Every state that imposes sales tax, imposes use tax. If you live in a state that imposes sales and use tax and also insure, garage in that state, I believe that you will be held liable for use tax. The state seeking the tax will review the business conducted by LLC. If it is deemed a shell, they will seek to impose the tax on the insured and pierce the LLC.This is the same tax effect as leasing a car from an out of state lessor, the tax is paid either up front or on a monthly basis, depending on the state. As a practicing CPA in NJ and NY, I would not enter into this type of transaction. State's budgets are stretched and are ever increasing their deficits. Also, I see exponential increases sales and use tax audits. On a personal note, I routinely did this with aircraft I owned. I was audited on every purchase, the state's mistake was auditing too soon to prevail because they sent agents to airports to record tail #'s and scanned the FAA database on new registrations. I would argue that the plane was only in the state on a temporary basis and prevailed. Once the initial audit was concluded, I never heard from anyone ever regarding use tax. This is several airplanes over a 18 year period. Given yesterdays SCOTUS decision granting state's the right to collect sales tax on online sales, the whole nexus issue goes out the window. I would be very careful with this type of tax avoidance approach in the future. Just my 2c.
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Tax avoidance cometh and tax avoidance goeth Originally Posted by keithgreer
California is cracking down on this. https://www.dmv.org/articles/chp-cra...istrations.php
BlackBeauty
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Captain, I think we use the same dealership - POTML, feel free to PM me. For what it’s worth I’m a CPA at a large international accounting firm and do tax work.
The issue here is that states generally have sales AND use taxes. So if you register business property in one state and use it in another, you’re liable for use tax in that other jurisdiction. Typically the rates are the same and you’re entitled to a credit paid to other jurisdictions, but if you didn’t pay any tax to that other jurisdiction, you’ll have to pay use tax to the state you’re using it in. So the Montana strategy works as long as you use the property in Montana.
Many states like PA now come with an explicit taxpayer certification when you sign the return, that you’re making an affirmation subject to perjury laws (typically up to a 25k penalty (on top of taxes and interest due)) about whether or not you’ve paid all the sales and use tax due in your state’s jurisdiction.
I’m not judging anyone here, just trying to provide information that unless you’re practicing in this area, might be hard to piece together. To your point as to what is “legit”. You can confirm the above with any CPA that works in tax.
The issue here is that states generally have sales AND use taxes. So if you register business property in one state and use it in another, you’re liable for use tax in that other jurisdiction. Typically the rates are the same and you’re entitled to a credit paid to other jurisdictions, but if you didn’t pay any tax to that other jurisdiction, you’ll have to pay use tax to the state you’re using it in. So the Montana strategy works as long as you use the property in Montana.
Many states like PA now come with an explicit taxpayer certification when you sign the return, that you’re making an affirmation subject to perjury laws (typically up to a 25k penalty (on top of taxes and interest due)) about whether or not you’ve paid all the sales and use tax due in your state’s jurisdiction.
I’m not judging anyone here, just trying to provide information that unless you’re practicing in this area, might be hard to piece together. To your point as to what is “legit”. You can confirm the above with any CPA that works in tax.
Spyerx
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Soooo many do it here. Some love the edge. Some like me don’t want the hassle.
In some cities the cops just love to hassle exotic cars with out of state plates.
Low profile is good for me.
In some cities the cops just love to hassle exotic cars with out of state plates.
Low profile is good for me.
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Low profile is good for me.
You know the old mariner's saying "you can't harpoon a whale that doesn't surface"Originally Posted by Spyerx
Low profile is good for me.
gellie
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This plan Seems good in theory. However being a P car owner it seems like we are ready have a target on our back I agree the more low-profile the better
koala
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Montana is definitely the go-to choice, see a lot of MT plates here in AB since we're in such close proximity. Seems an especially popular option for expensive RV's
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I’d be a bit careful. In this day and age, the insurance companies and states are watchful of things like this. In FL, they pay attention to OOS plates, and eventually could be called out and forced to register in the state in which you hold your primary residence. And if you transfer from a zero tax state to one that has it, they will collect their income tax at the time you register it.
I once lived in PA near the DE border, and the State of PA tax office used to conduct ‘sweep surveys’ looking for goods purchased in DE for which they collected no tax.
I once lived in PA near the DE border, and the State of PA tax office used to conduct ‘sweep surveys’ looking for goods purchased in DE for which they collected no tax.
Some of the local 356ers do this with speedsters and spyders and very high dollar cars. They claim to have a legitimate business in Montana as well. CT hits you with 8% sales tax if its over 40k plus local property tax. In our town and state wide probably just went up about 25%. You wonder why the state runs a deficit.
Race Director
So is it legal to set up a Montana LLC, not have residency in the state, not use the car in the state, and not store the car in the state, and still avoid paying your state taxes where you
answer yes to all of the above in a state other than Montana??
Asking the attorneys and CPA's here. Thanks to those who posted as well.
answer yes to all of the above in a state other than Montana??
Asking the attorneys and CPA's here. Thanks to those who posted as well.
Three Wheelin'
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I could’ve purchased my own country (and make my own laws) with the taxes I’ve paid in Kalifornia.....this is why the mass exodus will intensify when Gavy is elected governor in November. And I will lead the wave. This guy will make Jerry Clown look like an amateur.Originally Posted by Randy M
And those who have money in Cali leaveth....
Now back to Porsche....
BlackBeauty
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STG, to answer one at a time only from a tax rules perspective (I’m not an attorney):
So is it legal to set up a Montana LLC, not have residency in the state - yes
not use the car in the state - yes (can use the business asset anywhere- but the insurance company will ask you where it’s used and will underwrite accordingly - that’s a whole separate area of problems outside my expertise).
and not store the car in the state - yes
, and still avoid paying your state taxes where you [use the business asset] - no
So is it legal to set up a Montana LLC, not have residency in the state - yes
not use the car in the state - yes (can use the business asset anywhere- but the insurance company will ask you where it’s used and will underwrite accordingly - that’s a whole separate area of problems outside my expertise).
and not store the car in the state - yes
, and still avoid paying your state taxes where you [use the business asset] - no
subshooter
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Quote:
Doesn't that only apply to use taxes? Not sales taxes?Originally Posted by BlackBeauty
STG, to answer one at a time only from a tax rules perspective (I’m not an attorney):
So is it legal to set up a Montana LLC, not have residency in the state - yes
not use the car in the state - yes (can use the business asset anywhere- but the insurance company will ask you where it’s used and will underwrite accordingly - that’s a whole separate area of problems outside my expertise).
and not store the car in the state - yes
, and still avoid paying your state taxes where you [use the business asset] - no
So is it legal to set up a Montana LLC, not have residency in the state - yes
not use the car in the state - yes (can use the business asset anywhere- but the insurance company will ask you where it’s used and will underwrite accordingly - that’s a whole separate area of problems outside my expertise).
and not store the car in the state - yes
, and still avoid paying your state taxes where you [use the business asset] - no