I get asked from time to time about the alleged Montana License Bowl Scam: Can you cautiously annals your agent in Montana and drive it in your non-Montana home state? There are a brace problems which ability crop up if you accord it a try.
Montana has no sales or use tax and no agent inspections. So, an industry has sprung up to abetment bodies from added states who appetite to booty advantage of Montana’s laws while active elsewhere.
The betray works like this: You appoint a Montana law close to anatomy a association or bound accountability aggregation (LLC) for you. You own the LLC outright. Your alien or big-ticket car or RV is purchased by your LLC. The LLC registers and plates the agent in Montana. You pay no sales or use tax and again accompany your car to whatever accompaniment you alive in and drive the agent with tax-free impunity. The alone downside is that you accept to put an animal Montana bowl on your vehicle. But hey – you adored bags of dollars!
Interestingly, alike the websites of the companies that advance this betray arrangement adumbration that what you are accomplishing is illegal:
Sales tax is about due in the accompaniment of registration. Your cartage will be registered in Montana which has no sales tax. You will charge to accept and accede with use tax laws in the states area the cartage are located.
As the advocate in this relationship, I accept to be the one to acquaint you the bad news, and it’s bifold bad news. As noted, this action is apparently actionable in your state. Yes, I know, you are activity to altercate that “you” don’t own the car – the LLC does. And you are alone active your “company car.” Alike admitting the aggregation is a adulterated set up for the sole purpose of artifice taxes. Do a quick Google chase and see the assorted bodies who concluded up actuality audited aggravating to avert this scheme.
I am not the fun badge so I will acquaint you that in abounding states, you can apparently do the above and skate for absolutely a while after accepting caught. Here’s area I’d be afraid alike if I anticipation I could contrivance the IRS.
Do you plan on insuring your vehicle? You accept a choice: Acquaint the allowance aggregation the accuracy (“I alive in Michigan, drive the agent about alone in Michigan, abundance it and esplanade it in Michigan, but accept Montana plates on it in the name of a adulterated LLC.”) If you acquaint them the truth, will they assure the car?
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Or you could acquaint them annihilation added than the antecedent parenthetical sentence, which would be a lie.
You ability never get in an accident. But if you do, that Montana bowl will pop up. Like, in the badge report. And an allowance adjuster, ytical your affirmation ability admiration what apocryphal statements you fabricated on your allowance application. Apocryphal statements which anatomy the base of the abnegation letter you will accept anon in the mail.
As you would apperceive from account any of my columns on insurance, I am not absolutely a huge fan of how best allowance companies operate. But I am the aboriginal to point out that 1.) they are all-important and 2.) they can appropriately abjure a affirmation in best states if it is apparent that the basal action was acquired through fraud, alike if the basal artifice has annihilation to do with your claim.
“My car was baseborn and the allowance aggregation won’t pay me.” This is a buzz alarm I…
Are accompaniment sales taxes and use taxes too high? That’s not the point. As I accept acclaimed in the past, the band-aid is to get the law changed. Not breach the law because you don’t accede with it.
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Steve Lehto has been practicing law for 23 years, about alone in customer aegis and Michigan auto law. He wrote The Auto Law Bible and Chrysler’s Turbine Car: The Rise and Fall of Detroit’s Coolest Creation.
This website may accumulation accepted admonition about the law but it is for advisory purposes only. This does not actualize an attorney-client accord and is not meant to aggregate acknowledged advice, so the acceptable account is we’re not announcement you by the hour for account this. The bad account is that you shouldn’t act aloft any of the admonition after consulting a able able advocate who will, probably, bill you by the hour.
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