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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.
Montana
Law
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:
(1)
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.
(emphasis added)
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.
Motor
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.
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.
Tennessee Law
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:
55-4-101. Registration
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
trailers
(a) (1) As a condition precedent to the
operation of any motor vehicle upon the streets or highways of this state,
such vehicle shall be registered as hereinafter provided.
(2) Such registration and the fees provided
therefore shall constitute a privilege tax upon such operation.
(b) The commissioner shall be, and is hereby constituted, the
registrar of motor vehicles and, except as otherwise provided in chapters
1-6 of this title, every owner of a vehicle intended to be operated
in this state and required by this chapter to be registered shall, before
same is operated, apply to the department for the registration of and the
registration plates for such vehicle.
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:
55-4-120. Limited
exemption of nonresident owners from registration -- Registration required
when transporting for hire
(a) (1) A nonresident owner of any regularly
licensed passenger motor vehicle not
operated for hire registered in any state or territory of the
United States, Canada or Mexico may have the privilege of operating
upon the public roads of this state for a period of thirty (30)
consecutive days, PLUS such additional period of time as a resident of
Tennessee would be permitted to operate such passenger vehicles not for
hire over the highways of the state of such.
Montana is
also a “reciprocity state.” Montana’s
statute, MCA §61-3-719, “Automatic reciprocity,” provides the
following:
61-3-719
Automatic reciprocity.
Automatic reciprocity. If
an agreement, arrangement, or declaration is not
in effect with respect to another jurisdiction as
authorized by 61-3-711 through 61-3-733, any motor
vehicle, trailer, semitrailer, or
pole trailer properly registered or licensed in another
jurisdiction, and for which evidence of compliance is supplied must
receive, when operated in this state, the same exemptions, benefits, and
privileges granted by the
other jurisdictions to motor
vehicles, trailers, semitrailers,
or pole trailers properly registered in this state. Reciprocity
extended under this section
applies to commercial motor
vehicles, trailers, semitrailers,
or pole trailers only when engaged exclusively in interstate
commerce.
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.
Lenders
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.
Insurance
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:
1.
Destination
Financial Services
at (toll-free) 877.553.3400. Ask for Lexi Johnson; and
2.
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.
Additionally, if
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 |