Montana registration crack-down

What about all those cars in California that drive around without any plates? Are those even registered at all?

 

What does the Georgia law say? Not how the authorities interpreting it.

Does it really state if you garage it here you owe us taxes?

Is it possible the Montana LLC loophole is actually legal? We won't know unless someone spends the money to challenge the crackdown.

 

it is legal.

 

Dealer plates (the paper ones with the dealer's name) are legal to drive on, but only for a limited time. Sometimes dealer cars are used as loaners, but I have no idea what the rules are around that.

 

It’s worth noting that the two guys they are chasing are blatant with showing their extravagant lifestyles on social media. Both with 20K + followers on Instagram.

If that’s the type of evidence the state had to get to make a real solid case then I think they will have trouble going after the more discrete people.

 

Fools! I live in Montana and register my cars in California. There are many ways to beat the system.

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Ok, I'm going to say this

People rich enough to buy an exotic but cheating the system on their taxes? Lame.

 

I'm just not convinced they are breaking a law in most States. I don't consider taking advantage of a legal loophole to be lame. If the a State's legislature wants to close the loophole.....it seems they can by passing a law that addresses it. The bigger question is why haven't they passed laws to close the loophole rather than doing "high profile scare tactic raids"?

Virginia is one of the most aggressive States chasing Montana plates because they have the dreaded yearly "car tax" which gives the owner the opportunity to pay for the car again over time in property taxes. They encourage citizens to turn in their neighbors if they believe someone has an improperly registered car and they invoke scare tactics and traffic stops to do it.

I'll speculate that the true reason they invoke scare tactics is because their legal foundation is weak based on the interstate commerce laws. I just don't see how they can apply taxes against a business that has paid them properly in another State.

While Virginia routinely threatens to punch a hole in LLCs to "show tax evasion" again it is a scare tactic because a properly formed and maintained LLC is a business entity that pays taxes. Most of the cases I have seen in Virginia never make it to trial because being labeled a "tax cheat" means the full weight of the State government is applied and the cost of litigating a case through the court system costs a lot more than the taxes and penalties in question.

While Virginia government hacks may not like someone not paying "their fair share of taxes", perhaps their time might be better spent and more productive creating a car friendly environment rather than one creates bad behavior and pits neighbor against neighbor.

BTW all my cars are registered in Virginia. I simply hate the car taxes in this State.

 

I don't think governments should be able to tax anything but transactions, but I'm not stupid enough to try to make end-runs around the rules. The LLC ownership angle is interesting, but I don't know enough about that.

 

Why don't they go after U-Hual who registers all their stuff with AZ plates? Same thing to me. Don't allow an owner to register it under an LLC if they can't prove it's for business I suppose. The raids are childish and scream of bullying in those not smart enough to out smart others with an intelligent counter argument,

 

It just makes exotic owners look bad.

And, it does rob the state you actually live in of funds.

I'm in favor of legally saving taxes. But this always seemed like a gray area because you knew you were getting around the system by doing it.

I imagine everyone who sees you driving your exotic in Georgia now with Montana plates must view you with some degree of contempt.

If Montana had a state inspection each year, this would stop overnight.

 

The Texas State Comptroller’s office has issued a ruling that an out of state LLC which has no business interests other than owning a vehicle will be ignored for purposes of vehicle registration requirements.

The way the golf pros do it is they form a Montana LLC to buy the bus. The Montana LLC typically then rents the bus to a separate LLC for the pro’s activities. Moreover, most pros don’t bring the bus home at the end of the tour. They ship it to storage/repair shop for rehab.

Planes are tuff because the FAA flight rules detail when and where a plane goes. I know Texas and other states routinely go to airports to check tail numbers. Yachts that stay more than 30 days are also at risk.

In Texas, the annual registration is nothing. It is not based on value. The initial 6% sales tax is the problem. I’ve had clients who flip a lot of cars form a dealership to get around this, but the state does limit the number of dealer plates. While having a dealership beats the sales tax, insurance is problematic. I’ve seen guys buy personal insurance on a car owned by the dealership, but have questioned whether the insurance company would pay if they found out a dealership owned the car.

YMMV.

Ps I just remembered something. States can check planes on the FAA’s website. They don’t have to go to the airports. I wrote a paper on this a while back, part of which was published in Sports Car Market, and interviewed several states. California, of course, is the most aggressive. They even have a snitch line for people to rat you out. I wouldn’t drive a car in California with Montana plates if I had a California driver’s license. Then again, you couldn’t pay me enough to live in California. I prefer to rent by the day.


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That will never happen.

 

I agree. Too many Montana lawyers making bank on LLCs.

 

Here in VT, they (the folks in our government) have the same approach to taxation as you say "soak the rich". The only problem is, there really aren't as many rich business owners here as there are in California, so the burden is placed on the middle class working families instead. And believe me, Vermont is definitely a California "wannabe", carbon copying laws right after Cali writes them. We even have water conservancy laws relating to plumbing! For crying out load, we get enough precip here to consider growing rice patties, and they say "but California has these laws" so we MUST follow suit.
The bottom line is this; if you want to own anything nice in this country, (house, car, property) the government is going to make sure you pay dearly for it. Our property taxes here are nauseating. If you dont mind living in the projects and taking public transportation, then you probably wont ever say that "your" taxes are too high. And that I believe is a nationwide, perhaps worldwide problem.

 

But doesn't that raise the bar only an inch? It is easy to associate an ebay store with an LLC to sell and buy items making the LLC an Ecommerce store. I understand their motivation but administrative rulings like this won't solve the problem. All they do is encourage more shell games that conform to the new definition.

I like what the pro golfers are doing....that makes a lot of sense.

Sales tax (one time) on registering a car in Virginia is 4.15%.

Annual Personal Property Tax is calculated separately for personal vehicles as follows for Northern Virginia:
1. Assessed value of vehicle is $250,000.
2. Apply the $4.20 tax rate: ($4.20/100)x $250,000=$10,500
3. Calculate personal property relief on 1st $20,000 of value: ($4.20 / 100) x $20,000 x 39% (for 2018) = $327.60.
4. Reduce the tax by the relief amount: $10,500.00 - $327.60= $10,172.40 every year

The most hated tax in Virginia.

 

Everyone has to pay taxes, but there are places in the US where you can almost have it all because others subsidize your state and county revenue through sales tax (tourists). That's how FL gets by with no state income tax, low sales tax (6%), and not that high property tax unlike Texas which is high. No car emissions testing and no one cares if you illegally import a car as long as you pay registration lol (there are a lot here and they tend to stay in state to avoid other crazy state cops). Annual registration is like $30 flat.

 

I've been to Vermont. It is a spectacularly beautiful, lush green state. But your winters are too cold, I could not hang. If it gets below 50 I'm whining already.

There is a flip side to high state taxes. And in that you get states like Alabama. Always rated as a great state for low taxes. Thing is, I've been to Alabama too. Most of it could easily be confused with the 3rd world. Compared to California's first rate infrastructure, Alabama might as well be Honduras. I'd rather pay the freight on tax day and have CalTrans keeping the roads smooth and clear than destroy my six figure suspension on that moonscape Alabama has the nerve to call "roads".

 

+1 Alabama roads suck. I lived there recently (Bham) and the roads are horrific. I guess my 5% or whatever state income tax, 1% Jefferson County income tax, and 10% sales tax on EVERYTHING including groceries didn't pay to maintain it. Even when I wanted to leave, my flights out of that small airport were delayed if not canceled and already expensive as hell. Glad I'm out of there.

Oh yeah and most places were closed on Sundays even though I worked all weekdays and a lot of Saturdays. I think they finally lifted that dumb weekend alcohol sales ban close to when I left.

 

Not to mention that having a total state population of just a tich over one million, how does a rancher get his fleet of 1959 Studebaker one tons past an inspection.

 

The Texas ruling was aimed at RVs. If all the LLC owns is the RV, they will come after you. At that point, is it worth spending money to fight a one-time 6% sales tax? Probably not. BTW, in Texas, the sales tax is based on what the state thinks it is worth, not what you paid.

Ps I can guarantee you several states routinely do Google searches for Montana LLCs. So, yes, there will be state employees reading this thread.


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Maybe someone who lives in New York can chime in and tell us.

IIRC when I was younger in New York annual registration fees were based on the car's weight not value, which made sense. The weight of the car is a reflection of how much wear you put on the roads. Of course it would have been more accurate to multiply it by miles travelled, but still better than the value models used in most other states which have nothing to do with how much one car "uses" the roads.

When I got to CA I couldn't believe what an annual fleecing it was.

 

The biggest scam are Teslas and other EVs that pay very little in the form of taxes to maintain roads yet wear them down faster than ICE cars since they weigh more than their competitors (Model S weighs a lot more than a BMW 5 or 7). Federal tax is 18.4 cents per gallon and California does another 41.7 cents a gallon. That is used for roadways, but the Teslas/EVs don't pay into that. What a joke. And they get premium parking and HOV lane use...

 

One of our main issues are school taxes. As property taxes increase, people pack up and leave to find better paying jobs. Then there are less kids in the schools from middle class families. You would think, less pupils= less money the schools need. It is exactly opposite here, as the numbers keep going down, the tax rates keep going up. Its bedlam. But the roads or ok.