Caution about forming out-of-state RV LLC

[colorado RVer]

If you are thinking about having an out-of-state L.L.C. formed, in order to reduce taxes and registration fees on your RV, please be careful and check your local state laws to be sure you will not be violating them. We had an out-of-state L.L.C formed in order to reduce taxes and registration fees on our new RV and now we are facing FELONY charges. Gratefully, these charges are being reduced to a misdemeanor, deferred conviction, if we pay the taxes, interest, dissolve the L.L.C and perform community service. Needless to say, the emotional and financial toll has been tremendous and not worth it to us. So check your state laws very carefully and think twice before having an out-of-state L.L.C formed.

 

[John From Detroit]

There are several things involved.  Some states are starting to crack down on the Out of state LLC "Scam" (Put in quotes because that's the state's term for it)

Some LLC's are better than others as well.

I can not advise anyone to form an LLC, how to form an LLC or not to form an LLC

I can say "Check it out very carefully first"  Read original post as to ONE of the reasons why

Some states just hit you with a fine.. If you thought the sales tax on the Motor home was stiff ... Try the fine on for size

 

[Wendy]

States frown on their residents evading paying taxes and registration fees. Forming an LLC for the express intent of evading justly due taxes and fees is illegal.

Forming an LLC in a state that you will claim as your state of domicile is fine. Just make darn sure that you don't work and live year round in another state.

Intent is everything.

Wendy

 

[Gary RV_Wizard]

Sorry to hear this, colorado rver. It is the first case I have heard of where anyone was actually prosecuted for having an LLC for an RV.  Some states,  including Colorado and California, have threatened a lot but none had actually gone this far yet. Sorry you had to become the first.  Can you tell us briefly what the basis of the fraud charge was/is?

 

[Ron]

Have you contacted the law group that set the LLC up for you?  Will they help?

Maybe one shouldn't believe some lawyers any more than they do salesman. ;D ;D

 

[John From Detroit]

Maybe one shouldn't believe some lawyers any more than they do salesman. ;D ;D

Ron Some lawyers ARE Salesmen  Ever see the TV ads "My name is Joe Blowski and I'd like to represent YOU!"

 

[Ron]

Your right John and if I ever needed a lawyer I sure wouldn't use one that advertises.

 

[Tom]

... if I ever needed a lawyer I sure would use one that advertises.

Did you change your position Ron, or is that keyboard playing up again?

 

[John From Detroit]

Or perhaps is his tong planted firmly in his cheek

I think letting lawyers advertise was a BIG mistake

 

[Ron]

Did you change your position Ron, or is that keyboard playing up again?

Thanks for catching that Tom.  This ole keyboard is really acting up lately. ;D

 

[King]

Around here we have radio and tv ads that say "we will get you every dollar you deserve."  What they should be required to say (truth in advertising) is "we will get you two dollars of every three you deserve.  We keep the rest" 
Art

 

[John From Detroit]

King, what they mean is "WE WILL GET every dollar you deserve"  (Not we will get YOU)

 

[colorado RVer]

Sorry to hear this, colorado rver. It is the first case I have heard of where anyone was actually prosecuted for having an LLC for an RV.  Some states,  including Colorado and California, have threatened a lot but none had actually gone this far yet. Sorry you had to become the first.  Can you tell us briefly what the basis of the fraud charge was/is?

Failure to pay  39-21-118  (3)
Second Degree forgery    18-5-104

We violated the above statues by forming the out-of-state L.L.C.

 

[colorado RVer]

Have you contacted the law group that set the LLC up for you?  Will they help?

Maybe one shouldn't believe some lawyers any more than they do salesman. ;D ;D

Yes we have and they are very surprised that we are being charged with a felony, but they can not help us because they feel our case is too weak to support in court. We were out of state more than 6 months but brought the RV back into state for more than 1 month at a time.

 

[Karl]

Colorado,

?39-21-118(3) Any person required under any title administered by the department to pay any tax or estimated tax, or required under such title or by regulations made under authority thereof to make a return, keep any records, or supply any information, who willfully fails to pay such tax or estimated tax, make such return, keep such records, or supply such information, at the time or times required by law or regulations, in addition to other penalties provided by law, is guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than fifty thousand dollars, or one hundred thousand dollars in the case of a corporation, or imprisoned not more than one year, or both, together with the costs of prosecution.


Misdemeanor & Felony Forgery
Forgery in the Second Degree (18-5-104)

  1. A person commits second degree forgery if, with intent to defraud, such person falsely makes, completes, alters, or utters a written instrument of a kind not described in section 18-5-102 or 18-5-104.5.
  2. Second degree forgery is a class 1 misdemeanor.

NOTE: Red highlighting is mine. 18-5-102 is a felony but, according to you, that's not what you were charged with. I am not, nor claim to be an attorney or anything of the sort, but just thought that felony charges were a little much, and had to look them up for myself. I do hope you get a good attorney and I wish you a favorable outcome.

 

[Ron]

I found the same thing.  NO Felony.  Like Karl I think a good lawyer is in order.

 

[Gary RV_Wizard]

Failure to pay  39-21-118  (3)
Second Degree forgery    18-5-104

We violated the above statues by forming the out-of-state L.L.C.

Failure to pay is only a violation of this statute if you in fact OWE anything. What I really wanted to learn was how the state made the case that you personally actually owed a tax on the RV owned by an out of state LLC. Owning an entity in another state is not itself a crime, and taxing property owned by some entity in another state is well outside of any states authority.  Heck, I'll bet half the large commercial vehicles in CO are owned by out of state corporations. Apparently CO felt they could somehow defend that your LLC was purely a tax fraud and had no other purpose.

I am not a proponent of LLCs for RV ownership and do not want to get into a debate defending them, but your plight has aroused my legal curiosity!