Question about Montana

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BLAKDUKE

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Salem Al.
The inspection thread brought this question to mind.  I have seen advertisements about registering/insuring a motor home in Montana whether you live there or not.  I may have the wrong opinion, but would someone explain to me the pros/cons of this or is it a scam.

ALK
 
BLAKDUKE said:
The inspection thread brought this question to mind.  I have seen advertisements about registering/insuring a motor home in Montana whether you live there or not.  I may have the wrong opinion, but would someone explain to me the pros/cons of this or is it a scam.

The answer depends on why and also how you register in MT.  An easy way to do it is to establish a LLC, Limited liability corporation to own the RV.  Then register using the lawyer's address for the corporation's address.  If you have Domicile in another state you may become in violation of their tax laws and also vehicle registration.  Search for Montana LLC and you should find a lot of information.  There is some discussions going on a related subject.  Since the LLC has to have an income to pay the registration and any loan, shouldn't the LLC pay income taxes??  I'm not  clear on where this is going.

Many states are going after residents who have registered in MT because it may be tax fraud.  California, Washington and some others have done this and won their court cases.  RV owners paid large fines and back registration and taxes on the RV.

Check with a lawyer in AL and find out where you stand.  BTW, RV registration is not expensive here as my last was less than $200 on a 2001 DP.

This is a real quick cut at explaining and I am sure there are more details if the subject is researched thoroughly.

If you establish domicile in MT, which requires a residence in the case of vehicle registration, you are home free except you now are eligible to pay MT income taxes as well as any property taxes on owned property in the state.
 
IMHO the statement "many states are going after residents who have registered in MT because it may be tax fraud" needs to be read and interpreted very carefully.  The key question is where will your RV be much of the year?  If you live in another state and intend to have the RV with you so you can easily use it, then registering it in any other state is probably a violation of your home state's laws.  On the other hand, you could be a resident of, for example, Washington who chooses to store his RV in Montana where he happens to have a legal entity capable of owning it. If the RV is used to tour mostly outside of WA and isn't in the state in any year for more than 30 days, then the arrangement would probably not be judged to be illegal, but it most definitely would be inconvenient for most people!

However, it's a very different story for full-time RVers who have a state of domicile but who may or may not spend much time there.  If you have a domicile in a particular state but the RV is not present there at all (or for only brief periods of time) it is difficult to construct a case that it has to be registered there.
 
Two years ago, I met a guy in L.A. (lower Alabama) in our winter park in a gorgeous Prevost a couple of years old. Turns out he was a major car dealer from middle Illinois and had researched the Montana LLC thing with a Montana lawyer, had his Illinois tax attorney go over it closely, got a thumbs up and pulled the trigger.

A year later, someone ratted him out after seeing his Prevost in his driveway in Illinois. Next thing he knew, he was being threatened with tax evasion and jail time. He was to be the poster child for playing fast and loose with the law. Over $100,000 in fines and back taxes later, he was pretty sure the Montana concept had some serious limitations in his case.

Another guy in the park, also from Illinois, had his insurance canceled when they found his coach was registered in Montana while his other vehicles had Illinois tags.

You can argue the pros and cons, and you can take the two items above with a grain of salt. It's also obvious this is an RV Forum, not the law review. You can decide based on your circumstances. It's not for the rest of us to judge.
 
If your domicile is in one state and you register your RV in Montana to escape paying the taxes and registration fees then you are committing a fraud and could be prosecuted. However if you are a full timer you can use Montana as your domicile and then it would not be fraud.

Your domicile is the state you (theoretically) live in. You should have your drivers licence, legal address, vehicle registration, vehicle insurance and voter registration in that state. 
 
docj gave a pretty good summary of a very complex topic.

The OP asked about pros and cons. The pros are a relatively low annual registration cost and no sales or personal (vehicle) property tax in Montana. Depending on the taxes and fees in your current home state, that may be a big deal. Or not, if you have already paid the sales tax and your state does not apply a property tax to vehicles.

The con is that you cannot simply title/register the RV in Montana and then continue to keep & use the RV in your home state. You will almost surely be [rightfully, IMO] accused of tax fraud by your state and you really don't want to go down that path.

If you already own the RV (and therefore sales tax is not a concern), there are a several states that have low annual fees and no vehicle property tax. Florida and South Dakota are two of them. The potential tax fraud issue with your home state still applies, though.
 
Depending upon the state you live in an LLC in another state can be a very useful tool or it could lead you to have some issues.  Our home residence is in Wyoming and I have two LLC's in Montana, one for property management of an AZ condo and another for a graphic arts business which doesn't do much business anymore.  My wifes car and my motorcycle are both registered in Wyoming simply because we drive those primarily in Wyoming when at home.  Our 5th wheel, medium duty truck and Rhino are all registered through the graphic arts LLC in Montana.

The state of Wyoming DOES NOT approve of folks doing this so they have some rules which MUST be adhered to.  One of which is that the LLC can do NO business within the state of Wyoming.  Since the few clients that I do have for that business are located in Montana, Arizona and Texas that's not an issue in my case.  As far as taxes are concerned, an LLC  is a "pass through" business meaning that unlike a corporation any money made is simply declared on your personal or business income taxes.  Since Wyoming has no state income tax this makes my life a little easier.  To date I have never been pulled over and had to explain myself to the government but the thought has crossed my mind.

An out of state LLC isn't for everybody but the advantages can be very appealing.  From a legal standpoint we're doing nothing wrong but if somebody wanted to make my life miserable I'm sure that they could, the state of Montana has made a LOT of money by catering to RVer's and from the standpoint of Montana they welcome your money.  Incidently, when we were preparing to leave this last fall I stopped by the local DOT scale to get a recent weight on the rig and ran into some Montana motorcyclists waiting for some friends (the scale is in Wyoming).  One of them questioned the Montana license plate on the truck and 5th wheel then proceded to go off on my wife about how we were defrauding the tax man.  It was an interesting conversation given that the taxes we do pay on our equipment were going into the coffers of "his" state.

Our primary reason for doing the LLC (which cost around $1k to set up) was for both negating sales tax and to reduce our yearly licensing fees.  Any vehicle that is considered a "toy" in Montana gets a permanent plate, this includes campers, ATV's, boat trailers and motorcycles.  Pickup trucks of 1-ton or less and over ten years old can also get a permanent plate (MDT's don't count unfortunately).  We pay $125 per year for our licensed agent in Missoula Montana which is a fraction of what just the plates would cost in Wyoming.

Are we cheating the tax man??  As far as I'm concerned, no.  We violate no laws by doing this but we are fully aware that if questioned it could cost us more than we've saved to defend ourselves.  Innocent until proven guilty is a nice saying but we fully understand that it's a myth.
 
Innocent until proven guilty is a nice saying but we fully understand that it's a myth.

It only applies to criminal law anyway, and your tax payments aren't considered a criminal matter until they file fraud charges against you. Up til then, the laws of most states allow the tax agency to confiscate your worldy goods, garsnishee your wages and do all kinds of nasty things that would be unthinkable if you were merely charged with murder..
 

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