anyway to minimize sales tax when buying toys?

That's the way I look at it. If you get caught and go to court, the judge will start asking a lot of very uncomfortable questions
("what does the business do", "what is the annual revenue", "how many employees", etc.) and it's going to be obvious that it's a scam.
Then the book gets thrown at you.

 

I was there at the same time. Very ugly. They were trying to jail her for 6 months.

Art

 

the way i did it (multiple times) was to register the car out of state *as a nonresident*, ie using my CA driver's license. of course using my out of state (local to the foreign jurisdiction) address, but again as a nonresident of that state. i expect most states allow this since they want the registration revenue.

however you still have to (and i did) obey the 30 day registration requirement. i just kept the vehicle out of state for the prescribed period (1 year at the time, now it's back down to 90 days) before bringing it in. if i had gotten a ticket in the couple of weeks after bringing it in and before registering it, i would have been fine with the out of state plates.

in CA, i have heard of folks getting exemptions to the registration requirement based on their having multiple domiciles that they split time between fairly evenly. just anecdotal though.

 

Why would we be discussing California residents? All of the examples thus far (including Llenroc, the impetus for this discussion) have been regarding non-residents. Remember that when establishing the LLC in Montana, it is the LLC that owns the car and not the out-of-state resident. Thus, pursuant to the section of California law I quoted, the Montana LLC registration is legal.

 

LOL, Doug your wasting your time with this, the posters here don't understand no matter how many times its explained.

 

post #2, the very first example, talked about residents and non-local registration. but i guess that is before we started talking about Llenroc's case.

i guess i have to agree, to the extent that the LLC is not seen as "transparent" (i hope you get my meaning), it seems perfectly legal. there are cases where direct personal liability and assets have been attacked even though a corporate entity was at fault in some dispute, just because the corporation was clearly a legal device and not legitimate. don't know if that type of thing would be a risk for an LLC setup solely for the purpose of owning a vehicle.

 

If you read selected sections of the California vehicle code, you can easily come up with just about any conclusion you wish. However, in this instance, there is no way you get to register a vehicle used regularly in California which is owned by a foreign corporation.

6702 reads:

6702. Every nonresident, including any foreign corporation, having
an established place of business within this state, and regularly
using a vehicle of a type subject to registration under this code,
shall immediately register the vehicle upon entry into this state.

6700(b) provides:

(b) A nonresident owner of a vehicle, otherwise exempt from
registration pursuant to this section or Section 6700.2, may operate
or permit operation of the vehicle in this state without registering
the vehicle in this state if the vehicle is registered in the place
of residence of the owner and displays upon it valid license plates
issued by that place. This exemption does not apply if the
nonresident owner rents, leases, lends, or otherwise furnishes the
vehicle to a California resident for regular use on the highways of
this state, as defined in subdivision (b) of Section 4000.4.

As you can see, the legislature has figured out all of the angles. That Montana LLC is a crude attempt to avoid payment of legimate California taxes, and I suspect if someone using that little ploy is caught, they may be looking at a large fine, if not a little time. Conpiracy to avoid taxes is most probably a felony, however the taxing authorities generally don't charge that, but sometimes they do.

The bottom line is that there are legal ways to avoid payment of the sales tax, if you preplan the purchase, and follow the rules necessary to establish your exemption from the sales tax. Registration of a vehicle used within the state is another story, and avoidance of those types of tax usually fail, with drastic consequences to the person who is attempting to evade the tax.

Art

 

One other option that is available in Washington State, and probably is in other states, is a 'trip permit'. If you do not drive your car too often, or have a reason to wait to license it, it is something to look at. In WA they cost $29.00, and are good for three consecutive days. You fill in the dates and you can buy more than one and keep them on hand for future use. Very handy when we had an annual excise tax based on the value in addition to the sales tax on purchase.

 

What about getting your dealers license in CA?

An fchatter did this before purchasing his F430 Spider, I've thought about it myself, has anyone looked into the process, pros/cons?

 

I fear not, but I'm going to give it one more go...

We have already discussed 6700, which seems to make the LLC legal, since it only forces resident owners - and not out-of-state corporations - to register locally. 6702 clearly states that it only applied to "foreign" corpoerations with an established place of business within the state, and not to those with established places of business outside the state, which of course is the case here.

At this point, I think we're just splitting hairs. I'll concede that perhaps in the spirit of the law, the Montana LLC registation is frowned upon, but in the letter of the law, I believe it's legal. Many others seem to agree!

 

One thing you will find if you contact one of the Montana attorneys is that they will send you a copy of your state's laws with their interpretation of what you must do to keep within those regulations. At that time you make the decision as to whether you can comply or, if not, do you want to take the chance on running afoul of the local constabulary. Every state is different in their desire to chase down people who register vehicles out of state. Nevada seems rather indifferent, just as they are with mounting a front license plate. There is a house a mile down the road that has had a Prevost motor home and a van parked in his drive way with Oregon plates for the last nine years with no appearant problem. In CA he probably would have been caught long ago, especially since Oregon has been helping states ID these people.

 

Correct me if I'm wrong but don't you have to register the car in a persons name? I'm sure a business/corporation can own the car, but I thought all vehicles have to be registered in a person's name. If that's true, then say you get pulled over in your Enzo, they see the car is registered to you, see that you are a resident with out of state plates, and then you would get fined. If it was so simple as to create a foreign LLC then why do you see million dollar cars with CA plates, taxes alone would be 70k+, you could setup an LLC for 1k. That seems too easy of a loophole to me. And knowing the CA franchise tax board they would be all over that.

 

Indeed not. "Company" and "fleet" cars are called such for a reason. When I worked for Enterprise Rent-A-Car, the printed name on each vehicle's registration was Enterprise Rent-A-Car. The printed address was our local headquarters. Imagine if they did have to be registered to a person though... since Enterprise had over a thousand cars in Colorado, that person would've gotten quite a few parking tickets!

 

"I like to pay taxes, with them I buy civilization." - Oliver Wendell Holmes.

Clearly not a value shared by all.

 

And who are these people you speak of?

 

Is there some kind of exemption for rental car companies, or can any business register in a business name? even with rent-a-car, you still have to carry the rental paperwork with the drivers name on it, so that make me think that there is something special for rental cars. and the rental agreement lets the officer know who is the registered driver behind the wheel. So can I have a anonymous company in another state and not have any tie back (aka liability) to me personally?? somehow I doubt it

 

It's an interesting question and I wish I knew the answer, but I still suspect that it's possible for companies to own cars. Consider other examples - government vehicles, for instance. They must be registered to the government which owns them, regardless of who's driving. University-owned vehicles which are used for maintenance, traffic enforcement, parking enforcement, etc. - same deal. Tow truck companies which own vehicles must register them to the company and not the driver... I don't know for sure, but I'd be willing to bet that companies can have cars registered in their names. Surely it doesn't remove personal liability.

 

If indeed they are doing that, unless they have a license to practice in California, it consititutes an unlawful practice of law, which is probably a crime. See: http://da.co.la.ca.us/pdf/UPLpublic.pdf Take a look at page 6, which covers this issue.

Art

 

I spoke to a friend who works at sacramento DMV, as this is a subject that interests me, and he said a vehicle can be registered in a business name but you still have to pay the tax. If its an out of state business, and the vehicle is operated in the state for more than 20 days then it has to be registered in CA and the tax will be due at that time. As for rental cars, tow trucks, limousines, emergency vehicles, commercial trucks over 10,000 GVW and taxis there are exceptions, but in the case of my example, which is an LLC 'Construction company' with 1 employee he laughed and said that would definately not qualify. If challenged in court the penalty is a misdemeanor, 50% of the tax due, plus if the judge wanted to impose perjury penalties. DMV has an investigations unit and field officers that would be used to investigate your claim. All they would have to prove is the car is/has been in the state for 20 days, OR if some method was being used only for the purposes of avoiding taxes, which in itself is not legal.

He pointed me to this link: http://dmv.ca.gov/pubs/brochures/howto/htvr9.htm#feesdue

Commercial vehicles and any vehicle owned by a California resident must be registered upon entry into California unless a special permit was obtained. Visitors whose vehicles are properly registered to them in their home state may operate their vehicles in California until they:

* Accept gainful employment in California.
* Claim a homeowner's exemption in California.
* Rent or lease a residence in California.
* Intend to live or be located here on a permanent basis (for example, acquire a California driver license, acquire other licenses not ordinarily extended to a nonresident, registered to vote).
* Enroll in an institution of higher learning as a California resident or enroll their dependents in school (K-12).

Fees must be paid within 20 days of entry or residency to avoid penalties.

NOTE: Nonresident military personnel stationed in California or their spouses may operate their vehicles with valid out-of-state license plates from their home state or the state where the military person was last stationed.

As a side note, I found this article that may be of interest:
http://articles.latimes.com/2003/sep/03/autos/hy-wheels3

 

Thank you for posting that - very interesting! Seems the out-of-state tags will only fly if you have residency in Montana - and even then it may not be so, since California has very strict residency requirements, at least for this purpose.

 

Seems so.

 

Another thing I forgot to mention is that CA considers a car with less than 7,500 miles on it a new car, and can impose a 'new car' tax based on MSRP/sticker instead of the normal depreciated tax. Where that would really hurt is an expensive car that has few miles on it that has depreciated quickly (aka Ferrari 575 or a Lamborghini). It would suck to pay taxes based on a 2005 575 MSRP of $268,000 when you only paid $120,000 for it.

They did say that decision can be made by the local DMV office whether to enforce it or not, so if I was registering a car like that I would pick the nicest old lady teller and be on my best behavior

 

With regards to boats, I believe you can minimize taxes using the out-of-state LLC and a Coast Guard Registration. I've never done it personally but know of folks that have.

http://dmv.ca.gov/boatsinfo/boatreg.htm

 

Depending on the state, this practice can have serious consequences. There is a well known case in Massachusetts where this was found to be in violation of state tax law and appealed all the way to the appealate tax board where they ruled in favor of the state. The LLC (which was simply the owner) paid significantly more than the sales tax in the end. My beleif is that we should all pay every dollar required by law - but not a penny more.

I'm surprised we don't have any tax attorney's here that can chime in with an opinion on this.

I have a pending sales tax case and my research has shown that while folks get away with many things, if tested, the courts normally side with the state.

I have the reverse problem- I was over assessed, paid to avoid penalties and was lead to believe an abatement was almost assured. After months of waiting- the abatement and subsequent appeal were denied without specific reason forcing escalation of the case. Once they get your money- getting it back is far from simple.

 

this is the problem with the govt, going after the small guys when the wallstreet bigwigs are robbing us blind