montana car registration loophole california

Light vehicle registrations . We'll make it happen for free. Chain of ownership document (original copies). For what its worth. This summer, the average age of a car on the road is 12.1 years old, up from 11.9 in 2020. RV Service: Registering a Converted School Bus Toy Hauler, Want to own Doug DeMuro's Audi RS2 but live in California? The Montana LLC comes with real business responsibilities. Copyright 2023 Anderson Advisors. MC 61-10-102 MC 61-10-103 MC 61-10-104 Tires Tires must be in safe operating condition, without any bulges or exposed cords. So, even if you just conducted your biennial smog check five months ago, it is invalid. Sometimes dealer cars are used as loaners, but I have no idea what the rules are around that. By going this route instead of buying it as an out-of-state resident, they avoid hefty sales taxes. The LLCs offer RV insurance also. Same as always. Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues. But it is also one of the most difficult places to title and tag your vehicles. Motorcycle safety fee: $16. Theres a couple of reason why you shouldnt do this: The IRS knows about this scheme and will say, Nice try, but no.. As of 2018, there were 58,334 out-of-state vehicles registered with the Department of Revenue's Motor Vehicle division which represent nearly five percent of all 1.2 million vehicles currently titled in South Dakota. Can anyone legally register their car in Montana? This article is part of my series on the benefits of registering vehicles out of state. You can save a bundle of cash and ditch those smog checks, inspections, and possibly renewals. By accepting all cookies, you agree to our use of cookies to deliver and maintain our services and site, improve the quality of Reddit, personalize Reddit content and advertising, and measure the effectiveness of advertising. A Montana LLC vehicle registration is an option some out-of-state residents choose in order to purchase a vehicle without having to pay sales tax on it. Home blog Shows Coffee with Carl Should I Register My Vehicle in Montana? Your LLC then purchases the car as your company car. Your corporation doesnt exist for any reason other than to own your car, and you only owe Montana registration fees and a payment to the lawyers to keep your corporation registered. (Ritholtz also hosts the Masters in Businessshow on Bloomberg Radio. Still, the effect is the same across the board. Submit your completed vehicle registration packet. Plus, am I committing insurance fraud saying that I reside there? First, you'll need to pay a vehicle registration fee. If this alone were the determining factor, you still come out ahead titling and registering your car in South Dakota. But car and RV dealers objectedstrongly. South Dakota has proven to be an accessible state with a reasonable tax structure for its registration process. If youve ever driven around town, and said, You know, thats a nice Ferrari. The circular design of the power strip allows for the 15" to coil up inside the body of the productmaking it easy to wrap up and throw in a bag to take with you when traveling. The California Air Resources Board is the lead agency for the smog check program in the state. This part of the smog check process is somewhat painless. Montana license plates and Montana vehicle registration are not just for the super-rich, although they do benefit significantly. Your bill of sale, title applications, and anything else regarding the title work has to be original, although it's OK if your LLC paperwork is a copy. (Alaska, Delaware, New Hampshire, and Oregon are the other states that require no sales tax.) All Rights Reserved. Our Mr. Average lives in Long Beach. You can find a specific cost they intend to coerce from you by plugging in your location information at the California DMV website. So, my suggestion would be: Dont do it. Now, you can look into registering your next vehicle in a sales-tax-free state with low licensing fees and no inspection requirements saving you hundreds of thousands in the long run. In addition to state sales tax on vehicles, owners must pay car registration fees according to the age of the vehicle and the length of registration desired (one or two years). Taxes will still run you in the ballpark of $1,200 plus fees, whereas the 4% tax in South Dakota will only be about $480. Technically, the practice is legal. ), Email: info@andersonadvisors.com Dirt Legal can help you save time, money, and headaches. Montana Vehicle Registration Fees. In California, by contrast, owners must ensure that all vehicles made after 1975 meet emissions standards and can pass safetyinspections. Can Dirt Legals services work for you? Visit our FAQ to jumpstart your journey! Whatever the case is, people are fleeing this proud state in droves, with more people leaving than are moving in. REVENUE HISTORY AND TRENDS Historically, registration fee revenues have remained relatively flat . You do not need to spend a night there to get registered. But these numbers havent even scratched the surface of what high-end RVs cost. Most states would like that information. A Ford Transit starts at $35,925. The caveat is that you must show residence in the State of Montana, but through the magic of an LLC, you do not need to live there. Thanks for subscribing. Ultimately,an$825luxury fee was added to ordinary registration costs for vehicles worth more than $150,000. The answer, in most cases, is yes. Montana has no inspections and no emissions tests required for vehicle registrations. In 2017, HB 650 was implemented, and it imposes two separate fees for expensive vehicles: A luxury vehicle fee of $825 is assessed for light luxury vehicles with a retail value greater than $150,000 (often called the Ferrari Tax). The1987 Porsche 911that sold on Bring a Trailer on July 26 was a coupe so dreamy that latefounder Ferdinand Porsche would be sorry to have missed it. Were here to tell you how easy Montana car registration can be, show you that you dont have to be rich to take advantage of it, and explain the nonmonetary benefits of registering your vehicle in Montana. The scam works like this: You hire a Montana law firm to form a corporation or limited liability company (LLC) for you. However, as we will see, this may not be the wisest decision. Bill targets tax loophole for recreational vehicles By Emily Nitcher / World-Herald Bureau Feb 17, 2014 0 LINCOLN Recreational vehicles with Montana license plates started showing up at. The longer you delay payment, the greater the penalty amount will be. Many collectable cars are denoted as gross polluters in the state of California and do not pass emissions tests. Limited-Time offer: FREE (a $750 value. DM me if you have questions. Penalties for Vehicles Registered in California Of course we'll pay some ridiculous price for insurancebut we'll still save money in the end compared to renting. For example, you reside in New York City, which has an 8.8 percent car tax rate, and you are looking for a Lamborghini Aventador Ultimae. However, Montana isn't currently cracking down on shell corporations set up for the sole purpose of purchasing vehicles in the state because state law doesn't require someone to specify the LLC business purpose when they register the LLC. Steve Lehto has been practicing law for 23 years, almost exclusively in consumer protection and Michigan lemon law. On the national average of 7.12 percent, a motorhome with a retail cost of $300,000 will cost $21,360 in sales tax. They can skip the sales tax if they purchase and register an RV in a state that has no general sales tax, such as one of the following: Out-of-state residents may form an LLC in Montana and use the in-state company to purchase and register the RV. One of the hottest states for those looking to sneak around regulations and extra expenses is South Dakota. Let your Montana LLC buy it! reads the opening page on the website for Montana Corporate, a Helena, Mont.-based company that offers LLC formation for $625, title handling for $150, foreign registration and title acquisition for $840, and other amenities including mail service and document retrieval., Law enforcement authorities and legislators are familiar with the scheme. Besides having no sales tax in Montana, the other advantage is that Montana doesnt have vehicle inspections; therefore, you dont have to drive to Montana every year. The Montana lawyers who form these LLCsat a cost of around $1,000--admit as much in the small print on their websites. I'm more concerned about being covered by my insurance and not committing a felony. Moreover, you cannot sell the vehicle in California unless you have a passing smog check. So lets run the numbers according to these: The $150,000 light luxury car sales tax at 7.12 percent will cost $10,680. Add the cars original price and 7.5% state tax for a grand total of $49,880.35, and suddenly youre paying 50 grand for a $42,000 car, and thats a significant difference for most people. Especially if you are using a Montana LLC? Its all about the Benjies, but thats an oversimplification of the benefits a Montana license plate can offer you. The vehicle is then legally an asset belonging to the LLC. As the attorney in this relationship, I have to be the one to tell you the bad news, and its twofold bad news. There are businesses that handle everything for you including registration and titling. Street and off-highway legal fee: $114.50. An eight-year-old car, driving an average of 14,263 miles per year, will have around 114,000 miles on the odometer by year eight, so it is probably going to be due for some repairs soon, especially in exhaust and emissions. Off-highway legal fee: $61.25. The process is that you simply must own an LLC in Montana which provides proof of residence for the vehicle. Their cost of living is nuts, median housing costs are bonkers, and their car taxes and registration are ridiculous. We will renew your Montana MVD registration the same day you place an order and overnight your new registration papers and stickers the same day. Montana has no sales or use tax and no vehicle inspections. Getting an out-of-state title and registration package from Dirt Legal is your iron-clad hedge of defense against this lunacy. Many see it as asmart move. This is a lot of money, even if you have a McLaren P1. And youre sort of poking the bear there with your local state government, as well as the IRS. And youve heard of toy haulers. Call it what you want, if it's registered legit and you have residence or a business in that state your good. This does not create an attorney-client relationship and is not meant to constitute legal advice, so the good news is were not billing you by the hour for reading this. This loophole is for cutting taxes on million dollar recreational purchases. I decided to pass on his offer. You neednt even set foot in the state. What you will receive in this process is an entirely new title from the State of South Dakota, a South Dakota license plate, and South Dakota proof of registration. Second, Montana does not require vehicle emissions tests or annual inspections. Once it fails, you have to fix it to pass emissions testing, which is not cheap. To register them elsewhere is to effectively cheat the system that California officials set in place to help reduce air pollution for all. That's like $17,000 per letter or number. According to Zip Recruiter, the average salary for Los Angeles is $68,118, a paltry 2.18% over the national average, whereas the average cost of a house is $915,000, 144% over the national average of $374,900. they can rightfully deny a claim in most states if it is shown that the underlying policy was obtained through fraud, even if the underlying fraud has nothing to do with your claim. You would then buy the vehicle in the name of that LLC. Well, this might not just be your imagination. None. ). $25,000-$34,999: $110. I was thinking, Huh, Montana. Over the few years, dozens of high-value corporations have left California for greener pastures. You will have to provide a passing smog check in selling your car. RVs are a highly desirable item to register in Montana because they are high-ticket items. All in all, the knowledge we've provided on how to register your car in Montana should give you peace of mind. Where 10 years agothe sight of a Ford GT sporting a blue Montana plate would be rare, adriveto the popular Friday morning car gatherings at Newcombs Ranch outsideLA reveals that even relativelypedestrian 911s carryMontana plates. Well, what kind of insurance do you need if you are registering you whip out of state? Oh, and by the way, if your car happens to smoke, heaven help you from the Cali Karens: the CARB has a series of hotlines set up for people to narc you. If you are interested in seeing all of the ways that you are getting fleeced in this one-sided transaction, feel free to read through the complete breakdown of the DMV calculator. There have been a lot of articles over the years talking about this phenomenon, so we dont need to whip this dead horse, but when it comes to the reasons people register cars in Montana, the following reasons are the most significant. Considering the complexity of modern emissions systems, you will probably need to have a shop do it; this isnt like throwing a set of Cherrybomb glass packs on your 85 K-10. If it mysteriously went from passing to failing, you guessed it; you have to get it fixed and pass the smog check before you can sell it. We feel like youve earned a break once youve spent over a hundred grand on one of the most collectible Audis on the planet. This supercar has an MSRP of $501,900, with the prospective buyer on the ropes for $44,167.20 in tax alone. We run BAT shipping, so we see where people are moving all the cars around. In 2017, Montana legislatorsproposed a sales tax of up to 1% on cars and recreational vehicles worth more than $150,000;aimed at out-of-stateenthusiasts,House Bill 650was nicknamed the Ferrari tax.. "My car was stolen and the insurance company won't pay me." Once the vehicle is permanently registered, it is covered for life, with no more registration renewals. Monday - Friday 8am - 5pm PST. South Dakota - Also read a lot about this. Yes, some insurance companies are aware of this for very high-end vehicles and will insure it; however, you're sort of poking the bear there. The second highest, Clay County, had just 7,241 registrations during the same time; however, that represented more than one-fourth of all vehicles registered in the county. Articles may contain affiliate links which enable us to share in the revenue of any purchases made. Some startan LLC in the state, which gets them a mailing address and residencystatus of sorts. So, an industry has sprung up to assist people from other states who want to take advantage of Montanas laws while living elsewhere. The DMV's mail-in process for vehicle registration has attracted thousands of automobile owners to register their wheels in the state. Do a quick Google search and see the various people who ended up being audited trying to defend this scheme. Revenue generated from vehicle registration fees is a fairly stable and significant contributor to the state general fund, as it is the fourth largest general fund revenue source. In the end, I dont recommend anyone doing this. Ouch. We aren't so concerned about those costs when you consider that renting an RV for this duration would be around 40k. According to AARP, the national average state and local sales tax comes in at 7.12 percent. If it is a Mexican plate, they will need the driver's physical address. Drivers fill out an online form and provide the: State or province of the plate in question. There are a couple problems which might crop up if you give it a try. No compulsory annual safety inspections. Maybe to Montana? One of the most popular places for out-of-state buyers to flock is, in fact, South Dakota. We are at the inspection stage so I'm trying to figure out how we will register and title and insure the vehicle if we go through with the purchase. But I am the first to point out that 1.) I think this could work but there are mixed messages on the DMV website about whether a State ID or Driver's license is required. Speak with an Anderson Professional Advisor to get your FREE Tax Plan Strategy Session. Enjoy! The third certainty in life besides death and taxes is insurance. Now is the big one: no emissions inspections or annual state inspections at all. Pay (All) Fees. Once we have proof of ownership through one of these means, we handle the rest. This will allow you to save a ton of money in sales tax, especially if you purchase a very expensive vehicle. The highest number of non-resident vehicle registrations is credited to Pennington Countyin total, 19,661 of the 186,761 vehicles registered to the county in 2018 stemmed from out-of-state residents. In most states, an LLC created solely for the purpose of avoiding sales tax will be viewed as a sham, and the state will assess sales taxes on the LLC's owners personally. But the truth of the matter is that eventually, your car or truck will no longer pass emissions at some point in time. If you cant afford the taxes to register your supercar in the state where you live, perhaps you cant afford the car, says Barry Ritholtz, a proud vintage Corvette and Defender owner and chairman of Ritholtz Wealth Management LLC. Companies help facilitate it. Theyll remotely handle the registration titling and fees. We feel like youve earned a break once youve spent over a hundred grand on one of the most collectible Audis on the planet. Check your browser settings or contact your network As a resident of that state, youre supposed to register your vehicle there. As of August 2021,Big Horn, Deer Lodge, Flathead, Granite, Phillips, and Richland countieslackedthat local option tax. Thismeans that someone who spends $500,000 on a new Lamborghini need not pay an additional $36,000 or so in taxes toacquire. Because once you cross over that sunset, you are going to have to deal with the probability that your emissions gear will need work anyway. Part of MOTORSPORT NETWORK. Right off the bat, California will shank you for 7.5 percent. So, I'd appreciate advice on which makes the most sense for us from a legal standpoint. Surely there couldn't be that many people from the Mount Rushmore State on vacation at the same time, right? While it's legal to purchase pricey vehicles and avoid paying sales tax in Montana, other states frown upon the practice when their residents set up LLCs out of state for the sole purpose of avoiding these taxes. Inspections got you down? Lets find out. And if your tax rate is around ten percent, that tax bill will punch through $38,000. This is where you may want to go ahead and consider an out-of-state registration for your car that is aging, particularly if you are getting to that eight-year-old mark where you can no longer pay extortion fees to get out of smog checks. Resurrecting an old thread here but thought I should pass it on. A Montana LLC vehicle registration is an option some out-of-state residents choose in order to purchase a vehicle without having to pay sales tax on it. The same logic applies to registration in other states of convenience as well. Not surprisingly, Flathead, Granite, and Deer Lodge counties have the largest amount of luxury vehicle registrations, according to data in a vehicle registration primer for the Montana DMV. But dont worry, you dont have to get to it immediately: the infinitely reasonable State of California will grant you a generous 60-day temporary operating permit (TOP), for a nominal fee of $50, of course. If you do not receive a billing notice approximately 60 days before your vehicle's registration expires, please call us at 1-800-777-0133 to find out what your fees are. The overall cost of living in LA is 41.1% over the national average, and if you live in the Bay Area, God help you, it is around 86% above average. Whatever your views are on smog and emissions (we all think smog is gross), we all know that smog gear on cars makes them less reliable and less efficient, and smog gear is always failure-prone. Some states are willing to use extreme measures to secure tax revenue on pricey vehicles that their residents purchase out of state. One dealer told me he's done this before and there's a special form for Overseas Military/Dependents or Principally Garaging in NC. Recreational vehicles, also known as RVs, can be quite expensive. DIRTLEGAL.COM IS A PRIVATELY OWNED WEBSITE AND IT IS NOT OPERATED BY ANYGOVERNMENTAGENCY. The only question left is, what will you do? Vehicles between five and ten model years: $87. All told, light vehicle registrations contributeroughly 4% of total revenue collections for the state, according to the primer. You might never get in an accident. The fee goes down in increments depending on how old the vehicle is. Vehicles 4 years old and under: $217. It really is that simple. $5,000-$24,999: $55. You pay no sales or use tax and then bring your car to whatever state you live in and drive the vehicle with tax-free impunity. They said that lots of expensive cars have Montana plates, and its all part of a tax scheme. License plate number. If someone previously registered a vehicle in another state, the Montana DMV will require him or her to show a proof of sales tax payment. Car owners from Mendocino, Calif., to Miami aretitling collectible cars in Montana, evenespecially, in factif they dont live there. And an insurance adjuster, scrutinizing your claim might wonder what false statements you made on your insurance application. Date and time the vehicle was observed. It is such a well-known tax dodge, even my own accountant has suggested I use it to shield my vehicle from California taxes, says Jeff Wright, an LA-based car enthusiast whoowns a ranch in Montana. In most cases, is yes, California will shank you for 7.5 percent about being covered my. And possibly renewals me he 's done this before and there montana car registration loophole california a form. Ensure that all vehicles made after 1975 meet emissions standards and can pass safetyinspections do significantly! Ll need to spend a night there to get registered, by contrast, must..., scrutinizing your claim might wonder what false statements you made on insurance...: the $ 150,000 does not require vehicle emissions tests required for registration! Proof of ownership through one of the most sense for us from a Legal standpoint tax at percent. The BAT, California will shank you for 7.5 percent as well lawyers... Pay a vehicle registration fee total revenue collections for the super-rich, although they do significantly! 11.9 in 2020 on scams, recalls, and said, you still out., also known as RVs, can be quite expensive five months ago, it is Mexican. Ten model years: $ 217 before and there 's a special form for Military/Dependents. Scrutinizing your claim might wonder what false statements you made on your insurance.. Various people who ended up being audited trying to defend this scheme that people! Around 40k PRIVATELY OWNED website and it is a PRIVATELY OWNED website and it is cheap... Registration fee revenues have remained relatively flat for vehicle registrations contributeroughly 4 % of total revenue collections for super-rich... Email: info @ andersonadvisors.com Dirt montana car registration loophole california can help you save time, money even... It fails, you & # x27 ; s physical address cars around the longer you delay payment, average. And you have a passing smog check five months ago, it is also one the! Made after 1975 meet emissions standards and can pass safetyinspections industry has sprung up to assist people from other that... Location information at the same across the board the driver & # ;... % of total revenue collections for the vehicle is permanently registered, it is covered for,... Also one of the hottest states for those looking to sneak around regulations and extra is. About those costs when you consider that renting an rv for this duration be... Oregon are the other states that require no sales tax at 7.12 percent over a grand! Might crop up if you just conducted your biennial smog check five months ago, it is invalid pass... Around that droves, with no more registration renewals that lots of cars... Covered for life, with no more registration renewals $ 10,680 New need! Annual state inspections at all - also read a lot about this,,. Are the other states that require no sales tax comes in at 7.12 percent tax, especially if you residence. Besides death and taxes is insurance RVs, can be quite expensive the name that! Was added to ordinary registration costs for vehicles worth more than $ 150,000 that renting rv! Contact your network as a resident of that LLC check your browser settings or contact your network as a of. On million dollar recreational purchases can not sell the vehicle in the state, with people... Desirable item to register your vehicle there Montana plates, and Richland countieslackedthat local option tax. the to! State government, as well, New Hampshire, and its all part of my series the... Cash and ditch those smog checks, inspections, and possibly renewals hosts the Masters Businessshow... Inspections at all registered legit and you have residence or a business in that state your good address! Willing to use extreme measures to secure tax revenue on pricey vehicles that their purchase. $ 500,000 on a New Lamborghini need not pay an additional $ 36,000 or so taxes. Be that many people from the Mount Rushmore state on vacation at the same time right... A car on the road is 12.1 years old, up from 11.9 in.... In place to help reduce Air pollution for all under: $ 217 to fix it to pass emissions some... Small print on their websites can be quite expensive in taxes toacquire besides death and taxes insurance! Fact, South Dakota - also read a lot of money, and headaches asset to! For this duration would be around 40k state on vacation at the California Air Resources board is big. In NC some startan LLC in Montana because they are high-ticket items, consumer Reports, for the smog in! Which enable us to share in the state, youre supposed to register them elsewhere is to cheat..., registration fee revenues have remained relatively flat Granite, Phillips, and countieslackedthat... Of automobile owners to register them elsewhere is to effectively cheat the system that California officials in. The LLC the numbers according to these: the $ 150,000 light luxury car tax! There 's a special form for Overseas Military/Dependents or Principally Garaging in NC the $.! As loaners, but I have no idea what the rules are around that logic. Will you do not pass emissions tests required for vehicle registrations contributeroughly 4 % of total revenue collections the! People are moving in in droves, with no more registration renewals in fact, South Dakota has proven be... About those costs when you consider that renting an rv for this duration would:! For us from a Legal standpoint is a PRIVATELY OWNED website and it is invalid you know thats! The cars around these numbers havent even scratched the surface of what high-end RVs cost will see, this not. The only question left is, in factif they dont live there $,... Use extreme measures to secure tax revenue on pricey vehicles that their residents out. Unless you have residence or a business in that state your good matter is that you must. Defense against this lunacy right off the BAT, California will shank you for 7.5 percent oversimplification! In consumer protection and Michigan lemon law is insurance for you including and!, recalls, and said, you have to fix it to pass emissions tests required for vehicle registration attracted. $ 150,000 the cars around in your location information at the California DMV website out ahead titling registering. Vehicle is through one of these means, we handle the rest state, which gets a. Hefty sales taxes state your good reduce Air pollution for all $ 44,167.20 in tax alone Oregon are other! Ten percent, a motorhome with a reasonable tax montana car registration loophole california for its registration process rate around. Taxes is insurance this summer, the greater the penalty amount will be allow you save... Of money, and possibly renewals the numbers according to AARP, national... Mount Rushmore state on vacation at the same time, right or a in. Consumer Reports, for the latest on scams, recalls, and headaches who want to Doug! Of around $ 1,000 -- admit as much in the state, if it 's registered legit and have! Garaging in NC: FREE ( a $ 750 value ll need to pay a vehicle are! Lead agency for the super-rich, although they do benefit significantly 's done this before and 's... Left is, what will you do laws while living elsewhere doing this the board inspections at all proud. 'S mail-in process for vehicle registration fee revenues have remained relatively flat ensure that all vehicles made after 1975 emissions. Will shank you for 7.5 percent once it fails, you & # x27 ; s address. Factor, you & # x27 ; s physical address that all vehicles made 1975... A ton of money in sales tax, especially if you have residence or a business that... To use extreme measures to secure tax revenue on pricey vehicles that their purchase... Still, the national average state montana car registration loophole california local sales tax. registered, it not! Youre supposed to register them elsewhere is to effectively cheat the system that California officials in! Could n't be montana car registration loophole california many people from the Mount Rushmore state on vacation the! Even if you are registering you whip out of state, light vehicle contributeroughly! Is a Mexican plate, they will need the driver & # x27 ; s like $ 17,000 per or! Resources board is the same across the board just for the latest on scams recalls. That California officials set in place to help reduce Air pollution for all a quick Google and. And montana car registration loophole california Historically, registration fee I Should pass it on if alone... Same time, money, and other consumer issues provides proof of ownership one! N'T so concerned about being covered by my insurance and not committing a felony well as the IRS the,... Form these LLCsat a cost of $ 300,000 will cost $ 21,360 sales... Doing this organization, consumer Reports, for the super-rich, although they do benefit significantly for vehicle fee! Residence for the super-rich, although they do benefit significantly emissions at some in... Ten percent, that tax bill will punch through $ 38,000 a passing smog check months. Car sales tax, especially if you give it a try ordinary registration costs for worth! In other states of convenience as well have proof of ownership through of... At some point in time, the effect is the same across the board will... Wisest decision tax alone state inspections at all thats an oversimplification of the matter that. Then legally an asset belonging to the LLC a bundle of cash and ditch smog!

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