on the title. There's a date of issue on every title I've ever seen. So think about how this goes down. You walk into the CA DMV and hand over a brand spanking new Montana title in the name of a Montana LLC. The DMV is already on the lookout for Montana titles and Montana LLCs. Do you think that's going to raise any suspicions? What if the DMV worker tells you that they need to run it past their supervisor. What are you going to do then? Just skidaddle out of the DMV - "thanks but no thanks"? LOL. Personally, I wouldn't pursue this route.

    The tried and true method is to wait a year and hope that you don't get pulled over in that year. You likely won't.
     
  9. U-Boat Commander

    U-Boat Commander Formula 3
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    Jun 7, 2008
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    The DMV website requires a CA title for intra-family transfers. But if it's a more than one year old out of state title, that could work.
     
  10. ralfabco

    ralfabco Two Time F1 World Champ
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    Mar 1, 2002
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    #35 ralfabco, Apr 16, 2020
    Last edited: Apr 16, 2020
    Driving on Sunday will result in less glances in your rear view mirror. Can't help if your state is watching your every move with cameras and computers.


    It all sounds like the more broke the state the more desperate they are to search for pennies and 5 cent pieces laying around. I guess it is ok for the illegals, to just drive around with fake temporary paper plates over and over again. A rich state will permit you to flaunt your odd-ball license plate and silk scarf.




    I never ****ed anybody over in my life didn’t have it coming to them … Tony Montana
     
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  11. arizonaitalian

    arizonaitalian F1 World Champ
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    Oct 29, 2010
    19,897
    Wyoming
    #36 arizonaitalian, Apr 16, 2020
    Last edited: Apr 16, 2020
    so this is from old memory, and thus I may not recall it perfectly...

    First, I'll state that I presume this is all merely theoretical and in the interest of knowledge and discussion only...so when I say "you", I mean "the generic you" for sake of discussion.

    I believe that CA DMV requires a bill of sale to register a used car (to determine value and collect sales tax). So, I interpreted your question to be "if I bring in a BOS from an LLC (which I happen to own) to me for $x (where x is not exactly the amount I really paid and/or the real value of the car...ahem), what will happen?

    I can't say for sure what would happen. I do know the DMV has been at this a long time, and they know people try to fudge the numbers on BOS. But I suspect some of how you are treated comes down to the DMV clerk you get and how suspicions they are. Seeing an LLC might be a red flag for them to dig deeper. Seeing a MT LLC in particular might be a red flag. Seeing an exotic brand car might be as well. Not sure how they are trained to look for this type of fraud, but I am pretty sure they are and its very widespread (and they know it).

    If they know that "you" are the sole owner of the LLC (either because you tell them, they ask, they research, whatever), then they might try to find out when the car was purchased by the LLC. I say that because their std procedure to register a car is to check to see if it was sold within the past 1 year and they then assess sales tax at CA rates and deduct any amount you may have already paid (zero in the case of MT I presume). I'm not sure they would be able to figure out that you are the LLC though...

    Which brings me to the final point...I'm not a lawyer, nor an expert on the DMV, so given that you are theoretically asking for advice on how to commit tax fraud, I'd suggest perhaps talking to someone that is. It might or might not turn out to be risky, or to varying degrees. And then you will have to sort out whether that degree of risk is worth the savings.

    (there are tax/legal veil issues here that are beyond my ability to comment. For example, if the LLC is engaged in a bona fide business, maybe it is legally a separate entity from its owners and transactions between the owners and the business are hunky dory. Thus my rec to talk to an attry. I think your idea is with some merit, but getting professional advice before doing anything that might cause one more trouble than its worth is perhaps a good idea)
     
  12. Nospinzone

    Nospinzone F1 Veteran

    Jul 1, 2013
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    There's a famous expression that goes, "it's not whether you can afford to buy a Ferrari, it's whether you can afford to maintain a Ferrari".

    Well part of maintaining a Ferrari is properly and legally registering it and insuring it. If you can't afford to pay the insurance, sales and excise/property taxes on the car, then you're not financially ready to buy it yet.
     
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  13. Pmili75

    Pmili75 Rookie

    Jun 22, 2015
    10
    Connecticut
    I think what most people don't understand is just how bad a state like CT kills you on annual car tax. Technically personal property tax. Average mil rate is 31 in CT which basically means you will 3.1% of the value of your vehicle every year you own it. That is in addition to the sales tax you paid at registration.

    200K Ferrari x 7.75% = $15,500 at registration then ~$6000 per year every year !!! all for the joy of driving on some of the worst roads in America.
     
  14. jippiejake

    jippiejake Formula Junior

    Nov 6, 2012
    977
    Venice Beach
    Full Name:
    Mike Kerns
    I have found out that after having the car registered for year in my Montana LLC I can transfer the car to a California title.
    Why all the negative crap Nospinzone? Maybe you are just upset and jealous that other people are enjoying their lives?
    Hope your days gets better.
     
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  15. Texas Forever

    Texas Forever Seven Time F1 World Champ
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    Apr 28, 2003
    75,381
    Texas!
    Did you pay the initial sales tax on the car? If not, I’ll bet California will do what every state I’ve looked at, which is make you pay it before you can register it. Sucks I know.


    Sent from my iPhone using FerrariChat
     
  16. jippiejake

    jippiejake Formula Junior

    Nov 6, 2012
    977
    Venice Beach
    Full Name:
    Mike Kerns
    No tax in Montana. After a year under a Montana registration there would be no tax due in California, just need to state the value possibly.
    I also purchased another car that needed a few years work so I put in on a none-operational status. When the car was finished I simply just registered the car and didn't even mention the costs to purchase and restore the car.
     
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  17. Texas Forever

    Texas Forever Seven Time F1 World Champ
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    Texas!
    Great. Texas will not charge you sales tax so long as you can prove you paid sales tax when you brought the car, even if the tax paid in the other state is less than what it would have been something. That's what the rule is. However, I have know of cases where big RVs and Buses where originally titled in Montana and then changed to Texas without tax. So maybe if you keep it on the down low. ;)
     
  18. RonH

    RonH Formula 3

    May 29, 2016
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    Ron H
    Seriously jippiejake? The following is “negative crap”?

     
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  19. donv

    donv Two Time F1 World Champ
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    I thought the car had to be physically outside of California during that time? So if you are getting the restoration done in Montana, sure, no problem. Maybe even in Utah, but if it's in California then I think that's an issue.
     
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  20. Nospinzone

    Nospinzone F1 Veteran

    Jul 1, 2013
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    So your moral compass doesn't direct you to declare the correct value? Really?
     
  21. Snapshift

    Snapshift Formula Junior
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    May 31, 2020
    715
    Centralia IL
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    Lyle D. Pahnke
    What are the issues if Montana issues a lifetime plate?
    Would there be any issues to register in another state later on or would one actually need to? Just trying to understand all this. Thanks.
     
  22. fennellaxis

    fennellaxis Rookie

    May 4, 2013
    28
    Atlanta
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    Robert Fennell
    Hey Guys I live very close to Dunwoody Georgia home of Caffine and Cars (on tv). Recently the Feds (I think..they were scary dude's with black uniforms) made a note of all cars with Montana tags down here in Georgia. Raids of airplane hangers full of Lambos and Ferraris soon followed. Dont know the end result, I am sure these dudes had some wicked lawyers, but it didnt look like a good situation. Robb
     
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  23. MHawk

    MHawk Rookie
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    Mar 3, 2019
    29
    Florida, NY
    They were probably state agents; federal government isn't missing out on any taxes from vehicles. A few years ago Georgia started cracking down on people who are dodging sales/property taxes by keeping vehicles registered out of state with sham LLCs. Google "georgia montana llc" and you'll see a bunch of stories about people getting caught.

    It's just not worth it IMO. Sure, you might be able to get away with it and save a few thousand. On the other hand, there's a very real chance that you're exposing yourself to felony tax evasion.
     
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  24. arizonaitalian

    arizonaitalian F1 World Champ
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    Oct 29, 2010
    19,897
    Wyoming
    "Meh, they will never catch me and besides, nobody goes to jail for tax evasion. Now I'm going for a drive in my fine Italian automobile."

    Sincerely,
    Al Capone
     
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  25. Ascend

    Ascend Karting

    Jul 23, 2018
    125
    Full Name:
    Kim
    Hi!

    I know this topic has been beaten to death and is frowned upon by many members but I thought I would ask a question before speaking to a lawyer about it.

    I dont plan to use it for a personal vehicle that will be stored in my garage, but for a collectible vehicle, is it kosher to buy a car under LLC and store in Illinois (I live in a state close to it)

    Seems like as long as the vehicle is properly registered in its home state, it is not a big problem in illinois as long as I dont live there.

    Any thoughts and comments are welcome
     
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