anyway to minimize sales tax when buying toys?

It may or may not be. But in any state that collects fees for yearly registration, I highly doubt it would be legal.

To be precise, not legal to have a car registered in Montana, but being kept and operated in the other state year round. A state has a right to regulate vehicles that are being used primarily in that state, and they do so.

California does not permit that (does not permit a car to be used in California permanently, year round without being registered in California), and the purpose is to collect fees for cars being used on its roads. That's not a novel concept, and my guess is most, if not all, fee collecting states are the same. But you'd have to check with your own particular motor vehicle department.

 

I also have homes in multiple states. I am a resident of CA. The other states have odd rules, e.g. NC does not allow non-resident registration. Although I have a home there, I am not a resident there. So the car I operate in NC is registered in CA. This is legal per CA and NC laws.

 

Does the DMV check mileage driven in each state? How do you define "located" versus "operated?" That's just a specious argument. They include both of those terms to cover their bases.

Your example makes no sense. If the car is in Oregon for 7 months and in California for 5 months, how would one define "operated" for 2 months or 1 month? Number of days driven? Mileage? And how would this be tracked. IMO that is ridiculous. If the car is physically in one location outside of CA for the majority of the year, there is no way the DMV in CA could claim that it was still "operated" more during the 5 months it was in California.

In any case, even if your ridiculous parsing of "located" and "operated" made any sense, my SO drives the cars too and she actually drives way more miles in a year than I do so any vehicle in question would get "operated" more in the time it was in OR than in CA. You are either a DMV employee or just looking for an argument now! ;-)

 

My statement was:

"Their argument would be that..."

You can always argue your intrepretation with them.. specifically, these guys:

http://www.chp.ca.gov/prog/cheaters.cgi

and see if they agree with you

You can read this thread as well:

http://forums.officer.com/forums/showthread.php?118587-Getting-stopped-w-out-of-state-plates

Specifically, the posts from SgtCHP and this one:

"Usually what happens JQC is I stop you driving a car registered out of state. I warn you about the possible violations. Several months later we meet again and you're still driving this vehicle registered out of state, now we have issues."

 

Five,

I don't know if you are genuinely trying to be helpful, or just like to argue, but you are missing my point.

You're still not showing me anything that says if the car is in another state for more than 6 months out of the year, is owned by a resident of that other state, my driving it in CA would require it to be registered here. The law as written seems to be pretty clear. Just because some CHP officer posting on a message board says he would cite the driver if he saw him a few months later with the same out of state plates does not mean that driver is not in compliance.

Could I get pulled over? Sure. Could a CHP officer be a jerk and write me a ticket? Sure. But if the car is owned by my SO, who is an Oregon resident, and I can show that the car has been in OR more than CA during the registration period, that seems to be legal according to the laws as written. WOuld it be a hassle to have to go to court and prove it if I am pulled over? Sure. But, as I said, given that we would save six figures in sales tax and six figures in annual use fees just on cars we plan to purchase in the next couple of years, and it is legal, the threat of some cop on a power trip writing me a ticket and having to have an attorney clear it up is not a big deal. My only issue is if it is ILLEGAL. If the statutes as written would make it legal, then I would seriously consider doing it.

I am not interested in MY interpretation. I am interested in learned feedback as to what the CORRECT interpretation is... That's why I asked for input from attorneys who are Fchat members. Are you an attorney? I am only interested in finding out if the law as written means that having the vehicle in CA for less than half the year, regardless of how much it gets driven, would mean keeping it registered in OR, owned by an OR resident who has no business or ties to CA, is legal. If it's legal, I will take my chances with the CHP, especially with some of the connections I have with the organization. As helpful as many members here seem to be on certain issues, I think perhaps I should have one of my attorneys find out for me rather than argue with someone who seems to be missing the point of what I am asking. :-/

 

Who actually is driving a Ferrari owned by a Montana LLC with Montana plates that is a member of the forum?

 

I have been wondering why this is really a big savings, but I have never owned a car anywhere near that expensive. For example, here in Alabama, my 308 is thirty bucks a year for a tag. Same for my Scirocco. Same for my Alfa and my Mercedes and my MGB, etc.

My 05 Touareg was something like $300+/year and that shook me a little the first time I opened the bill after I bought it new (first new car in my life)

What would a financed 2010 F430 cost annually in CA to put a tag on the back?

 

It says:

"... if the vehicle is located or operated in this state for a greater amount of time than it is located or operated in any other individual state ..."

You are saying the vehicle is located in another state for the majority of the year. In that case, you don't have to worry about the "located" in another state vs. California part (if you can prove it).

Then it is all up to where it is "operated" more and what they mean by "operated". I think it is a reasonable argument to say if the car is driven 1 month out of state and 3 months in California, it is operated in California more than another state. If you don't agree, I have no problem with it. But that is how I'd interpret it.

 

8% Sales Tax the first year, and 2% Privilege Tax every year. So, add 10% to the window sticker to drive off the lot in CA. And you should feel obligated to pay your 'fair share' of privilege tax because CA sets that money aside to build roads that are open only to Ferrari drivers...and none of that money ever gets diverted to state general funds for healthcare for illegal aliens, drug user needle exchanges, Toyota Prius subsidies, or any other redistribution of wealth schemes.

 

This is an interesting thread.
Hopefully I can add something useful from a dealership prespective. Now this would apply to Illinois as that is my frame of reference but I doubt other states are all that different.

First, The customer doesn't actually pay the tax to the state. The dealer collects an amount from the customer that will cover the dealership's sales tax obligation on the sale. The dealership then pays the state dept of revenue the tax. It's a subtle destinction but important as to who is liable to the dept of rev.

Second, The dept of rev asumes tax will be collected and paid on every sale unless there is a provable exemption. This is where the problems arise. There is an exemption that would alter the sales tax amount for "out-of-state buyer". Note it does not say registered to an out of state address. In Illinois having an out of state address, even if that is where you keep the car, even if that is where you register it, does not exempt the sale from Illinois state sales tax if you are in fact an Illinois resident. If a dealership does not collect Illinois sales tax from an Illinois resident just because they registered it out of state that dealer is going to be liable for the tax amount when they suffer a sales tax audit.

Now, if the dealership is provided documentation of an out-of-state residence and the customer signs an affidavit that they are not a resident of Illinois the dealer may not collect tax. With that documentation the burden will shift to the customer. Of course if you falsify that affidavit or other documentation you are dealing with tax fraud as well as still being liable for the tax if/when the dept of rev finds out.

Simply, If you are an Illinois resident and you buy a car from an Illinois dealer you are gonna pay Illinois State Sales tax unless someone makes a costly mistake or there is fraud.

Also note that this in now. 10 years ago if the car was titled out of state, even to a Montana PO Box, it slid right through. The key is, the exemption is for "out-of-state buyer"
and the dept of rev has changed the interpretation from out-of-state REGISTRATION to out-of-state RESIDENT so they can get more money.

That's just on sales tax. Nothing to do with the discussion about plates and registration and yearly use fees and where the car is or isn't.

Hope that helps.

 

"If you do what the "Montana registration" company is saying to do, i.e., you are a California resident, your car is in California, and you use it mostly in California, and you do this Montana scheme it is illegal. That scheme being to set up an LLC in Montana, register the car in Montana, but live and keep the car in California. Absolutely illegal."

California has a history of trying to tax property they have no jurisdiction over and losing in the supreme court. See, for example, http://phinvv.wordpress.com/2009/02/25/the-franchise-tax-boards-conduct-could-cost-california-500-million/.

In the case of the use tax on movable property, there's an argument waiting to be made regarding the interstate commerce clause in the constitution (http://www.law.umkc.edu/faculty/projects/ftrials/conlaw/statecommerce.htm). The challenge is that the leading expert in this area, a law professor who feels that California is on the wrong side of the law in taxing the property of foreign LLCs, charges $650 an hour, meaning it would much more expensive, in every case I can think of, to litigate than to settle.

I guess my feeling on this issue, is that as long as corporations enjoy the perquisites of "corporate personhood", individuals should enjoy the same rights, through personal corporatehood, including the right to manage movable property for tax avoidance.

But that's just me.

 

Hello @Glassman, would you mind posting the name of that attorney in Missoula again for me? Or DM it to me? Thanks!

 

Might be kinda late to the thread but in a specific country that I'm accustomed to in the middle east specific people that can fly under the radar avoid paying extraordinary taxes for their 4 wheeled toys by opening a faux "car gallery", importing said machines, putting them up for "sale" and having joyrides as the boss of said establishment. Since the car isn't technically sold to the end customer, they can get away with much less. Maybe check your connections and local laws?

 

Car dealer license fraud is already a thing in the US. See Matt Farah's "dealer owner" 718 Spyder, etc.