Montana LLC Scare

[Smoky]

Don't know how to provide a link but I got this off one of the Newmar Yahoo postings.  Illinois appears to be particularly tough, sending state Revenue agents out to a Newmar rally requesting information on RVers with Montana license plates.  "NKK" refers to Newmar Kountry Klub" which is the official member club for all Newmar owners.


Here is the full posting:
*****

Edit: Sorry Smoky, but that violates our forum rules. We don't allow full posting of messages from other forums, just like I'd hope they wouldn't allow full posting of message from this forum.

All you need do to post the link is copy the URL/address from the address line of your browser and paste it into a message here.

 

[John From Detroit]

Many states are looking with covetous eyes at those big expensive class A Motor homes and thinking "How can we gouge them"

Alas.  There are many ways

By the way, I see the original poster of the message said that the state requested membership info and was refused

However they felt the info would be provided under warrant later

This is the proper way to do things.  And I give high marks to the club officer for demanding the proper request form (Warrant) be provided.  it sometimes happens that the law forgets to provide for such a warrant and membership info should NEVER be released without one.

 

[Ron]

Somehow this doesn't suprise me.  In the past several years I have been cautioned that Montana was looking into the LLC thing.  Of course these folks did not realize we are not registered under an LLC but were just advising us as friends.  Now with this I guess it appears that several states are working together on their investigation into the LLC issue.  Glad we don't have the MH registered under a Montana LLC. 

 

[Tom]

We have consciously avoided a MT LLC because I could see this day coming. When I talked with a MT LLC attorney at FMCA last year he hinted at the same thing. He told me he set up two or more MT LLCs owned by a top level LLC and their purchases (e.g. multiple motorhomes or motorhomes and toads) were owned by the individual LLCs. He said he did a number of these for entertainers/high earners as a way of making them one more step removed from their possessions.

 

[Woody]

Several states are now charging what they refer to as a "use tax". Even though the MH may be titled in the name of an LLC registered in a non-tax state like Montana they tax the vehicle based on the premise that the primary drivers license is issued by their state. Ohio comes to mind right off as well as Indiana and I believe Illinois.

Woody

 

[Tom]

Not an LLC issue per se, but I was recently talking with a neighbor who used to do a lot of RVing with the previous owner of our house. He told me that the CHP stopped the guy and questioned why his coach was registered in Oregon while his toad was registered in California. He had to cough up several years worth of registration fees and penalties.

 

[Ron]

From what I was told Montana is looking at income tax issues and the Feds may be looking at folks that are claiming interest on the loans that technically the LLC has.  Don't know all the details but could very well turn messy.

 

[Carl L]

From what I was told Montana is looking at income tax issues and the Feds may be looking at folks that are claiming interest on the loans that technically the LLC has.  Don't know all the details but could very well turn messy.

Hooo boy, that would set the fox in amongst the chickens!  That deduction is an exception to the general non-deductability of interest for individuals for the taxpayers principal residence and 1 additional residence.  That could result in massive IRS audits and tax bills plus penalties.

 

[JohnSandyWhite]

Just as a matter of interest? Do you think this might have ANY effect on UK (and other nationalities) using an LLC to tour the USA?

 

[John From Detroit]

I'm wondering... What happens if I actually MOVE to Montana as my "Home state"  I mean, there are a lot worse places to spend a few months a year than Mt.

 

[Ned]

If one is domiciled in MT, then there would be no problem.  Of course, a MT resident wouldn't need the LLC either.

 

[Tom]

... Do you think this might have ANY effect on UK (and other nationalities) using an LLC to tour the USA?

John, maybe we can use a process of elimination to answer your question ....

The potential loss of income tax deduction for interest payments on a loan to purchase an RV is unlikely to have any effect on folks visiting from the UK, unless of course they're earning money here, paying income tax here, have a qualified loan here and are claiming the deduction on their U.S. income tax return. It's highly unlikely someone from the UK who is merely touring the U.S. would be employed here and therefore they wouldn't be filing a tax return here; In any event, it would be illegal to be employed here on a visitor visa.

Any non-U.S. national could be legally employed here with the appropriate visa. There are several million of them, but these folks will be affected in the same way as U.S. citizens living and employed here. No difference when it comes to income taxes and allowed deductions.

Just as a matter of interest?

An unintended pun?

For clarification, the term deduction as used above is akin to the old tax relief we used to enjoy with home mortgages in the UK. I'm aware that it was eliminated several years ago. Here, at least for now, folks can claim the deduction on the interest paid on both a primary residence and a second home. The residence or home could be, and is for many folks, an RV.

Disclaimer (From our forum rules):
RV Forum members should seek the advice of respective legal or financial professionals before making any decisions based on the legal or financial advice or opinion of forum contributors.

 

[JohnSandyWhite]

An unintended pun?

;D I guess it must have been?  ;D Thanks for the clarification Tom. I quite often get people contacting me for the latest Information on buying, touring and shipping etc. 

 

[Tom]

I quite often get people contacting me for the latest Information on buying, touring and shipping etc.

Well, you are something of an expert John and now you have some really useful additional info.

 

[edpick]

My head is spinning have just made enquiry into setting up LLC in Montana and now have read this (which way to go) ????? also was thinking when we ever ship our M/H back at end of our 18 month trip  it belongs to the LLC company on paper how would it be when UK customs get the paper work and then i try and claim no vat and duty payment, does anyone know out there (please).
Its a great site this, so much helpfull information to look at
                                                                          Regards Ed and Eileen

 

[markw]

Please clarify this Montana LLC thing for me. I thought it was being done to avoid paying high sales tax and/or high vehicle registration fees charged by the person's home state. Are there other reasons?

On another note, are you folks saying I can write off interest on a MH loan on my income taxes just like my mortgage? I hadn't heard that before.

Mark

 

[Carl L]

On another note, are you folks saying I can write off interest on a MH loan on my income taxes just like my mortgage? I hadn't heard that before.

Yes, if the loan is secured by a lien on the vehicle you can claim it as a mortgage on a second (or first) home.  See http://www.irs.gov/publications/p936/ar02.html#d0e453 .  Particularly note the following section:

Qualified Home
For you to take a home mortgage interest deduction, your debt must be secured by a qualified home. This means your main home or your second home. A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities

I deducted the interest on my trailer loan for some 10 years with no problem.

However, let me caution you that I am not a professional anything and certainly not a tax expert.  Check this out with a professional accountant, lawyer, or other real expert like an enrolled agent.

 

[AlGriefer]

I'd hope that anyone considering a Montana LLC would contact a reputable attorney in Montana who could advise you on its laws AND that of the state you are legally domiciled in.  There are lots of opinions that may or may not be valid for your specific case.

Al

 

[Tom]

Good advice Al, thanks.

 

[Ron]

I'd hope that anyone considering a Montana LLC would contact a reputable attorney in Montana who could advise you on its laws AND that of the state you are legally domiciled in.  There are lots of opinions that may or may not be valid for your specific case.

Al

Hmmm reputable attorney????? ??? ???  Personally I have known only two, whoops three sorry Peter, attorneys that I considered reputable enough that I would put my trust in them. ;D ;D