Montana LLCs

[Pete Masterson]

There are legal ways to avoid taxes. Tax avoidance is honest and fair. The tax laws are written such that taxpayers are expected to pay the minimum _legal_ tax due. That is all that is reasonable for the tax authorities and other citizens should ask. (Please understand, I was a California licensed tax preparer -- I have some experience in this area -- my goal was always to allow my clients to pay the minimum legal tax -- no more, no less.) 

Tax evasion is "cheating" and is dishonest. Tax evaders should be caught, fined, and made to pay the proper taxes that are due. If serious fraud is involved, evaders ought to spend some time in prison. Tax evasion ends up costing honest tax payers as overall tax rates might be lower if all tax payers paid the minimum legal tax owed.

The tax authorities (should) have no problem with a discussion of honest tax avoidance, as that is how the laws and rules are written. If the legislature felt that the laws should be different, it is within their capacity to change the laws. While a discussion of tax evasion is "free speech", I don't advocate or support improper, fraudulent tax evasion.

For a California resident to follow the rules and avoid paying CA sales tax, the state obviously has no problem as they have implemented the method with forms, etc. that allow the method to be used -- subject to some inconvenience. Just follow the rules. 

California does have a "sales tax" that is applied to qualifying purchases made within the state. They also have a "use tax" that applies to CA residents who buy things from out of state that are delivered to a CA address. (These taxes apply to almost all tangible personal property, not just vehicles.) To facilitate paying the use tax, California now has a space on the income tax form to report the use taxes owed on out-of-state purchases.

I doubt that state or Federal tax authorities would bother to spend much time monitoring this or most other online lists. Most cases of tax evasion are reported by business contacts, employees, neighbors, or friends (?) of the tax payer. CA maintains a special call-in number to report out-of-state registration violations. The IRS offers to share the sum collected if evasion is found based on a report (but they rarely actually pay off). 

In my own case, my coach was originally registered with a MT LLC because it was my intent to establish residence in another state and full time. With the crash in the real estate market, my plans to sell my California home were cancelled, I closed the MT LLC and registered my coach in California -- following the rules established under California tax law. The state is aware of my transaction(s) as they are detailed on the forms used to register the vehicle. I note, for simplicity sake, I have not explained every last detail of my transactions here, but that close description isn't relevant to the general discussion.

One "interesting" byproduct of the transfer is that while the registration fees are higher, the insurance cost is lower -- so the net cost of registration + insurance is about the same when MT is compared to CA. The insurance company commented that MT LLCs are so often used by full timers, that the insurance rates are higher while having a private residence (even in a generally more expensive state) ends up with a lower insurance rating. Go figure.

Pete Masterson

'95 Blue Bird Wanderlodge WBDA 42

El Sobrante CA

"aeonix1@mac.com"

On May 26, 2008, at 2:55 PM, Leroy Eckert wrote:

I wonder if anyone on this site ever considers that it may be monitored by someone in the appropriate division of the taxing State. That goes for RV.net or any other site. It is open to the public. Perhaps they do not even have a BB but say they do????????Huh?

<snip>