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 > Montana LLC's and Sales Tax

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wnytaxman

Western NY

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Posted: 03/31/11 05:49am Link  |  Print  |  Notify Moderator

If you have or are considering a Montana LLC be aware that there could be some problems ahead for you. One of my clients, who is a NY resident, purchased a coach in Florida and used a Montana LLC. He has met all the requirements of NY law by having the coach outside of NY for at least one day every month. In spite of his meeting the legal requirements, he has been hit with a bill for $28,000 for sales taxes, penalties, and interest. NY is requiring him to prove that he is not owing those taxes. If he cannot prove it to the satisfaction of NY Taxation, he will owe the money or have to hire a tax attorney to fight with NY. When he contacted his Montana attorney, he was told to check with his local laws and they could not help him at all.

Be aware that if you go the route of the Montana LLC you may have to prove that you met the requirements of your home state's laws. Make sure that you have all the documentation needed. Even if you met those requirements you may have to prove that you met them and it could get costly for you to prove that you are right. Remember, under the tax laws you are guilty until you prove your own innocence.


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JTHarley

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Posted: 03/31/11 06:52am Link  |  Print  |  Notify Moderator

I looked into it for Michigan and here was the "state's rule"

Coach is purchased outside of the state and delivery is made outside the state.

Coach does not come into the state for 365 days.

Coach is out of the state at least 6 months every year.

Even then, they will try to hit you with the 6% use tax instead of the sales tax. Dealers are audited regularly now looking for just this stuff.....Montana License plate, Michgan drivers license = trouble.


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Daveinet

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Posted: 03/31/11 11:44am Link  |  Print  |  Notify Moderator

mowermech wrote:

... It seems to me it violates one of the basic premises this country was founded upon! ...
And this statement is news?


Dave

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barnaclebill

Atlanta Michigan or towards the sun

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Posted: 03/31/11 08:52am Link  |  Print  |  Notify Moderator

JTHarley wrote:

I looked into it for Michigan and here was the "state's rule"

Coach is purchased outside of the state and delivery is made outside the state.

Coach does not come into the state for 365 days.

Coach is out of the state at least 6 months every year.

Even then, they will try to hit you with the 6% use tax instead of the sales tax. Dealers are audited regularly now looking for just this stuff.....Montana License plate, Michgan drivers license = trouble.


I am curious, in another post of yours you posted you have bought a "super C" motor coach. Did you form a Montana LLC for your new rig?


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Larry Cohen

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Posted: 03/31/11 02:45pm Link  |  Print  |  Notify Moderator

I posted recently about what I discovered when talking to my RV repair shop...an Alabama tax auditor was in the shop and instructed them to notify them of any Rv that came in with a Montana tag......looks like a short fuse before the BOOOOOM !!


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wnytaxman

Western NY

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Posted: 03/31/11 01:39pm Link  |  Print  |  Notify Moderator

I understand your point about one not having to prove their own innocence, but when you think about things in a practical sense, it wouldn't work the other way around. If the government had to prove that you didn't get a $10,000 bonus or that you really did drive 75,000 business miles for your newspaper delivery business, then everyone would cheat an awful lot more than they do now. That is one of the few points about tax law that does make sense.

As for the Montana LLC, I'm not a proponent of them or an opponent of them. I'm just letting people know that all states and the feds are hurting for money and they will go to any extent necessary to raise those funds. Their lawyers are already on staff. Yours have to be hired and paid out of your own funds. It's kind of lopsided in their favor.

JTHarley

Northeast, Michigan, USA

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Posted: 03/31/11 03:21pm Link  |  Print  |  Notify Moderator

barnaclebill wrote:

JTHarley wrote:

I looked into it for Michigan and here was the "state's rule"

Coach is purchased outside of the state and delivery is made outside the state.

Coach does not come into the state for 365 days.

Coach is out of the state at least 6 months every year.

Even then, they will try to hit you with the 6% use tax instead of the sales tax. Dealers are audited regularly now looking for just this stuff.....Montana License plate, Michgan drivers license = trouble.


I am curious, in another post of yours you posted you have bought a "super C" motor coach. Did you form a Montana LLC for your new rig?


I looked into it and contacted Bennett Law Firm who graciously sent me the rules for the state of Michigan. I just couldn't meet the rules to avoid the tax. As much as I hate paying Michigan's unreasonable taxes it's not worth the penalties and interest if you are questioned by the state. In michigan you pay for plates every year based on the original purchase price of the coach. That means for my Winnebago I had to pay $1400+ each year or choose to license it "temporarily" on a month to month basis when I use the coach. In addition, regardless what your trade in is you pay the 6% tax on the entire purchase price. In Florida for example you pay the tax on the amount of the new coach LESS your trade in value.

khager76248

Granbury texas, usa

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Posted: 03/31/11 05:02pm Link  |  Print  |  Notify Moderator

I guess I am lucky I live in TX. 6.25% of the purchase price, less value of trade in, and then $132 every year for tags, on a 2008, 20,500 GVWR Class A. If I lived in NY I would move.


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barnaclebill

Atlanta Michigan or towards the sun

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Posted: 03/31/11 05:45pm Link  |  Print  |  Notify Moderator

JTHarley wrote:

barnaclebill wrote:

JTHarley wrote:

I looked into it for Michigan and here was the "state's rule"

Coach is purchased outside of the state and delivery is made outside the state.

Coach does not come into the state for 365 days.

Coach is out of the state at least 6 months every year.

Even then, they will try to hit you with the 6% use tax instead of the sales tax. Dealers are audited regularly now looking for just this stuff.....Montana License plate, Michgan drivers license = trouble.


I am curious, in another post of yours you posted you have bought a "super C" motor coach. Did you form a Montana LLC for your new rig?


I looked into it and contacted Bennett Law Firm who graciously sent me the rules for the state of Michigan. I just couldn't meet the rules to avoid the tax. As much as I hate paying Michigan's unreasonable taxes it's not worth the penalties and interest if you are questioned by the state. In michigan you pay for plates every year based on the original purchase price of the coach. That means for my Winnebago I had to pay $1400+ each year or choose to license it "temporarily" on a month to month basis when I use the coach. In addition, regardless what your trade in is you pay the 6% tax on the entire purchase price. In Florida for example you pay the tax on the amount of the new coach LESS your trade in value.


I "feel your pain" if you look at my profile, I am from Michigan also. I also, as you did, check into forming a Montana LLC. I did not either, that route was NOT for me! Enjoy your new coach, Bill

Hear-I-Am

Great Falls, MT

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Posted: 03/31/11 06:53pm Link  |  Print  |  Notify Moderator

Wow! Make me glad that I get to live in Montana. You would think we'd have more dealers here than we do... Good luck all.


David (USAF Ret)
Linda and the dogs (2 wonderful mini-dachshunds Chewy and Chipper)
07 Fleetwood Discovery 39V


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