Iowans who have been dodging state taxes by putting Montana license plates on luxury motorhomes are being offered a one-time deal to settle their debts. According to a report by the Des Moines Register, if they don’t pay up quickly, they could be hit with big state tax penalties or even charged with a crime.
The Iowa Department of Revenue, in cooperation with the Iowa Department of Transportation, is making the offer to Iowans whose motor vehicles are registered to out-of-state limited liability corporations. The deal would bring them into compliance with Iowa law.
“This is an opportunity to contact us before we contact you,” said Victoria Daniels, an Iowa Department of Revenue spokeswoman. “If you contact us, for this limited time we are going to be able to work out a settlement. If you don’t contact us, and we find out about it, we are going to pursue every remedy we have under the law.”
A statewide crackdown is already underway against motorhome tax evaders — particularly RV owners who have set up shell companies in Montana and registered motor homes costing as much as $500,000 or more under the firm’s name. By doing so, RV owners have often avoided paying thousands of dollars of Iowa taxes and fees because Montana residents do not pay general sales taxes.
Maj. Paul Steier, commander of the DOT’s motor vehicle enforcement investigative unit, says his staff is working on at least 60 cases of Iowa vehicle owners who have allegedly been trying to evade payment of state fees and taxes. Iowa investigators have recovered more than $1 million in just the past two years in such cases.
“Our hope is that this would get it cleared up much sooner, rather than dragging it out for an extended period of time,” Steier said.
State officials say the offer would require owners to pay a 5% vehicle registration fee, based on the purchase price. They also would pay a penalty of 10% of the fee.
So under the terms of the settlement, the owner of a $200,000 motorhome registered in Montana would pay a $10,000 fee to properly register it in Iowa. On top of that, a $1,000 penalty would be assessed.
The terms are non-negotiable and the settlement agreement must be signed and paid in full by Oct. 23, Daniels said.
The deal does not involve repayment of past annual registration fees, but it does apply to RV purchases made in the past. For example, if someone purchased an RV five years ago, they will be asked to pay 5% of the price of the vehicle when it was acquired, Daniels said.
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