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Neb. Officials Moving to Close RV Tax Loophole

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February 17, 2014 by   Leave a Comment

Recreational vehicles with Montana license plates started showing up at Nebraska campgrounds and Husker football tailgate parties about five years ago.

The Omaha World-Herald reported that Tax Commissioner Kim Conroy said the Nebraska Department of Revenue also started getting calls from people saying they knew about Nebraska residents who had registered their recreational vehicles in Montana to avoid taxes.

The prevalence of the problem led Revenue Department officials to push for a bill that would close a tax loophole that allows recreational vehicles to be registered in Montana to a limited liability corporation. Similar legislation was enacted in Iowa last year.

Legislative Bill 851, introduced by State Sen. Galen Hadley of Kearney, would give current statutes enough teeth for Nebraska officials to go after the RV owners.

After spending some time on Google, Hadley said, he was shocked at the number of law firms and companies willing to help people create limited liability corporations in other states so they can avoid paying taxes.

By registering RVs in Montana, owners can save thousands of dollars because that state has no sales tax.

The typical state and local sales tax in Nebraska is about 7%, Conroy said, so the buyer could save $14,000 on an RV costing $200,000. The owner would also avoid paying about $900 in title and registration fees to the Department of Motor Vehicles.

Local RV dealers said the bill is about five years too late. The practice was more common a few years back, but now banks won’t finance purchases through an out-of-state corporation. And few people have the cash to spend thousands of dollars on an RV without financing.

For the full story click here.

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