Montana LLC – Worth the Risk?

March 29, 2010

It works for many but some states are not happy about missing out on that revenue. According to the RV Daily Report, Massachusetts has identified 23 Massachusetts RV owners who have set up LLCs and registered their vehicles in Montana instead of the state where they are residing. They suspect there are more and are unhappy that Montana will not release information. These RV owners have been given warnings that they must register their RV in Massachusetts. In cases cited in the MyFox.com article, the amounts were in the $9,000 to $11,000 range plus a yearly excise tax imposed by municipalities as well. So far the state has collected more than $200,000. The Inspector General’s Report, linked in the Fox article, explains the process they went through to identify residents evading taxes.

If a vehicle is driven in Massachusetts for more than 30 days in the state, it must be registered there. Most states have such a law. Full-time RVers may not stay in one place for that long so it wouldn’t be a problem. But for RV owners who actually reside in a state, the likelihood of being caught increases. California, for example, encourages citizens to turn in neighbors or co-workers who have vehicles registered in other states- especially Oregon, which has no sales tax. There can also be fees and penalties in addition to having to register, pay the missing sales tax and perhaps even back years’ fees. It could get expensive.

I expect states will get more aggressive about finding “lost fees.” I’m not sure I’d risk it unless I were moving about continuously. However, it is an individual decision. Just go into it with your eyes open, knowing you take a risk.

Jaimie Hall Bruzenak

reprinted with permission

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