The strategy of establishing a Montana LLC to take title to
an RV, in order to make a legal, tax-free registration of the RV in
Montana, in order to avoid another state's sales or use tax, isn't
This misconception - that this will either always work for someone - or that it will never work for anyone - is at the heart of much of the miss-information out there.
When you purchase an RV or a vehicle under your name as an individual you will have to register it in the state you reside in. YOU WILL PAY the tax if any when you register and title it in your home state. Setting up dummy addresses out of state will not work.
You can form a Montana LLC (Limited
Liability Co). You may live anywhere to form a Corporations including
LLC’s. You then register the RV under the name of the LLC in Montana.
You will have Montana plates. Since you are the owner of the company you
decide where to garage or drive the RV. No sales TAX.
Your name doesn't appear anywhere on
the Registration. Your Driver License will be in your name and a
REGISTRATION of the RV in the name of the LLC. This is NOT THE SAME as registering a MH out of state in YOUR OWN
NAME to a fictitious or relative/friends address.. Do not confuse this
with people registering it in Oregon or elsewhere under their
own name while living in some other state. This is illegal in
all states. Most people on Forums talk about a Judge in AR or people from CA going up to OR.
An LLC is a separate entity it is NOT
you. You or others may have
Before you listen to all the OPINIONS on Forums and newsgroups from uninformed people; get the facts. Make up your own mind with factual information. Read the letter below "Purchase and registration of Motor Home" I received from John Bennett concerning recent changes in Montana with fees and rules. The letter applies to me living in TN. Your state rules WILL be different so before you do anything get in touch with his Firm to get the latest information than and reliable local information for your specific situation.
This letter contains information concerning the LLC, Fee's, Insurance, Financing and other subjects.
You do not need an Attorney to setup an LLC, there are many firms that form Montana LLCs for way less than attorneys, but the fees are minimal for getting everything right.
You will have to insure the RV that is
registered in MT but garaged elsewhere. This is not a problem. If you wish
to finance your purchase you may have to look harder to get a Montana LLC loan but it
Most people doing this have researched the law or received reliable advice. The rules are different in each state especially if you are not out of your home state for a specific amount of time. Check all your options before you commit to this system.
The following quote is very applicable
to this subject.
“There are two
systems of taxation in our country: one for the informed and one for the
If you are a full timer then some of
the above doesn’t apply but then you do not need to form an LLC just
make your residence in Montana or any other tax friendly state. Montana is
good on Sales Tax but they are not very friendly on your income tax. Many
full timers pick South Dakota or Texas.
In summary, there are two options for forming a Montana Limited Liability Company to not pay sales tax on a Motorhome:
Note: I registered my RV under my name in the state I live in. This is my interpretation of the Montana Registration. I do not advocate anyone to do this. It works for many. If you have anything to add to this please let me know.
|The following letter from John Bennett was dated January 13, 2006
Purchase and registration of Motor Home
Bennett Law Office, P.C is a full-service law firm dedicated to providing a wide range of legal services to owners of recreational vehicles. Since 1998, we have helped thousands of clients minimize sales and use taxes on the purchase and registration of recreational vehicles and other vehicles. In addition, we have helped clients minimize their state income tax burden.
Montana business entity for ownership of vehicles
Forming a Montana business entity (usually a Limited Liability Company) may help you eliminate all sales taxes and minimize license fees upon the purchase and registration of a recreational vehicle or any other vehicles.
A Montana business entity can take ownership of a new vehicle, or a vehicle you currently own, and register the motor vehicle in Montana, which has no sales tax and low registration fees.
By following these steps, a non-resident of Montana may enjoy the benefits mentioned above:
1. Have an attorney establish a Montana business entity for you;
2. Purchase (or transfer the ownership of) the motor vehicle in the name of the business entity - such that the name of the business entity and Montana address of the business entity (the address of your attorney and registered agent in Montana), and not your personal name and home address, appear on the reverse of the “Manufacturer’s Certificate of Origin” (the pre-title document given to you by the dealership from whom you purchased the motor vehicle) or the title, if the vehicle was purchased used or already owned by you; and
3. Operate the motor vehicle in a manner that complies with the laws of the state where the vehicle is located and operated. We help you do so by researching the laws of all states, such that we can provide you with the legal guidance you need to avoid violating the laws of those states.
This can be done quickly and easily. Upon filing, via facsimile, the Articles for the business entity with the Montana Secretary of State, the business entity will be in existence within twenty-four business hours. We will then receive the approved Articles from the Secretary of State within 2-3 days. We can then title, register, and license your business entity’s vehicle or vehicles the same day as we have the Articles from the Secretary of State, the Manufacturer’s Certificate of Origin or Title, and the funds to pay the Montana DMV. It is usually possible for us to overnight the plates and registration to you the same day.
Please note that if you purchase the vehicle before forming the business entity, or the title work is not completed correctly, this process can take longer. If the vehicle is financed, the financing should be in the name of the business entity. If your purchase and finance a vehicle in your own name, the bank must grant permission to change ownership to the Montana business entity, or you will be required to refinance the loan in the name of the business entity.
The purpose of forming a business entity for the holding of a motor vehicle is to take advantage of Montana’s low licensing fees and lack of a sales tax; as mentioned above. A Montana business entity can do so due to Montana’s registration statute, which is found at Montana Code Annotated § 61-3-303, entitled “Original registration -- process – fees,” and which provides, in subsection (1), the following:
Except as provided in 61-3-324, a Montana resident who owns a motor
vehicle, trailer, semitrailer, or pole trailer operated or driven upon the
public highways of this state shall register the motor vehicle, trailer,
semitrailer, or pole trailer in the office of the county treasurer in the
county where the owner permanently resides or,
if the motor vehicle, trailer, semitrailer, or pole trailer is owned by a
corporation or used primarily for commercial purposes, in the county where
the motor vehicle, trailer, semitrailer, or pole trailer is domiciled.
The Montana Attorney General’s Office, which oversees the Montana Department of Motor Vehicles, has interpreted the above statute. The AG’s office has indicated that a Montana business entity that has taken title to a motor vehicle may make a legal registration of the vehicle in Montana.
In addition, vehicles registered in Montana, with a few exceptions, require no inspection, and never need come to Montana. With Montana’s scenery being so breathtaking, most of our clients do travel through Montana, and we enjoy the opportunity to meet our clients in person and assist them with their legal needs in person.
Home Registration Fee Schedule (As of 1/1/06)
On January 1, 2006, a new fee schedule will go into effect for registering motor homes in Montana. After January 1, 2006, motor homes will be registered for a twelve month period from the month registered (a motor home registered in February will have plates that show the registration expires at the end of February of the following year).
The registration fees will be as follows:
$302.50 for motor homes less than two years old.
$244.25 for motor homes two years old and less than five years old.
$152.50 for motor homes five years old and less than eight years old.
$117.50 for motor homes eight years old and older.
In addition to the above fees, if there is a lien to be file against the vehicle, there is an additional $8.00 fee.
The age of the motor home is determined by subtracting the manufacturer’s designated model year from the current calendar year.
If the motor home is eleven years old or older, it may be permanently registered for a fee of $257.50 and, if applicable, five times the personalized license plate fees.
Fee Schedule for Automobiles, Vans, Sport Utility Vehicles, and Light Trucks
The registration fee for an automobile, van, sport utility vehicle or a light truck is good for 12 months from the month of registration. Montana has a registration fee based on the vehicle’s age. In addition, there is also a property tax of 0.5% of the vehicles depreciated value.
An automobile, van, sport utility vehicle, or a new light truck, that is four years old or less, can be registered for a flat fee of $236.00 plus 0.5% of the depreciated value of the vehicle. If there is a lien against the vehicle, there is an additional fee of $8.00.
If an automobile, van, sport utility vehicle, or light truck is five to 10 years old, it can be registered for $109.00, plus $8.00 if there is a lien, plus 0.5% of the depreciated value of the vehicle.
If an automobile, van, sport utility vehicle, or light truck is 11 years old or older, it can be registered for $47.00, plus $8.00 if there is a lien, plus 0.5% of the depreciated value of the vehicle.
In addition, an automobile, van, sport utility vehicle or light truck can be registered for 24 months, upon payment of two years fees, and vehicles 11 years old or older can be permanently registered.
Trucks rated at one ton or greater expire at the end of December each year, and have a different registration fee schedule based on the rated capacity of the vehicle. Other vehicles, including 5th Wheel/Travel Trailers, snowmobiles, ATV’s, boats, motorcycles, and utility trailers will be permanently registered and need not be renewed for as long as the LLC owns the vehicle.
Laws of Other States
Some states restrict one’s right to avoid registering a motor vehicle in the state of one’s residence even if one is operating a motor vehicle owned by a non-resident (in this case the non-resident is the Montana business entity). We research the laws of the states of residence of our clients and inform them of the results of our research. Please note that we are licensed attorneys in Montana and our interpretation of other state’s laws may differ from attorneys in those jurisdictions.
It is a good idea to consider purchasing your vehicles in a state other than your state of residence.
While this does not change the legal standards regarding your state’s vehicle registration and sales and use tax laws, it may reduce the likelihood of your being audited or scrutinized regarding your vehicle’s registration and use. States have different regulations and procedures regarding collecting or not collecting sales and use tax, which includes out-of-state delivery, affidavits, and time restrictions in which the purchased vehicle must be removed from the state. If you have questions regarding these issues, our attorneys will happily discuss them with you. We recommend you keep a log with receipts to show where the vehicles are located and operated. If you are ever audited or questioned, your log and receipts will provide evidence that you complied with the laws. If you purchase vehicles in your home state, this is even more important since your likelihood of getting audited increases.
You indicated that you are currently a resident of Tennessee.
The general rule for vehicle registration in Tennessee is found in section 55-4-101 of the Tennessee Code Annotated. This section sets forth in part:
required before operation -- Application -- Issuance of registration and
license plates -- Rules and regulations -- Temporary permit -- Transfer of
registration when changing vehicles -- Fees -- Safety rules for homemade
There are limited exemptions for nonresidents of Tennessee operating motor vehicles within the state. These exemptions are set forth in section 55-4-120, which provides in part:
exemption of nonresident owners from registration -- Registration required
when transporting for hire
Montana is also a “reciprocity state.” Montana’s statute, MCA §61-3-719, “Automatic reciprocity,” provides the following:
Reading the Tennessee and Montana reciprocity statutes suggest that reciprocity is given to nonresidents of both states with no specific time limit mentioned. Thus, a Montana LLC should be able to operate a vehicle in Tennessee as long as it is properly licensed in Montana.
With no case law on point in Tennessee, the statutes are the only authority addressing this issue. It appears clear that there is reciprocity given to both states and there should be no problem with a Montana owned motor home being operated in the state of Tennessee as long as it is not being used for any business purposes.
If you finance the purchase of your motor home, your lender must be willing to write the loan in the name of your company.
An RV lender who can provide financing for purchases or refinancing in the name of your company is Destination Financial Services, LLC. Please contact a RV Loan Specialist as they are experts at writing RV loans in the name of Montana Business entities, and can assist you with a loan to purchase a new or used RV, or to re-finance a loan you already have. The toll-free phone number is 877.553.3400. Their fax number is 406.721.3032.
Make sure your insurance carrier is aware the vehicle will be owned by the LLC. Each insurer treats the LLC differently, so discuss this with your provider to determine how the insurance contract should be completed.
If you are a “full-timer,” which may be defined as residing in your motor home or trailer full-time or part-time during the calendar year, it is in your interest to request insurance written specifically for “full-timers.”
If you are not a “full-timer,” it is in your interest to specify to the insurance company which locations the vehicle or vehicles will be operated and stored. It has come to our attention that if you insure your vehicle within the state of your residence, the likelihood of you and your business entity being audited or scrutinized may increase, and therefore it is imperative that you keep records, such as receipts, illustrating that the use of the vehicle complies with all state laws and regulations.
The following businesses are familiar with insuring through a Montana business entity:
at (toll-free) 877.553.3400. Ask for Lexi Johnson; and
Garden City Insurance at (toll-free) 866.444.1084.
Ask for Keith Nelson.
If you are interested in using your Montana corporation to take title of the motor vehicle
you plan to purchase, I will do the legal work necessary to do so, and register the vehicle in Montana.
My fee is $850.00 (A discount from our standard fee of $950.00), which includes the following: 1. All attorney’s fees; 2. Completing all paperwork necessary to license the vehicle (does not include actual registration fees and includes only the first 2 vehicles. There will be a $100 per vehicle charge for additional vehicles added to the company); 3. forwarding the license plates, registration documents, and legal documents to you, via overnight service, as soon as possible; 4. drafting and making all necessary filings with the Secretary of State’s office; 5. acting as the registered agent of the business entity during the year of filing; and finally 6. the law firm can act as the manager of your LLC to provide privacy and to speed up the process.
In addition, we will assist you in renewing the vehicle in your state of residence if you choose to do so in the future, and we will “wind-up” the company for you should you at some point no longer need the company. (Filing fees paid to the State will be charged.) Tax liabilities upon renewing the vehicle in your state of residence are regulated by each individual state. In many states we can assist you with the renewing the registration of the vehicle with no or minimum tax liabilities. We will be glad to discuss the research we have on these liabilities regarding your specific state of residence.
In addition to the registration fee and the attorneys' fee, there is a $100.00 fee that must accompany the articles to be filed with the Secretary of State of Montana. This fee includes the base filing fee, an additional fee for priority filing, which results in the articles being filed within 1 business day of their receipt by the Secretary of State, and a fee for a certified copy of the articles, which the Montana DMV requires at the time of the registration of the company’s first vehicle.
Although it is possible to set up a company for $80.00 by not paying the $20.00 priority-filing fee, we do not recommend it. Failing to pay the $20.00 filing fee can result in a delay of up to a month in the Articles being filed, and in that time the company name you chose may become unavailable.
Thus, the total fees and costs are as follows:
1. Registration fee (no more than $305.50 for any motor home);
2. Attorneys fee (a flat fee based on the amount of work estimated); and
3. The filing fee to establish the company (no more than $100.00).
The fee following the first year for our acting as the registered agent and manager for the business entity is $125.00 per year. You will receive an invoice for this fee during the early part of the calendar year following the establishment of your business entity.
Out of that fee, we will pay the annual fees the State of Montana requires to keep your business entity active and in good standing. In addition to acting as your registered agent, we will forward all of your business entity’s mail to you.
Please be aware
that, while we are licensed to practice law in Montana, we are not
licensed to practice law in any other state.
Consequently, we strongly suggest that you discuss the above
proposal; the legal and tax consequences; and the implication of the above
laws with an attorney and accountant in your state.
We find that working with a client’s attorney and accountant
generally results in a better legal product.
there is more than one owner of the business entity we form for you, such
as a husband and wife owning in joint tenancy with right of survivorship,
there is a potential for a conflict of interest if the owners become
involved in a dispute. Bennett
Law Office, P.C. represents the business entity, and cannot take sides and
represent any individual in such a dispute.
If there is a dispute, we cannot keep information confidential from
the owners of the business. If
such a dispute arises, we urge each party to seek independent counsel to
protect their interests and advise them.
If you finance any part of a motor home purchase, and you desire to use as a tax deduction the interest paid on the loan, you should discuss with your accountant whether to do so. Our clients receive differing advice from their accountants on this particular matter. In general, if we establish a single member Limited Liability Company, the tax deduction will “pass through” to the member, and you will be able to fully deduct the interest. This is also true when the single member (owner) of the LLC is a Living (or Revocable or Family) Trust.
In addition, because your accountant may be able to characterize our services as being for asset preservation and/or protection, our legal fees may be tax deductible by you.
There are no forms for you to complete in order to establish the business entity. The staff of Bennett Law Office, PC drafts and files all the necessary documents. You only need to call our office and provide information including your contact information, what you are purchasing, and what you would like to name your business entity to one of our attorneys.
Any of the attorneys in the office will gladly discuss this letter with you, answer any questions you may have, and establish a business entity that meets your needs. We will look forward to your contacting us.
Thanks and regards,
JOHN M. BENNETT
John M. Bennett Thaddeus J. Brinkman Alain B. Burrese
Attorneys At Law
135 W. Main Street, Missoula, MT 59802
P.O. Box 7967, Missoula, MT 59807
Tel: 866.543.5803 Fax: 888.543.5804