Montana LLC questions

Montana is a tax shelter state and derives a large amount of its' revenue from these... while establishing a shelter there, it is not a one size fits everything... there are boundaries to be maintained/ pitfalls that must be avoided... it is best to consult with a pro how to get the best result from using the states resources... mobile assets like cars, planes, boats etc can be captured by another state if use in a "foreign" state exceeds the rules for transient use by being in a state too long... the cure is to move these assets out of state and restart the "clock"/ calendar... ( just watch the marinas in Florida empty only to see the same boats return a short time later )... it is more than using Montana plates in one's "home" state and be done with it... one needs to look to the total cost benefits...executed correctly savings can be large with minimum effort

 

To put it bluntly........if you plan on driving your car regularly, you will have an unpleasant experience. This works best for vintage cars seldom driven. I live in Montana.
I might add.........done correctly you could license a 250Gt SWB for life for $75.00

 

If another state has a case for tax evasion or anything "illegal" its no longer a tax shelter. It will pierce the shield! Boats and planes are easier to hide from home state. Both can easily be out and reset the clock. A boat only has to go 10 miles offshore to be out of the states jurisdiction and reset the clock.

 

There are several threads on this site, and many on others, about the promises and consequences.

We actually formed a Montana LLC, but in reality, most states (including ours) have increased their scrutiny of out-of-state plates and know all about Montana LLC's as a vehicle to avoid certain DMV/registration and property taxes. Our local town (and the police) are well aware, and you will get caught even if only by a plate reader....at which point things unravel. In our case, our vehicles are registered locally and I pay way too much in local taxes on them.

California actually has a CHP website for people to turn their neighbors in.....

I am unsure what the vehicle registration/tax laws are in Texas, I'd imagine the Montana option might vary from state to state. I actually know some people who transport their cars to/from Montana annually to "check the box" and stay in compliance, but if your car is in this state for more than 30 days without registering (and thus, being subject to taxes), you're illegal. Plus, most of the EZPass lanes now have plate readers, as do the local police.

 

I would worry that if you ever had a serious accident the insurance company would come up with some loophole why they will not pay out.

 

yes, that could do it... :=) ... most jurisdictions want some proof like a fuel receipts with dates , dockage etc that show a physical presence elsewhere before restarting the "clock"

the problem is there aren't any places that offer receipts for purchases at the off shore CONUS boundary :=)

 

cars can either be held as any personal property or as road use vehicles... personal property in casual sales ( non broker /dealer / retailer ) may not subject to sales tax, road use tax ( vehicle registration ) etc... registering for road use and tags presents the car to a different department to collect revenue... a car could be purchased in a low sales tax state ( shelter state ), after proper ageing time ( meeting the laws ) it could be moved ( registered ) into a primary residence state as previously owned elsewhere avoiding double taxation... it's not a simple thing, is the savings worth the trouble... some states are now collecting taxes on all vehicle transfers / sales ( even between father and son or settling an estate... in an effort to collect more revenue and close any loop holes... savings can be had, BUT become familiar with the complete transaction to insure the desired end result...

 

^^ good points

to be clear, my comments were really focused on using a Montana LLC as a way to perhaps minimize property tax exposure and/or steep registration fees. In CT, the property tax and DMV fees are simply punitive IMHO.

As a separate comment, for insurance, it's always best to be honest about where the car is garaged, and where it is driven. We had our CT-plated car in CA last year, we're covered, but a car insured in Nebraska that lives in Manhattan is likely going to create questions

 

run the numbers, it is possible to domicile a car in one state and register it for use in another state... leasing companies do this

 

Well, I've looked into it, as have my lawyers and accountant

For example, in Connecticut or California, if your car is within the state for more than (30 days), you are required to register it. The same states also require you to have a driver's license issued in that state, unless you can prove alternative (and primary) residence elsewhere.

And, upon registering it, you instantly have to pay the DMV fees and (depending on the state) typically some for of property tax. As for sales tax, I've lost track of the California laws, but I know it has gotten more expensive.

If I were to register a car in Florida, and then keep it in Connecticut, if the car is here for more than 30 days, and gets flagged (i.e. plate readers or otherwise), they will eventually catch up with you. When we moved 2 of our cars from California to CT and kept our CA licenses and registrations, it only took about 90 days for the letters and notices to come through.

At least within the northeast (NY, NJ, CT, MA), the states and local governments are getting very dialed in to this. For example, if I sell or trade a car, and cancel the registration, the town requires some proof of actual sale or trade - essentially, they want to make sure that I'm just not putting it into my name somewhere else - before they take it off the tax records. My insurance agent requires the same paperwork before he will take it off the policy. Our town's tax assessor actually has a form letter specifically about out-of-state registered vehicles plastered on the counter. They also track the VIN's, particularly on high value cars (I know, because I had a long conversation about WTF they were doing. In their words, they estimated that our little town "loses" $500K a year in property tax due to registrations, which is about 2 additional cops or fireman, so they are enforcing it more.

With the increase in surveillance, connectivity of registrations and tax records, believe me, they are coming after you. My wife was pulled over by a local cop after his plate reader got a "hit" on her plate twice - once because it was a CA plate and had been here for a year, the other because the CT registration was overdue (which it was, my fault).

Another example, which has been around for a while, is NY City trying to hit people up for NY City Income taxes by monitoring how often you are in the city, tracking EZPass usage, etc etc.

Again, some states (eg. CT, CA) are more strict and aggressive than others.

 

the 30 day rule... can put many in violation... if the gov't pushes their authority to the strictest interpretation... it could have many registering their cars and getting new driver's licenses a few times year... it opens a can of worms...does a second home become primary after 30 days, etc... forcing all to make changes... states are on a mission for more revenue... my guess is that the 30 day rule is not enforceable if challenged by someone with multiple residences

 

Reallllllllly dumb question here. But say hypothetically your brother owns a car in NH and you live in CT. What's to say he doesn't give you permission to drive his car as frequently or infrequently around whenever you please, essentially you're borrowing it. Who would stop you and legally how could they do anything? Meaning you could drive "his" car (ahem) for 30+, 90+, 250+ however many days you want...

(If that's a tangent, ignore)

 

What town do you live in? The car tax is not my favorite but everyone pays it so I am starting to like it. At least the car tax is deductible (of course some people get phased out or AMT bites them ). We used to live in Stamford and their car tax is insane, the mill rate was so much higher than the other mill rates in town.

I live in Greenwich now (we have the lowest tax rates in the state). I see FL plates here daily and many of them.

 

i think you will find that the level of intrusion by the state into what license plate is on your car is directly related to how much they are in debt. ie they need to screw as many citizens as possible to raise revenue. they will also be the ones ticketing the most etc. in other words, states that i would prefer not to live in.

texas, specifically houston, does not seem to give a damn about out of state licenses - there are just too many people moving here, working here for a while, or that have multiple homes and cars. that being said, we have a montana llc, but the only reason to put my incoming cars onto montana plates would be if i were wanting to sell them - which i do not. so they will likely be put onto texas plates. that will cost slightly more, but the extra couple hundred bucks is not worth the hassle. but for many of our other cars it makes sense.

hire a lawyer based in montana and ask them your questions for answers specific to your situation.

 

I went in to AAA to pick up personal plates and pay my registration on my SLS AMG here in CA. The person behind the counter didn't want to say the amount I owed out loud. She was afraid it was wrong and that I'd go ballistic. Kudos to her though, she immediately asked "Is that the car with Gullwing doors?"

Yah, it was a lot of money but you know what, I drive around without the constant anxiety of getting busted...trust me, if/when it happens, it'll cost you MUCH more than you imagined. Unless you're talking GTO money, I can't honestly understand how it'd be worth all of the gyrations to pull off the dodge.

 

having your cars registered in montana is not against the law.

 

I read the comment about not getting 'busted' to mean not getting 'caught' not getting arrested.

No, having your car(s) registered in Montana is not against the law.

Tax evasion is.

If your local authorities suspect and can make enough of a case that the only reason you're sporting Montana plates is to avoid paying taxes or fees, guess what. You won't go to jail, but you will spend a whole lot of money, or a whole lot of aggravation, probably both, which will quite probably outweigh the savings you enjoyed by gaming the system.

 

Well that is the truth. There is an underground garage in Missoula Montana that houses some mind blowing vintage cars. Owners from around the US and other countries.

 

My 69 Land Rover was 11$ for life. 😀

 

Nor is buying a home there. Some could be had for the price of the tax of a very high end car.

 

From what I understand, it makes it more complex, however we've experienced the requirement to demonstrate we actually have another RESIDENCE (i.e. not a PO Box). If you actually have a home in Bozeman or Jackson and are there most of the year and you bring the vehicle back and forth, and can prove it, you're probably fine

My understanding is regardless of who's car it is, the vehicle code requires the owner to register it in the state within 30 days, and they can and do send property tax bills out of state, happily. The tax people are using the DMV code as a way to sniff out the property tax issues IMHO

Wilton. And I agree, I see a lot of out-of-state plates still. As for Florida, I'd imagine there are some folks with homes down there that bring their cars north for summer, or at least could prove that.

good advice, I'd also consult a LOCAL tax attorney near where you live....

+1. Our town tax folks are likely reading this thread...

That's the perfect solution. If the cars are in a collection and rarely driven, that's the most cost-effective way to do it. IIRC most of the high-end collector garage facilities maintain records, video, et al - so if you're asked, easy to prove "hey, the car was in Montana for 10 months this year"....which is the way most people with Montana plates sort of hit the wall when asked by DMV and tax people.

Sorry guys, if I seem to have some "heat" on this topic, it's because I looked into this option hard, from every angle, and in the end the potential risk, pain and cost outweighed the benefit for us. Your tolerance for taking the risk may be higher, or your states/localities may not care as much or have different rules. As always, YMMV.

 

isn't the whole thing moot regarding the "residence" in another state because... well you have an LLC. And IT is home based in Montana with a Montana address. Therefore as a seperate entity it has "residency" in Montana.

Also... Alaska is a nice place too I hear

 

Again, I think this is up to each individual as to how they want to leverage the "Montana LLC" lever, as individual situations differ as do states laws/regs on registration, sales tax and property tax.

If you own an LLC, you actually need to file a tax return; it's perfectly legit to file zero revenues, but the IRS is increasingly scrutinizing LLC's that claim losses (or produce no revenue) particularly in "hobby businesses". I'm no expert, but I think it's even hard now to get a car dealer's license, you actually have to buy/sell a minimum amount of vehicles to qualify.

As for residency, and registration (and, taxes), there are a ton of loopholes. Some states are getting aggressive at trying to close them. Owning an LLC in one state does not constitute residency, and some states have vehicle/property laws regardless. Again, I'd imagine that if you live in the right state, you can probably get by without being questioned. However, the pain and suffering (and $$) of being found to have evaded (not avoided) taxes can be brutal and opens up cans of worms that may not be worth the risk to some. Paying back taxes is one thing, getting a penalty is another.

As I mentioned earlier, I do know some folks who "winter" their cars in Montana, to be absolutely legit-with-records. The property taxes on a few uber-expensive cars more than offsets the transport and storage costs. IF there is a will, there is a way....

Candidly I do everything I can to avoid taxes (including leasing cars to avoid paying sales tax up front!), however many things we used to be able to do to avoid taxes by being creative are being blocked off.

No judgment from me, just my experience, and my only advice is to consider consulting a (good) tax attorney.

 

A couple things:
1. It depends on the value of the car you are considering. If you're not talking into the six-figures, then probably not worth considering.

2. It's a PITA and not cheap in the long run. Call Deer Creek LLC in MT and they'll give you all the info you need. Here you go: Montana RV Registration | MT Registered Agents | Tax-Free Montana LLC : Deer Creek Corporate Services
(I have no affiliation or interest in the company)

3. You'll always be looking over your shoulder as more states are cracking down. Is that worth it for you?

4. Insurance is an issue. This may be the biggest stumbling block. Call your carrier and ask.
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