Avoiding Sales Tax on Cars
#1
Rennlist Member
Thread Starter
Join Date: Jan 2016
Location: New Orleans, LA (NOLA)
Posts: 5,262
Received 2,279 Likes
on
1,045 Posts
Avoiding Sales Tax on Cars
I have a friend that buys multiple expensive cars in a state with high sales/registration taxes. We are talking $300k cars.
He created a LLC in another state with no sales tax and registers the car through the LLC in that state. Cost is $450 for the LLC. This state does not require insurance in that state for company cars. The cars are owned by the LLC which of course is owned by the driver. He keeps his driver's license and insurance in the state that he is domiciled and has zero affiliation with the state that his LLC is registered in. If pulled over, he shows his driver's license and insurance for the state that he is domiciled and presents the registration for the state that the LLC is registered in. He explains to the cop that his car is a company car for his business back in state X and has a home in state Y.
He saved $27k in sales taxes on a car that he bought two weeks ago.
Anybody else doing this? What is "legally" wrong with this model? I get the moral dilemma - that is not what I am asking.
He created a LLC in another state with no sales tax and registers the car through the LLC in that state. Cost is $450 for the LLC. This state does not require insurance in that state for company cars. The cars are owned by the LLC which of course is owned by the driver. He keeps his driver's license and insurance in the state that he is domiciled and has zero affiliation with the state that his LLC is registered in. If pulled over, he shows his driver's license and insurance for the state that he is domiciled and presents the registration for the state that the LLC is registered in. He explains to the cop that his car is a company car for his business back in state X and has a home in state Y.
He saved $27k in sales taxes on a car that he bought two weeks ago.
Anybody else doing this? What is "legally" wrong with this model? I get the moral dilemma - that is not what I am asking.
#2
Rennlist Member
Thread Starter
Join Date: Jan 2016
Location: New Orleans, LA (NOLA)
Posts: 5,262
Received 2,279 Likes
on
1,045 Posts
Incidentally, corporations are doing this exact same thing to avoid paying taxes in the city that I just moved from: http://www.businessinsider.com/build...oration-2017-4
#3
I don't know much about Montana registration, but the moral dilemma lays squarely on the gov't. If I didn't live in a no sales tax state I'd do the same thing.
#4
Banned
Join Date: Jan 2013
Location: Chicagoland Area
Posts: 26,141
Likes: 0
Received 5,413 Likes
on
2,516 Posts
#5
Rennlist Member
Thread Starter
Join Date: Jan 2016
Location: New Orleans, LA (NOLA)
Posts: 5,262
Received 2,279 Likes
on
1,045 Posts
Here is an article that shows it is legit and defendable in court. https://www.bozemandailychronicle.co...c0bf7e398.html
P.S. Thanks for the link Lex.
P.S. Thanks for the link Lex.
#7
Race Director
Many states are cracking down on this and sales tax evaders having to pay up $$$. Will be getting even worse that it's such a well known thing. Many stories about that too.
Trending Topics
#8
Three Wheelin'
What’s another $27k on a $330k spend? Sorta like asking if it’s OK to use 87 octane gas in my 991 because it’s so much cheaper then premium.
Much easier to follow the intent of the law and pay the tax where the car is actually resident....and it’s the right thing to do.
Or do what I’m doing....move outta CA.
Much easier to follow the intent of the law and pay the tax where the car is actually resident....and it’s the right thing to do.
Or do what I’m doing....move outta CA.
#9
I heard some vague comments about this a few months ago and one that stood out was your insurance company may deny claims if this is not disclosed to them upfront. And if disclosed upfront, they may not cover. I don’t know how true this is.
#10
Rennlist Member
Thread Starter
Join Date: Jan 2016
Location: New Orleans, LA (NOLA)
Posts: 5,262
Received 2,279 Likes
on
1,045 Posts
I found a case from last year in my state where a guy bought a $351k RV and registered it in Montana under an LLC umbrella. LA tried to fine him $49k in taxes and penalties. He lost but appealed and won. I don't know the details of his case though but case law sets precedence.
Also - This is not Tax evasion. It is tax avoidance. Illegal vs Legal. Don't people buy vs rent so that they can deduct interest?
#11
Rennlist Member
Thread Starter
Join Date: Jan 2016
Location: New Orleans, LA (NOLA)
Posts: 5,262
Received 2,279 Likes
on
1,045 Posts
My car was registered in Florida for 20 years while I lived in 12 different states when I was in the military. No issues.
#14
Screw California, never moving back.
#15
Burning Brakes
You have to love the Cal.Gov.....illegal, costing, cheaters.....I thought they were talking about themselves instead of the citizens of California. They talked about Mexican state registration.....that sounded racist to me. All they have to do is tell them they are illegal and they'll let them pass.
Abe
Abe