The state said Wednesday it is investigating 270 cases in which Minnesotans may have set up shell companies to evade paying sales tax on luxury recreational vehicles that can cost more than $1 million.
According to a report in the St. Paul Business Journal, the Minnesota Department of Revenue said in a news release it has closed 22 other cases since Oct. 2010, collecting $230,000 in sales taxes, penalties and fines.
The department said in most of these cases, the Minnesota residents set up shell limited liability corporations in Montana, which does not charge sales tax. The Minnesotans buy the RVs through the Montana corporations and register the vehicles in that state, yet the RVs often are kept in Minnesota.
The state said the high-end RVs cost between $150,000 to more than $1 million.
Minnesota has a 6.5% sales tax, which translates into $9,750 for a $150,000 RV and $65,000 for a $1 million RV.
The state said Minnesota residents convicted of evading the motor vehicle sales tax could face felony criminal charges in addition to having to pay back taxes, penalties and interest.
If it is illegal, I hope they catch every one of them.
Tax cheats, be it local, state, or federal taxes, cause the rest of us to make up the revenue losses due to their cheating. No, I do not like paying taxes, but I do pay them where due.
Loopholes, are IMO destined for considerable scrutiny. The Montana LLC story has always piqued my curiosity.
Many states use tax strategies to generate otherwise unavailable revenue. In Maine for instance, favorable registration fees have been established for freight trailers. You'll notice tractors everywhere hauling 48-53' trailers registered in Maine, that never have been and never will be in Maine. This is an opportunity the state has leveraged to create revenue, plain and simple.
As for Montana's LLC, I'm not sure how state coffers benefit beyond receipts from LLC filings. Naturally, attornies do well as evidenced by the level of advertisement for establishing LLC's in Montana.
I'll be curious to see how this plays out. While I'm not a fan of taxes, I'm less a fan of loopholes that leave the average Joe subsidizing the priviliged.
In all of these cases in comes down to the people who set up the shell LLC's in Montana TO PROVE THEY WERE NOT SET UP WITH THE SOLE PURPOSE OF BUYING YOUR RV IN MINNESOTA TO AVOID PAYING SALES TAX IN MINNESOTA...good luck because you will need alot of it...
I'm sure Minnesota will not be the only state to do this...
i wish the people in MN well, and hope you can fight this. I try to avoid any and all taxes that i can get away with. The government waste so much money and doesn't even know where it all goes. If they were more responsible I wouldn't mind paying, but the way it is now, you need to do everything possible to avoid it. Near my home, they repaved our road, then dug it up to put in new water lines, then repaved it again....very smart use of money! Screw the govennment!!