Owning a recreational vehicle is getting more expensive for some Iowans. As reported by The Gazette, Cedar Rapids, it’s not that the price to buy a motorized mansion is going up, but that the state is getting tougher on collecting registration fees.
Already, the state has recovered about $1 million in unpaid tax and registration fees and a law change that went into effect July 1 is expected to channel more revenue into the underfunded state Road Use Tax Fund.
“It’s well worth our time and effort,” Major Paul Steier of the Iowa Department of Transportation motor vehicle enforcement unit, said.
The DOT and Iowa Department of Revenue are going after Iowans who have established limited liability corporations in Montana to register their RVs there to avoid paying the 5% Iowa registration fee on vehicles and annual registration fees.
Montana does not charge sales tax, so it’s become the Cayman Islands of recreational vehicles for people from all over the country who want to avoid paying their home state’s sales tax on the purchase of expensive motorhomes.
“That 5% adds up when you’re talking a $100,000 RV,” Steier said.
That’s $5,000 on a $100,000 RV or, as the bill’s author Sen. Tod Bowman, D-Maquoketa, likes to say, it’s $50,000 on a $1 million RV.
However, that’s a fraction of the penalty if an RV owner is caught registering the motorhome in Montana to avoid the Iowa fees. Steier said the Department of Revenue can slap them with a penalty equal to 75% of the purchase price.
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