Montana LLCs Have Served 20K RV Owners

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November 11, 2010 by   1 Comment

The number of out-of-state RV owners who chose to license their RVs in Montana has reached 20,000 and is growing daily.

Out-of-state residents have been saving tens of thousands of dollars on taxes by registering their high-priced vehicles in Montana for years and the loophole is also bringing in big bucks for the state, KLXF-TV, Butte, Mont., reported.

Thousands of non-residents legally slap Montana plates on their vehicles, even if they live in Florida or California, It’s a practice that Missoula attorney John Bennett calls tax planning and while others may call it cheating, it’s a perfectly legal practice.

“If you’re a non-resident of Montana and you desire to register a vehicle here, of course tax-free, a route you can go is to establish a Montana business entity … and that entity can legally register a vehicle in Montana,” Bennett said.

Since the RVs or cars are technically owned by Montana limited liability companies (LLCs), the driver avoids paying sales tax. Creating the dummy companies also allows the out-of-state residents to save upward of 10%, or up to $30,000 to $40,000, depending on the price of the vehicle.

“Recently, a client purchased a vehicle and the purchased price was reportedly between $30 million and $40 million. The vehicle is going to end up in California, and the vehicle had to comply with the exemption from California’s laws on the date of purchase. I believe the car was stored in Montana for the test year. So, if it was 40 million, the client saved around $4 million. That was a good hit,” he said.

Lawyers are making money, dealerships are gaining out-of-state business and the state earns more registration revenue. But, the bulk of the work is being done at the courthouse by county employees.

The Missoula County Treasurer’s Office has daily standing appointments with three separate law firms in Missoula to deal with all the paperwork. It’s a process that Missoula County Deputy Kim Seeberger says her staff has adapted to.

“I think, in the beginning, until we were able to work through the workload change, and it is growing more and more, we had to do some adjustments. But as I said, the law offices that are involved with this heavily have been great working with us and know the impact it has on our office,” Seeberger said.

Critics argue Montana and its county employees should not be helping out-of-state residents avoid paying taxes, but Bennett says in the end the state makes more than it spends paying staff.

“A lot of people don’t like the idea that non-Montanans are making use of a Montana law to minimize their taxes. My argument is a fiscal one … in my estimation, this brings in $10 million to Montana that we otherwise wouldn’t have,” Bennett said.

Bennett also estimates that around 20,000 LLCs have been set up over the years in Montana.

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One Response to “Montana LLCs Have Served 20K RV Owners”

  1. dee on November 15th, 2010 1:25 pm

    How can this really be legal… assisting consumers to commit tax evasion/fraud. If they work, reside, own a home etc in another state other than Monatan that is where they should register the unit – if not it is plaion and simple TAX FRAUD! Many states are coming down on these consumers and making them pay huge fines. Typical lawyers – and when the customers come back on them with fines what do they do to help?! None of the big lenders will even finance a unit using a Montana LLC, as they also know this is TAX EVASION. I sure wish you would not APPLAUD this type of business practice…