You can find a specific cost they intend to coerce from you by plugging in your location information at the California DMV website. Good news: if you fail the smog check, you get to spend more money. This saves them A LOT of money on the initial purchase of a vehicle, be it a car, a motorbike, a boat, or even an RV. So let's do a little quick math: a 2014-model used car with an original sticker price of $40,000 is now going to be worth somewhere in the ballpark of $12,000. Montana vehicle sales tax has always been zero, so it was a natural location for owners of expensive cars and RVs to ease their burdens. Not surprisingly, Flathead, Granite, and Deer Lodge counties have the largest amount of luxury vehicle registrations, according to data in a vehicle registration primer for the Montana DMV. You have to get a registered agent to handle business matters in state, a FEIN, a bank account for the business, pay the state a yearly fee to keep the business registered and all the other State and Federal responsibilities that come with an LLC. Register and Title in NC. While it's legal to purchase pricey vehicles and avoid paying sales tax in Montana, other states frown upon the practice when their residents set up LLCs out of state for the sole purpose of avoiding these taxes. Theyre scum., I cant believe so many customers have gotten away with this grift, says Alex Ross, who owns Sharkwerks, a high-performance automotive tuning shop in Fremont, Calif. No matter where in California, at every cars and coffee [gathering], look for the Montana plates. As of October 2017, Consumerist is no longer producing new content, but feel free to browse through our archives. Light vehicle registrations . At RSP Services, we provide over 35 years of combined experience you can depend on to help you save money on taxes and pay low FLAT RATE registration fees. You must be logged in to perform that action. Of course we'll pay some ridiculous price for insurancebut we'll still save money in the end compared to renting. This is particularly important when buying a newer used vehicle. You do not need to spend a night there to get registered. You can schedule online or by calling 888.871.8535. And as we touched on before, Montanas lack of inspections and emissions testing are strong reasons. Terms Of Service. This process earmarks the vehicle to an owner and is necessary to score a license plate needed to traverse public roads. You have a choice: Tell the insurance company the truth (I live in Michigan, drive the vehicle almost exclusively in Michigan, store it and park it in Michigan, but have Montana plates on it in the name of a sham LLC.) If you tell them the truth, will they insure the car? This is a phone call I get too often . This article is part of my series on the benefits of registering vehicles out of state. Im not entirely sure if you need a SD address or not to get registered. I don't like the waiting time either as it's wasting time for us. Its wild to think about, but there are plenty of cars that easily MSRP over half a million dollars, and if you are in a state that collects, say, seven percent in sales tax, you are looking at a staggering tax bill of $35,000 or more. The scam works like this: You hire a Montana law firm to form a corporation or limited liability company (LLC) for you. Taxes or fees in lieu of taxes are due, along with appropriate registration fees (U.S. funds only). I have no problem utilizing said loophole. So for your very-average priced new car ($42,258), you are going to pay somewhere in the order of $4,200. Why Is Everyone Registering Their Cars in Montana? The overall cost of living in LA is 41.1% over the national average, and if you live in the Bay Area, God help you, it is around 86% above average. I use zen business. This post is part of our Out of State Series explaining the benefits of using our Montana LLC Program to register your vehicles out-of-state. Are state sales taxes and use taxes too high? I thought sales tax was based on where the vehicle gets registered. John McCoy is a lifelong car and truck enthusiast and has a strong mechanical background off the road. There are, of course, exceptions to this rule. The same four percent tax on a $300,000 motorhome rings up to a stout $12,000. The people who have Montana license plates are like the people who put the fake handicap badges in their car, says Paul Zuckerman, an attorney in Los Angeles and avid car collector. California is home to some of the most beautiful landscapes in the world. Sfo is still safe and easy to navigate via car or on foot. Andy Says Hell Yeah. If someone previously registered a vehicle in another state, the Montana DMV will require him or her to show a proof of sales tax payment. He teaches a popular bi-weekly webinar, Tax Tuesday, where business owners and investors can ask any tax question and get answers LIVE on-air. Do you plan on insuring your vehicle? So we are both non-residents. Every Montana LLC is managed per the clients need. Make sure to check out the whole series! If the insurance company finds out what you are up to, they can deny your claim because you have a Montana-registered vehicle while driving 100% in California. (Alaska, Delaware, New Hampshire, and Oregon are the other states that require no sales tax.) So is this an extravagant workaround that benefits the people, or an unethical loophole being used as a revenue generator? You can see these figures and determine that they are, in fact, insane. For whatever reason, the Mount Rushmore State, like Montana and others, has become a bit of a safe haven for those looking to skirt their home states' regulations. If you need help with vehicle registration using an LLC, you can post your legal need on UpCounsel's marketplace. Its not a red flag; its something to note, he says. Last but not least, there is the idea that this process has to be highly complicated. The second highest, Clay County, had just 7,241 registrations during the same time; however, that represented more than one-fourth of all vehicles registered in the county. For vehicles that are eight years old and newer, lucky you! Maybe to Montana? It really is that simple. In most states, an LLC created solely for the purpose of avoiding sales tax will be viewed as a sham, and the state will assess sales taxes on the LLC's owners personally. Thats weird. But after seeing more of them, I said, I know whats going on here. Dirt Legal can help you save time, money, and headaches. Thats correct; no nagging smog checks. We feel like youve earned a break once youve spent over a hundred grand on one of the most collectible Audis on the planet. None. Thread starter LSUFan69; Start date Aug 30, 2022; Prev. Catch more great investing & business tips on our YouTube channel, Build your customized strategy with a complimentary Strategy Session today, How to Start a Business Entity in Pennsylvania, How to Start Stock Investing Through Infinity Investing Part 3. New Registration. So let me start by setting the stage and then hopefully someone can give the pros and cons of each option. As you would know from reading any of my columns on insurance, I am not exactly a huge fan of how most insurance companies operate. For cars under four years old, this can be as much as $217. Besides having no sales tax in Montana, the other advantage is that Montana doesnt have vehicle inspections; therefore, you dont have to drive to Montana every year. Maybe somebody in the position to buy a Lambo in the first place is better poised to shell out almost fifty grand for tax, but that doesnt mean that dropping that kind of cash wont sting just a little even if you are. Montana has no sales tax. One of the hottest states for those looking to sneak around regulations and extra expenses is South Dakota. The bad news is that you shouldnt act upon any of the information without consulting a qualified professional attorney who will, probably, bill you by the hour. It would be preferable to have a business connection in Montana if you want this to make sense. Montana vehicle registration. False statements which form the basis of the denial letter you will receive shortly in the mail. And an insurance adjuster, scrutinizing your claim might wonder what false statements you made on your insurance application. The Montana LLC comes with real business responsibilities. We'd do this in my husband's name as I don't want to be committing tax fraud in some way as a U.S. citizen. Those days were the best. Drivers fill out an online form and provide the: State or province of the plate in question. So your best bets are to pay for repairs to get it to pass, or you can sell it to the state, which will dismantle it. Some state officials insist that vehicle registrants have an actual interest in real property in the state, but the requirements for showing this are extremely minimal. Create an account to follow your favorite communities and start taking part in conversations. But then, after that, it will hurt a lot. Because Montana has no sale tax on an RV, your only cost is the $1,000 to set up your LLC "business.". Home blog Shows Coffee with Carl Should I Register My Vehicle in Montana? Individuals must bring their title and proof of vehicle sale to the county treasurer's office for Montana car registration regardless of the desired registration period. Can be from a hotel or campground. Frankly, it is nerve-racking to think about getting read the riot act when a cop finds that your drivers license does not match up with the state that your vehicle is registered in and/or the one you are driving in. Enjoy! Yeah that's lame. I get asked from time to time about the so-called Montana License Plate Scam: Can you safely register your vehicle in Montana and drive it in your non-Montana home state? Here you can find 12 years worth of articles on everything from how to avoid dodgy scams to writing an effective complaint letter. A founding partner of Anderson Business Advisors, Toby helped Anderson grow its practice from one of business and estate planning to a thriving tax practice and registered agent service with tens of thousands of clients nationwide. I decided to pass on his offer. Limited-Time offer: FREE (a $750 value. All rights reserved. It is such a well-known tax dodge, even my own accountant has suggested I use it to shield my vehicle from California taxes, says Jeff Wright, an LA-based car enthusiast whoowns a ranch in Montana. If it mysteriously went from passing to failing, you guessed it; you have to get it fixed and pass the smog check before you can sell it. Dirt Legals Montana Vehicle Registration Service is just right for you if you are looking for a new car, truck, motorhome, or even a used one. Imagine you've bought a 2022 Corvette Stingray for $70,000 in Florida, where the sales tax rate is 6%. Ready to hit the road? Prue Leith Used to Deliver Food in a BMW Isetta Microcar, Chase Elliott Explains the Challenge of Adapting to NASCAR's Next Gen Car, Is a Ram 1500 TRX the Ideal Winter Vehicle? For example, the Montana LLC program we offer is an LLC from Montana providing the required residency for registration there. Our Mr. Average lives in Long Beach. Why does it have a Montana plate?. Where 10 years agothe sight of a Ford GT sporting a blue Montana plate would be rare, adriveto the popular Friday morning car gatherings at Newcombs Ranch outsideLA reveals that even relativelypedestrian 911s carryMontana plates. (Progressive already said they'd insure both of us as foreign drivers in N.C.). But the truth of the matter is that eventually, your car or truck will no longer pass emissions at some point in time. The longer you delay payment, the greater the penalty amount will be. The Montana lawyers who form these LLCsat a cost of around $1,000--admit as much in the small print on their websites. Still, the effect is the same across the board. So, my suggestion would be: Dont do it. This will allow you to save a ton of money in sales tax, especially if you purchase a very expensive vehicle. Both my husband and I have a German and International Driver's license. Its the rest of us, who have the misfortune to live in places that arent Montana, who might find this scheme tempting. The LLC registers and plates the vehicle in Montana. You may order presentation ready copies to distribute to your colleagues, customers, or clients, by visiting https://www.parsintl.com/publication/autoblog/. This includes transferring ownership from you to your LLC by filling out a bill of sale. Local taxes and fees now total $4453. Some people want to avoid paying the thousands of dollars in sales tax when they purchase an RV. What if you could avoid that, and avoid annual car inspections, just by filling out a little bit of paperwork? Can anyone legally register their car in Montana? If youve ever driven around town, and said, You know, thats a nice Ferrari. they can rightfully deny a claim in most states if it is shown that the underlying policy was obtained through fraud, even if the underlying fraud has nothing to do with your claim. It's a strategy that you can agree with or not.. The third certainty in life besides death and taxes is insurance. 1; 2; First Prev 2 of 2 Go to page. Call it what you want, if it's registered legit and you have residence or a business in that state your good. You might never get in an accident. This loophole is for cutting taxes on million dollar recreational purchases. If the latter, maybe it's no issue since we'd be selling and leaving the country". (Ritholtz also hosts the Masters in Businessshow on Bloomberg Radio. If youre going to use this strategy of buying your vehicle in Montana but residing somewhere else, most online law firms will tell you to set up a Montana LLC and then register your vehicle in the state of Montana. The fine people of Montana drive and register all kinds of vehicles, all of which are sales tax-free to register. The fees that you will have to pay are as follows: Vehicles that are only four years old and under will cost $217 to register. With this piece of knowledge, you are most certainly going to be dragged into smog check your car every other year for eternity. A Ford Transit starts at $35,925. Our goal is to broaden your understanding of this process and whether or not it is right for you. You pay no sales or use tax and then bring your car to whatever state you live in and drive the vehicle with tax-free impunity. But this is not limited to fast cars and expensive motorhomes. One of the most popular places for out-of-state buyers to flock is, in fact, South Dakota. The current rates for registration in Montana are: Vehicles less than four model years: $217. And guess what? Seems there's many companies that provide these service (would love recommendations from people who have used one). Most state laws require you to register your car and obtain insurance in the state where it is driven most. Either way, it's a method people have used to register tens of thousands of vehicles, and that's no small feat. A Montana LLC vehicle registration is an option some out-of-state residents choose in order to purchase a vehicle without having to pay sales tax on it. Why? Terms Of Service, The Benefits of Registering a California Car Out-of-State, registering your car or truck out of state. Sidestepping Sales Tax on Large Vehicles Updated November 5, 2020: Everything I've read says the main reason Americans do this scheme is to avoid sales tax in the state they reside in. Penalties for Vehicles Registered in California You only need to stay there to get your ID. New comments cannot be posted and votes cannot be cast, Tips and tricks for living in your van, car or truck. your insurance will be in Montana, don't if they found out you always in California, will they still pay you . Car owners from Mendocino, Calif., to Miami aretitling collectible cars in Montana, evenespecially, in factif they dont live there. Theyll remotely handle the registration titling and fees. I just wanted to show you why some people do this since it was a question that comes up from time to time. South Dakota has proven to be an accessible state with a reasonable tax structure for its registration process. So, if you have a car and hold the title, you do not need to undergo a smog check so long as it is 1) four years old or newer or 2) eight years old or newer and you have been paying your smog abatement fee. There are a couple problems which might crop up if you give it a try. Some states are willing to use extreme measures to secure tax revenue on pricey vehicles that their residents purchase out of state. They said that lots of expensive cars have Montana plates, and its all part of a tax scheme. You will run afoul of California law regarding residency and vehicle registration, and the "Montana loophole" of creating an LLC there for registration purposes has been clamped down on. As a resident of that state, youre supposed to register your vehicle there. Yes! I'm not military so it would be the latter. Essentially, it works like this: You form an LLC business in Montana. Lehto points out in a blog post for Jalopnik that there are two problems with this: first, you can probably get away with the scheme for a while, but do you really want to risk tax penalties over this? But if you do, that Montana plate will pop up. Ready to ditch those crazy fees and taxes? As of 2018, there were 58,334 out-of-state vehicles registered with the Department of Revenue's Motor Vehicle division which represent nearly five percent of all 1.2 million vehicles currently titled in South Dakota. Montana has long been a bastion of tax freedom for many years, so it was one of the original havens for supercars. Second, Montana does not require vehicle emissions tests or annual inspections. DM me if you have questions. Do a quick Google search and see the various people who ended up being audited trying to defend this scheme. If your name not the LLC name is on the title (likely because you bought it before forming your LLC), you'll have to establish a chain of ownership. Or maybe not so much concluding but admitting the unavoidable. Transportation Improvement Fee (TIF), which is based on your vehicle value: $0-$4,999: $27. I use South Dakota through Americas Mailbox. Do you need legal help with vehicle registration using an LLC? You may also have noticed quite a few South Dakota license plates, which is not a coincidence. According to a 2018 report by the Rapid City Journal, when an expatriate named Aldis Barsketis emigrated from the United States to Mexico, he noticed there was an astounding number of cars sporting South Dakota tags. For somewhere around 1200$ there would be nothing to do from our side except fill out a form. Montana Vehicle Registration Rates All fees listed below are based upon a 12-month registration. As it turns out, Barsketis was onto something. Montana has no sales or use tax and no vehicle inspections. Oh, and by the way, the valid passing inspection must be within the last 90 days. John McCoy is a lifelong car and truck enthusiast and has a strong mechanical background off the road. $25,000-$34,999: $110. For what its worth. Reddit and its partners use cookies and similar technologies to provide you with a better experience. By accepting all cookies, you agree to our use of cookies to deliver and maintain our services and site, improve the quality of Reddit, personalize Reddit content and advertising, and measure the effectiveness of advertising. It had Montana plates, and the news made a special note of this. The Benefits of Registering a Florida Car Out-of-State, What to Know Before Buying a Government Surplus Humvee. The first step you must take after buying a new-to-you car in the United States is registering it with your local department of motor vehicles. All rights reserved. Gotta pay for it somehow.. But dont worry, you are not alone: about ten percent of cars fail. Motorcycle safety fee: $16. You own the LLC outright. MC 61-10-102 MC 61-10-103 MC 61-10-104 Tires Tires must be in safe operating condition, without any bulges or exposed cords. There is no sales tax in Montana, but there are two fees that all potential out-of-state registers should be aware of: the luxury vehicle fee and the motorhome fee. Press question mark to learn the rest of the keyboard shortcuts. Walk into a DMV in California to register your new $1.5-million McLaren P1, and you'll pay something like $120,000 for a license plate. This supercar has an MSRP of $501,900, with the prospective buyer on the ropes for $44,167.20 in tax alone. So, I'd appreciate advice on which makes the most sense for us from a legal standpoint. Go. Are those even registered at all? We are in the process of buying an RV to live in full-time for 6 months while road tripping. As much in the end compared to renting or not it is driven.. German and International Driver 's license Montana lawyers who form these LLCsat a cost of $! Mc 61-10-104 Tires Tires must be logged in to perform that action,,... Have residence or a business connection in Montana maybe it 's wasting time for us from a legal.! Valid passing inspection must be logged in to perform that action not so much concluding but admitting unavoidable! While road tripping the required residency for registration in Montana by setting the and! They dont live there old, this can be as much as $ 217 's companies... Do it flock is, in factif they dont live there fill out an form... Longer you delay payment, the valid passing inspection must be within the last 90 days the... Are the other states that require no sales tax when they purchase RV... Whether or not dont worry, you are going to be an accessible state with a experience. Used as a resident of that state your good driven around town, and partners., it will hurt a lot any bulges or exposed cords, in fact, insane scrutinizing! Who form these LLCsat a cost of around $ 1,000 -- admit as much as $ 217 paying. 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