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Montana registration crack-down

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

  1. Caphill

    Caphill Karting

    Nov 9, 2016
    125
    Just pay your damn taxes.
     
  2. bellwilliam

    bellwilliam Formula Junior
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    Oct 25, 2014
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    when I sell a car, I always file a release of liability. so the State do have a record of who bought the car, and for how much. that's how much sales tax is owed. how do you get around that?

    if I don't file a release. it also means the car is still titled to me (in State's eye), unless I file a non-op (which I can't since I no longer own the car), next owner is owed back tax and registration + penalty. in California, that is a LOT. few thousands in just a few years.
     
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  3. bcorner

    bcorner Karting

    Aug 25, 2017
    58
    As I understand there is no law against it. It’s tax avoidance. It just that they don’t think it’s fair. I personally think of this as harassment by the state.


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  4. Texas Forever

    Texas Forever Four Time F1 World Champ
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    The law in Texas is clear. If you're a Texas residence and you drive your car over Texas roads, you owe the sales tax unless you can show it was paid to another state. Using a single-member, sole-asset LLC is a strawman. Again, if you live in Texas and drive your car over Texas road, you owe the tax.
     
  5. cls

    cls Formula 3
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    There is a law against that.
     
  6. Jean-Pierre Marchand

    Jean-Pierre Marchand Formula Junior
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    Yes, the state collecting taxes is "harrasment"! LOL!!
     
  7. arizonaitalian

    arizonaitalian F1 World Champ
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    #257 arizonaitalian, Apr 4, 2019
    Last edited: Apr 4, 2019
    A State's ability to tax a business' assets that are physically in their state is well-trodden legal fact. It has nothing to do with "bias" or "self interest" legally. Of course they are those things. Importantly they also can claim "tax nexus" (aka “sufficient physical presence”) if a business operates or has assets in their state. This is really no more complicated than having an awareness and basic understanding of tax law and tax nexus. Most car guys (unsurprisingly) don't have that.

    The issues with "Montana Registration in the name of an LLC" are pretty straight forward:

    1) If the assets of the LLC are physically in another State, that state has every legal right to tax those assets locally and typically does.

    2) The LLC must have a *valid and real* business purpose. I know many folks who register their cars and RV's in MT, I don't know one of them that has a "valid and real" business.

    This is not a matter of "is it legal". In the vast majority of cases, it is not. The main (only?) asset of these LLC's is often the auto/RV. So if 100% of the company's assets are in XYZ State rather than MT, who do you think has nexus claims?

    Look...Its just a matter of getting caught or not. (In some states their cops and highway patrol are trained to stop out-of-state cars and verify if they meet the state's nexus rules or not - ask me how I know)

    So much stupid stuff written by car guys about this topic (not referring to the quote above). Think about it....Most US large corporations are "registered" in Delaware. Do you think only Delaware taxes them? Come on guys.
     
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  8. bcorner

    bcorner Karting

    Aug 25, 2017
    58
    I guess the solution is to move out of Georgia, and get your drivers license from a state you do like.

    I wonder how Georgia would like it if the top 10% earners moved away?

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  9. Xtreme5053

    Xtreme5053 Formula Junior
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    Aug 20, 2006
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    Not sure that’s the case. Registration? Sure. But if the ownership isn’t changing, don’t see the reason for paying tax?


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  10. Texas Forever

    Texas Forever Four Time F1 World Champ
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    Texas has already ruled it will ignore a single-member LLC that only owns one asset (car, boat, train). That is, it will look through the paperwork because it really is a sham. Some of you are playing word games. Why else would someone go through the trouble and expense of forming a Montana LLC to own a car that you drive in Texas if you're not trying to beat the tax man? Frankly, I don't think the Texas courts will be sympathetic to your argument.
     
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  11. Nospinzone

    Nospinzone F1 Rookie

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    You bring up a good point when you say "harassment by the state". We are talking about a tax law that is not universal. In fact, in Massachusetts the Commonwealth has nothing to do with collecting or spending the excise tax collected each year. Here the Town you live in bills you for each motor vehicle and the collected tax goes into running your Town, e.g. maintaining roads, fire and police, schools, library, etc. So when a neighbor cheats (and yes here it is tax evasion and not avoidance) on the excise tax he cheats all his neighbors.

    My feeling is if you somehow can make a convoluted argument to convince yourself that you are doing this legally, there is no way you can reconcile that what you are doing is ethical. If you live in a Massachusetts town and register your car in MT, or New Hampshire the state of choice around here, you are enjoying the benefits of the Town without paying a penny. If you can sleep at night with that, it's not a good way to go through life.

    BTW, recently a Town near the NH border did a crackdown because neighbors were complaining about other neighbors with NH plates. The people caught were fined $500 and had to pay all the back taxes with interest. Of course you can stand on your principles and not pay, but the Town will put a lien on your property so your heirs will end up paying. :)
     
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  12. BMW.SauberF1Team

    BMW.SauberF1Team F1 World Champ

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    I don't think that part is true. The owners in GA appear to own homes in GA and still maintain a drivers license in GA and only have the car as a Montana LLC. So their homes (well above the median home value in the area) pay more in property taxes than the others. Their state income tax is also likely substantially higher. So in actuality they are likely contributing much more financially to the local governments than the average person.

    Most people take away more in resources than they contribute to society. It almost fits the 80-20 rule where 80% of the population contributes less than they take and 20% do the opposite. Avoiding sales tax on the car is small in the grand scheme of it all, but some people try to minimize taxes no matter what loop hole they find and think is okay.

    For it to be "fair" everyone should pay for each thing they use. Be it have a kid in a public school, driving more miles on a public road, etc, etc. Of course it's not like that and never will be.
     
  13. Nospinzone

    Nospinzone F1 Rookie

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    Oh, I just meant not paying a penny for their cars. If you own a home in Massachusetts you are paying property taxes to the Town. In fact we all just received our quarterly bill, due May 1.

    I wonder if I can register my home in MT! :D
     
  14. CornersWell

    CornersWell F1 Rookie

    Nov 24, 2004
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    The inconvenient fact, however, happens to be that some States have won the argument in a court, while others have lost it. In other words, there's disparate treatment in the law. This is why I think it's ripe for SCOTUS to take the issue up. I see this as something that needs to be clarified and resolved at a higher level, because, despite what you say about a lack of "bias", you can't deny that a state that seeks to enforce (and wins) potentially sees higher tax revenues. So, they have an incentive to enforce a law that they wrote in their courts. There will always be a presumption, IMO, that the courts are inclined to uphold legislatively-adopted law as legitimate. Not in all cases, of course. But, does a taxpayer, say, in VA really get a fair hearing from a VA Court? Enforcing VA law? That fills VA's tax coffers? VA doesn't especially care about MT's. Hopefully, you see the problem in that. So, whether or not a "bias" exists, the mere perception of a state's bias ought to be enough for its' politicians to want to have this matter resolved clearly, too.

    CW
     
  15. Texas Forever

    Texas Forever Four Time F1 World Champ
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    Keep in mind the angle the states are taking is a single-member Montana LLC that only owns one asset is a sham. They're not talking about Hertz. I seriously doubt the Supremes would even look at one of these cases.
     
  16. steved033

    steved033 F1 Rookie
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    After 11 pages, and some of the billable rates some of you have...you could have done some work and made enough money to pay your taxes.

    :p:p:p:p:p:p:p:p:p:p:p:p:p:p:p:p:p

    sjd
     
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  17. Nospinzone

    Nospinzone F1 Rookie

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    Which states have lost the right to assess a property/excise taxes on a vehicle garaged in that state?
     
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  18. ago car nut

    ago car nut F1 Rookie
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    Answer this? A person buys a new car for $25K, sells it two years later to private individual for $20K, then they sell it in two years for $17K.
    Why is the state entitled to collect sales tax every time the car is sold? The original owner paid the tax on it.
     
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  19. Robin

    Robin F1 Rookie

    Nov 1, 2003
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    Arlington, VA
    I figure some of those taxes go toward paying for maintenance on the roads the car is driven on. Some will pay for the police who will help out when some schmuck who's updating his instagram runs into you. Some will go toward the EMS crews who collect your organs after said instagrammer runs you over. Taxes pay for a lot of stuff man. Complaining about it pretty much turns into a Pythonesque "what have taxes ever done for us??" situation. Just be thankful you've been successful enough to be able to complain about such minor things.
     
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  20. Texas Forever

    Texas Forever Four Time F1 World Champ
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    See your state legislators.
     
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  21. CornersWell

    CornersWell F1 Rookie

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    Louisiana lost a case on appeal.

    CW
     
  22. CornersWell

    CornersWell F1 Rookie

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    And, not only that, some states try to enforce (e.g. CA, VA), but others don't.

    So, again, there's disparity.

    CW
     
  23. Llenroc

    Llenroc F1 Rookie
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    Just to put all you worry warts at ease Montana now has a luxury tax(825.00/yr for any vehicle under 10 years old) on motor homes and cars that have a value of 250,000.00 or more. This is on top of all of the basic fees they assess to motor vehicles, which varies by county.
     
  24. BMW.SauberF1Team

    BMW.SauberF1Team F1 World Champ

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    Depends on the state. There's no sales tax in Arizona when a buyer purchases a car from a private seller. Only if they buy from a dealer.
     
  25. beng

    beng Formula Junior
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    Because each transaction is being taxed, not the car. That’s why it’s called a “sales” tax.
     
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