Montana registration crack-down | Page 22 | FerrariChat

Montana registration crack-down

Discussion in 'Ferrari Discussion (not model specific)' started by Terence Courtnage, Oct 25, 2018.

This site may earn a commission from merchant affiliate links, including eBay, Amazon, Skimlinks, and others.

  1. CornersWell

    CornersWell F1 Rookie

    Nov 24, 2004
    4,874
    MT's tax structure is perfectly legal. Calling this a "scam", "cheating" or "evasion", as many here have done, is misleading and unhelpful to the conversation. Minimizing one's taxes is also perfectly legal. And, MT's laws have their place in our system. They are "on par" with other State's laws and are to be given reciprocity. One state's decision to supersede another's on an arbitrary basis has problems. As a result, as I've said before, IMO, this is appropriate for resolution by a higher authority. While I can make a guess, given recent rulings, I honestly don't know how SCOTUS might rule on it, though. And, frankly, I am often surprised by many court rulings. They seem to turn on issues that have little, if anything, to do with the main nexus of the cases. So, any predictions would be with a low degree of confidence.

    Further, you are making an assumption that state legislatures only enact constitutional laws. They frequently do not. Often they exceed their powers and over-reach. To determine if something is lawful, therefore, it must be reviewed by the Courts. And, many laws are. Generally, in this context, this means it's going up the chain in the FEDERAL system, though, because, IMO, there's a potential conflict of interest in a state reviewing its' own legislative acts. On this issue, the Feds are impartial. That's not to say that every state Court is biased or that every law that's adopted is unconstitutional, but, IMO, there's been a steady march away from adherence with the constitutional limits, and I've seen with my own eyes how judges in many courts (on all levels) just aren't shooting straight. Which, as a lawyer, very much upsets me. Because, without the rule of law, and predictable interpretations of it, what do we have? I'm sure there are many justifications, but that's not good enough to make it constitutional. Just because it may be a law doesn't make it lawful or enforceable.

    Fighting is expensive, unpopular and uncertain. So, few will stand their ground on challenging this (or any other) duly-enacted law. I'm reminded that it took Bill Gates' unlimited resources to get the Show and Display law put in place. And, even his team required YEARS to do it. Taxes are one of the most complex areas, IMO, of the law (in addition to the Rule Against Perpetuities!), and it's never pleasant to be the target of a prosecution by a government. There are never any guarantees made by defense counsel, either. So, it's up to the individual whether to stand in the way of a train. That said, acting like this is so clearly and improperly black and white refuses to acknowledge that there's a whole other issue that has yet to even be reviewed.

    CW
     
    Saabfreak, randkin, LARRYH and 2 others like this.
  2. BT

    BT F1 World Champ
    Lifetime Rossa

    Mar 21, 2005
    15,291
    FL / GA
    Full Name:
    Bill Tracy
    Variable property tax rates really make no sense. Do people get to charge customers different rates for the same services based on how much they earn, or the car they drive? Want a haircut? How much do you make? It is only in government taxation that such an arrangement is allowed and is not voluntary. If you want to pay $1,000 for a fog light, you can choose to buy a Ferrari. But Kia can't ask how big your house is, or how much you earn to decide how much a spark plug should cost. In actuality, most people that have the lowest cost for government services receive the most services, so it is backwards from the norm.
     
  3. RonH

    RonH Formula 3

    May 29, 2016
    1,061
    Newport Coast, California
    Full Name:
    Ron H
    CornersWell. Nice obfuscation. Sure Montana’s tax structure is perfectly legal, IN MONTANA. What is a “scam”, “cheating” or “evasion” is when someone who is a resident in another state uses registering their car in Montana to avoid paying sales and use tax in the state where they and the car are resident.

    As I have said before, they didn’t get Al Capone for murder. They got him for tax evasion. But for those that want to roll the dice, that is up to them.
     
    readplays and Nospinzone like this.
  4. CornersWell

    CornersWell F1 Rookie

    Nov 24, 2004
    4,874
    True, RonH, that States have the legal right to tax (and differently), but the point is that adherence to MT's laws should be given reciprocity by other states. After all, in many contexts, states already do. But, in this specific context, the vehicle is legally-registered to a MT corporation in good standing. The fact that another state wants to extract a pound of flesh is greedy over-reaching, IMO.

    To use another example, let's assume that State A has an annual safety inspection requirement for vehicles. Let's now assume that an adjacent State (State B) doesn't. Can vehicles registered in State B drive on roads in State A? Can someone park a State B-registered vehicle in State A without running afoul of State A's law? For how long? For those in the DC area, they'll know exactly what I'm talking about.

    Legislatures do indeed adopt arbitrary laws. And, they do indeed over-reach. That needs to be reconciled, and this shouldn't be brushed under the rug.

    Yes, they did get Al Capone. Maybe they'll get the hardened criminals and murderers of F-chat, too?

    CW
     
  5. exoticcardreamer

    exoticcardreamer Formula 3

    Dec 9, 2014
    1,051
    usa
    Full Name:
    doesitmatter
    Many of the financing companies won't finance/lease cars that are registered in Montana unless a person lives there (putnam, premier, ally, etc.). This knocks out just about everyone who could register there.

    Car dealers in California will generally not sell cars that are to be titled/registered in Montana. All it takes is one sales tax audit and the paperwork not being in order and the State dings the dealer for the sales tax.

    Car dealers get sales tax audits all the time and the State authorities do see how many were tax exempt because they were registered out of State. California has very strict documentation requirements that a dealer/owner of the car has to adhere in order to not pay Cali sales tax. The authorities have been leaving dealers alone if the paperwork is there (that paperwork includes the drivers license information of the person (california drivers license).

    I'm not sure if the video someone posted earlier is the same one of the two people in Georgia but I'm betting that it stemmed from a sales tax audit of the dealership. They repeatedly saw multiple cars going to the same people and being registered out of State. The volume was way too high (probably more going on as those guys were probably middle men being used to flip cars and got on the radar of the authorities).
     
    Texas Forever likes this.
  6. Nospinzone

    Nospinzone F1 Veteran

    Jul 1, 2013
    7,346
    Weston, MA
    Full Name:
    Paul
    I did read it correctly, and I wasn't referring to your neighbor, I don't even know him/her.

    Your point about automobile excise tax was why should a more expensive car pay more than a cheaper car since they use the same roads/services/etc.

    My point was if you extend that reasoning, why should a mansion pay more in property taxes than a bungalow since both houses receive the same town services.

    That is the fallacy of your equal excise taxes for all cars position.
     
    RonH likes this.
  7. Nospinzone

    Nospinzone F1 Veteran

    Jul 1, 2013
    7,346
    Weston, MA
    Full Name:
    Paul
    Here is where you and gh really contort yourselves in trying to rationalize residing in one state and registering your vehicles in another.

    Scenario- A guy who lives in Montana goes on vacation to another state. He commits a crime there and is convicted. The sentence for his crime in that state is 5 to 7 years in prison. His attorney tells the judge, your honor in Montana this crime is only punishable by 2 to 4 years in prison. I want reciprocity for my client, so you can't sentence him to more than 4 years. :D:D:D
     
  8. LARRYH

    LARRYH F1 Veteran
    Owner Rossa Subscribed

    Jun 3, 2011
    9,142
    virginia usa
    I think you guys are making to much of all this I live in a military town less than 20 miles from the state line and on top of that it is a resort town (or was before coronavirus ) and every other car is from a different state .. I personally do not pass judgement on what any other person does on their motor vehicle I could care less just don't shoot me or burn a building down and I am good.....so this thread is crazy with a lot of unfounded and untrue claims....most people do not know the laws of every state in the country .. as when it comes to DMV every state is different..
    CW is correct by the way....
     
  9. Nospinzone

    Nospinzone F1 Veteran

    Jul 1, 2013
    7,346
    Weston, MA
    Full Name:
    Paul
    OK, so you say each homeowner should pay the same tax on their house and property regardless of value. Let's think about how that would work in a simplistic mythical city.

    In our mythical city it abolishes variable property tax rates. There are 10,000 houses in the city, and like most cities there is a wide range of income levels among the residents. The city budget to cover the costs of all the services the city provides to residents is $100MM. So under the same property tax law, the city taxes each house $10,000 per year. So a resident who used to pay $2,000 per year on his formerly assessed $100,000 house has now found his taxes quintupled.

    So he either finds a way to pay, or more likely moves out. Good luck trying to find a buyer for the house. After all who wants to pay an exhorbitent property tax in order to subsidize his better off neighbors. ;)
     
    davemqv likes this.
  10. RonH

    RonH Formula 3

    May 29, 2016
    1,061
    Newport Coast, California
    Full Name:
    Ron H
    CW, it is absolutely true that MT’s laws apply to a MT’s corporation’s vehicle WHILE IT IS IN MT. But when that vehicle comes to California then California law applies to it. In California you have to register the vehicle and pay sales and use taxes within 20 days. So just because it is owned by a MT corp doesnt change the fact that sales and use tax is due within 20 days of entry to CA. What is worse is that the MT company is not a real corporation. For tax purposes it is an artifice created by the CA resident to evade CA taxes. It is substance over form and it is really easy for CA to show that the MT corp was created solely to avoid CA taxes and that is tax evasion. So now not only do you have fines and penalties to pay in addition to the taxes owed but your are subject to criminal charges.

    I get that you dont like it and you come up with all kinds of theoretical arguments, but at the end of the day that is how it works in California.

    You should read this article. It does a pretty good job of outlining the sales and use tax law in California.

    https://klasing-associates.com/use-sales-tax-enforcement/

    Note, the following statement:

    “A common scheme that routinely blows up on California resident’s is to purchase a vehicle, boat or aircraft in another state in an attempt to avoid California sales tax...... when you drive your brand-new vehicle into California, you are legally required to calculate and voluntarily remit California use tax, this goes for boats and aircraft as well. California is known to obtain information for vehicle, boat and airplane registrations, from other state agencies, the Department of Motor Vehicles for example, to see if you have paid California sales or use tax on the out of state purchase. If you did not pay sales tax on the out of state purchase, the CDTFA will eventually access you use tax, along with penalties and interest. Unfortunately, if they can prove that you purposely evaded use tax on the out of state acquisition, you have exposure for a California tax crime called “Sales Tax Evasion”.

    Under the California Revenue and Taxation Code, any person or business that intentionally fails to report the assessment and fails to subsequently make payment of legally incurred sales and use taxes is guilty of sales tax evasion and can be faced with monetary fines and/or incarceration.“

    Also, as previously noted, the California Highway Patrol has a website devoted to turning in people driving in CA with out of state plates.

    So this is the way it is in California and likely in a number of other states as well.
     
    SVCalifornia likes this.
  11. Gh21631

    Gh21631 F1 Veteran
    Silver Subscribed

    Feb 24, 2011
    8,325
    East
    #536 Gh21631, Jun 2, 2020
    Last edited: Jun 2, 2020

    I am having a hard time believing that if you drive through CA you have to register your car there and pay taxes. CA is an absolute disaster so perhaps anything is possible there.
     
    davemqv likes this.
  12. Gh21631

    Gh21631 F1 Veteran
    Silver Subscribed

    Feb 24, 2011
    8,325
    East
    I was and it is an accurate analogy. Similar priced homes paying similar property tax but his vehicles are more modest compared to mine. How much more tax should one pay? I am already paying more in sales tax on each transaction. What is fair and reasonable?

    Its apples and oranges, you cant use the same methodology for autos - we are already paying more in sales tax on each transaction and in some states a recurring tax equal to ~4% of an inflated value YoY.

    Once again, most agree that taxes are necessary but when is it enough? People have the need to find alternative solutions when they feel like they are being taken advantage of. Treat people more fairly and this doesn't happen. If some, like yourself want to pay then go for it. My preference is to give to charities where I can see my money doing good vs. trusting the POS politicians.
     
  13. Gh21631

    Gh21631 F1 Veteran
    Silver Subscribed

    Feb 24, 2011
    8,325
    East
    But it is OK the other way around because they can afford -right? Just keep taking because the donkey will keep working and producing, just ride him/her into the grave.
     
  14. RonH

    RonH Formula 3

    May 29, 2016
    1,061
    Newport Coast, California
    Full Name:
    Ron H
    We both know that the CA resident that is bringing a MT registered car into CA is not “merely driving through CA”. They are resident here, as is the car. You know it, I know it and the CA tax authorities know it. That is the point and that is why they will get you. (As did the authorities in Georgia—which was at the commencement of this thread).

    People that believe others are inherently stupid should realize that they are mistaken and are merely looking in the mirror.
     
    davemqv likes this.
  15. Gh21631

    Gh21631 F1 Veteran
    Silver Subscribed

    Feb 24, 2011
    8,325
    East
    Right but if it were TX or NV? Are these OK by CA?
     
  16. Nospinzone

    Nospinzone F1 Veteran

    Jul 1, 2013
    7,346
    Weston, MA
    Full Name:
    Paul
    We can agree on that, I just don't don't believe that one alternative is to violate the law. To me alternatives are things such as working to change the law, not purchasing high cost cars, and of course moving to a favorable tax state.

    Here in Massachusetts, which is sometimes called Taxachusetts, years ago we got a proposal on the ballot to limit property taxes and it passed. Proposition 2 1/2 limited property tax increases to 2.5% and a town can exceed it only if the electorate approves a larger increase.
     
    RonH likes this.
  17. Gh21631

    Gh21631 F1 Veteran
    Silver Subscribed

    Feb 24, 2011
    8,325
    East
    What about the people who work at the higher end auto dealer? They need to sell and service cars. Why should they be singled out because the state is overreaching with their taxes? Moving to a favorable tax state is an interesting approach. I've seen for a while now the north easterners moving south and getting way from the unbearable taxes up north. Problem is they are stupid enough to vote for the same crap they ran away from and now like cockroaches they are ruining these more desirable areas. It is really a shame.
     
  18. ScreaminRevs

    ScreaminRevs Formula Junior

    Apr 4, 2004
    406
    Chicago
    You're employing the typical leftist tactic (i.e. only presenting a sliver of the whole situation). We see this daily on places like the Clinton News Network.

    A much more fair way to assess it:
    1) Every single-family dwelling that sits on similar-sized land should be billed the same dollar amount regardless whether a 1000 sq ft or 7000 sq ft house sits on it.
    2) A property containing no kids to utilize the local schools shall have to pay hardly anything toward said school system (here in the socialist IL the bulk of the taxes go towards the school. Live by the rule : You Pay for What you Use. That's simple. And fair.
    3) Revise all salaries of public officials. Government are public servants and should be paid minimal. (i.e. county commissioner should never be making 2 to 4 hundred thousand/yr. No one in public service should ever be paid anything approaching six figures.) I guarantee you that $100MM will be slashed by at least more than half, if not 75 or 80%.
     
    Gh21631 likes this.
  19. CornersWell

    CornersWell F1 Rookie

    Nov 24, 2004
    4,874
    RonH,

    Repeating the argument doesn't make it any more persuasive to me. I understand your points, but CA (or any other state, for that matter) has an inherent conflict of interest in adopting self-serving, arbitrary laws. It doesn't make them constitutional or enforceable, however. Until someone prevails on this in Federal court, it will continue to be winked-and-nodded along by state legislators and judges alike, though.

    You say it's "not a real corporation." Well, in MT's opinion, it is. Who's to say it's not? Who's to say that the protections afforded to it shouldn't be? Oh, that's right... CA. You'll have to pardon me, but I have a hard time accepting that that's not a disingenuous determination, because there's an economic interest in CA favoring CA. According to MT, though, the corporation has checked the appropriate boxes. It can legally own property (as well as do many other things), and there are very legitimate reasons why someone might use a corporation (limited liability, for example) to own and register assets. So what if it's in MT? Corporations can be legally formed there, too. As long as the corporation satisfies the requirements and is in good standing, it's a separate legal entity. The fact that the owner of the MT corporation may be somewhere else, or mobile assets can move out of the state shouldn't alter that.

    But, there certainly is the notion of tax avoidance "schemes", according to the IRS. Even if you comply, technically, with the law, if there's no other legitimate purpose, the structure may not be honored. Personally, I believe there are legitimate other reasons to establish corporate ownership outside of CA. CA obviously disagrees. So, now, I find myself repeating the point, again, that this needs to be resolved by a higher legal authority. CA simply cannot. That's like having the fox watch the hen house.

    CW
     
    BT likes this.
  20. Gh21631

    Gh21631 F1 Veteran
    Silver Subscribed

    Feb 24, 2011
    8,325
    East
    As an example many CA companies are registered in DE
     
  21. RonH

    RonH Formula 3

    May 29, 2016
    1,061
    Newport Coast, California
    Full Name:
    Ron H
    There are no “constitutional” issues here. The “unconstitutionality” of tax laws has been a time tested and debunked argument historically used by tax scofflaws. California and other states have always had the ability to tax their own residents. On sales tax the Supreme Court has even gone as far to say non resident sellers of other states have to collect and remit sales taxes when they sell to residents of states such as California.

    Yes there are DE companies operating in CA. They are all required to qualify to do business and pay taxes in CA. Your point is?

    So yes people that don't want to obey tax laws will throw up all kinds of “arguments“ about why tax laws are unfair or don't apply to them. If you want to be one of those, be my guest. But then be prepared for the consequences.
     
    readplays and Texas Forever like this.
  22. BT

    BT F1 World Champ
    Lifetime Rossa

    Mar 21, 2005
    15,291
    FL / GA
    Full Name:
    Bill Tracy
    A city of 10k houses with a $100 million yearly budget has a severely bloated list of services. The cost is $10k per house, so that is what would be required. The median income of $40k per person means a single person should not be paying 25% of their income on average for city services. Time was, government was small and largely innocuous. In the privater sector, the dentist does many things to perform a root canal, making it cost $1,500 on average. He would either get sued, arrested, or go out of business if he charges the wealthy guy $10k, and let the poor person get the services for $20? Government tries to disguise the reality of their wasteful budgets and spending by having variable pricing for the exact same services which is not allowed in any private arena, and it is involuntary.
     
  23. CornersWell

    CornersWell F1 Rookie

    Nov 24, 2004
    4,874
    The constitutional issue is whether one state's law has supremacy over another's. Can CA tax assets owned by a MT corporation that doesn't tax them? There are rationales that support it. Such as the fact that if you earn money in CA, it's subject to CA taxes EVEN IF you don't live in CA (e.g. professional athletes playing a game in CA). But, there are also other rationales that do not.

    So, it's not about the mere power to tax, which is well-established. Rather, it is about the power to tax an out-of-state ENTITY that's in full compliance there.

    Let me ask a hypothetical. Let's say you are a resident of State A. You own property there. You pay your taxes there. Let's say you have your driver's license there. You also own a second home in State B, which you travel to for extended periods. State B has a rule saying that if you're in State B for more than X days (20, 30 or whatever), you must get your DL changed to State B's. What do you do?

    CW
     
  24. Nospinzone

    Nospinzone F1 Veteran

    Jul 1, 2013
    7,346
    Weston, MA
    Full Name:
    Paul
    If the vehicle is in fact garaged (i.e. physically located) in Montana, then you are correct. For instance Massachusetts would not tax that vehicle even though the owner lives in MA. However, if the vehicle is garaged in MA, then it is subject to tax in MA.

    All state laws vary, so without knowing which state you are talking about it could vary. In Massachusetts if you are a permanent resident of another state you can drive your vehicle in MA without registering it and without applying for a MA driver's license. Of course this assumes you have a proper registration and valid license plates for the state in which you do live.

    I'm not sure if there are any insurance requirements because MA does require a minimum amount of insurance coverage for vehicles registered in the state. I do believe that MA does make exceptions for active duty military. I don't know what they are, but I believe it cuts them even more slack. Of course they've closed so many military bases here over the years it probably only applies to 4 or 5 people. :D
     
    RonH likes this.
  25. CornersWell

    CornersWell F1 Rookie

    Nov 24, 2004
    4,874
    I am aware that MA thinks the same as CA on this issue. There are other states, too. VA and GA, for example.

    But, again, just because they think alike doesn't mean their laws are constitutional or enforceable.

    CW
     

Share This Page