Rich Car Guy Problems: Montana License Plate Tax Dodge Crackdown

[G.Irish]

As some of you may know, there's a tax avoidance/evasion scheme that some car guys have been using for a number of years where they register their car to Montana so they can avoid paying sales tax (or car tax).  

The state of Georgia just decided to crack down on this since apparently 100's of supercar buyers have been registering LLC's in Montana to get around paying tax on these cars.  The two guys that the Georgia Dept. of Revenue decided to make an example out of apparently bought 50 cars in 4 years between the two of them and owe $1.6 million in taxes.

I've been bemused by this, and some of the reactions to this story.  I'm kinda like, if you're gonna use a sketchy tax loophole, don't cry when the tax man comes for dat azz.  Especially on an ultra luxury purchase like a supercar.

[Senor_Taylor]

I'm not a big fan of this. I've always liked how people used Montana. It makes sense that a state would be rewarded for shaping its tax laws to be friendly to buyers. Then again, none of these people were actually giving anything to Montana in exchange. I hate the idea of sales tax between private parties. It makes zero sense that the government should have a piece of a private deal.

Why does the state deserve hundreds of thousands of dollars because someone that lives there bought something nice?

All that will happen now it that these rich folks will buy small properties in Montana for pennies and register their cars at that address.

Sent from my Pixel 3 XL using Tapatalk

[WRXtranceformed]

You won't see me shed a single tear for a municipality losing tax and sales revenue to a loophole and people who are smart enough to use it. We are taxed into oblivion for nearly everything we do in our lives, you can't blame smart people for figuring out how to legally lessen or eliminate their tax liabilities. I did agree that it's only a matter of time before The Man got wise and went after them though.

Maybe a side note here but I've never understood how an argument could be made that people who lease their cars should have to pay a property tax. You don't have to pay property taxes when you rent an apartment or house, why should you have to do so when you're basically long term renting a vehicle unless you decide to buy out a lease and keep the car? Maybe someone who is more well-versed in leases can educate me as to why the government is in the right by claiming that it is property that I own.

[G.Irish]

Sales tax for private party sales is a sore point for some, but the way I look at it is that the tax revenue has to come from somewhere. You can get rid of the tax on private party sales to individuals but then some other tax would have to go up unless spending were drastically cut. Way back when Jim Gilmore ran for governor of Virginia (and won), his pitch was getting rid of car tax. He wasn't able to, because it would've left a humongous hole in the budget.

At any rate, these guys are buying new cars from the dealership and creating shell businesses in Montana solely for the purpose of avoiding the taxes. Some of them creating LLC's with their name as the company name. Sounds like Georgia is not going directly to putting people in jail for tax evasion, but I think the party is definitely over. Several other states have already started in on that scheme (CT, LA, CA, NE, and OH I think).

[Apoc]

the tax revenue has to come from somewhere.  

....unless government spending was lower.

[WRXtranceformed]

the tax revenue has to come from somewhere.  

....unless government spending was lower.

Beat me to it

[D_Eclipse9916]

On a smaller scale, registering trailers in VT is an issue as well. I have followed both these issues and chose to pay my dues instead, as this can easily be interpreted as tax evasion. As silly as it is, the IRS (and state counterparts) seems to care far more about cracking down on crime than any other agency (they want their money!!!).

[Apoc]

I mean, don't people here register their cars outside nova to avoid emissions? It's kinda the same thing.

[Evan]

As some of you may know, there's a tax avoidance/evasion scheme that some car guys have been using for a number of years where they register their car to Montana so they can avoid paying sales tax (or car tax).  
I'm kinda like, if you're gonna use a sketchy tax loophole, don't cry when the tax man comes for dat azz.

So is it a loophole, or is it tax evasion scheme?
One is legal, one is not legal.
Its 100% legal from Montana's perspective, and Montana will happily take your ~$200 in registration fees and you can legally be on your carbon-fiber and V8 way.

So if its not legal in Georgia, he question is, what in Georgia law specifically prevents private citizens from conducting legal business in another state?
Are they making shit up so they can go after all those "rich" people to take their money, which you appear to be cheering on? Or is there actually a law on the books that dictates if the vehicle is in the state for X amount of time then it must be registered in state. (which sure sounds like the sketchy part to me, since its impossible to prove and cars arent people)

And under the same rationale, Servicemembers who register their domicile in Florida because there is no state income tax there yet they dont live (which Florida grants with a smile) there should similarly be prosecuted for tax fraud and should not "cry when the tax man comes for dat azz" ?

[D_Eclipse9916]

As some of you may know, there's a tax avoidance/evasion scheme that some car guys have been using for a number of years where they register their car to Montana so they can avoid paying sales tax (or car tax).  
I'm kinda like, if you're gonna use a sketchy tax loophole, don't cry when the tax man comes for dat azz.  

 Or is there actually a law on the books that dictates if the vehicle is in the state for X amount of time then it must be registered in state.  (which sure sounds like the sketchy part to me,  since its impossible to prove and cars arent people)

Actually there are VERY specific laws concerning this with every state.  I have multiple friends that have been fined for this exact issue.

I don't blame people for doing it, but I sure as shit don't want to risk it! It also sounds like these people are getting a slap on the wrist instead of going to jail (they are just trying to get people to pay instead of actually fining).  Sounds like it's almost worth it even with them cracking down.  That said I don't want to be the state's example .

As far as military, pretty much all states give Military exemptions.

[Apoc]

So if its not legal in Georgia,  he question is,  what in Georgia law specifically prevents private citizens from conducting legal business in another state?  
Are they making shit up so they can go after all those "rich" people to take their money,  which you appear to be cheering on?   Or is there actually a law on the books that dictates if the vehicle is in the state for X amount of time then it must be registered in state. 

Not sure about Georgia, but in Virginia where they conduct business doesn't matter because it's where the vehicle is "normally" garaged.

https://law.lis.virginia.gov/vacode/58.1-3511/

[Ken]

As some of you may know, there's a tax avoidance/evasion scheme that some car guys have been using for a number of years where they register their car to Montana so they can avoid paying sales tax (or car tax).  
I'm kinda like, if you're gonna use a sketchy tax loophole, don't cry when the tax man comes for dat azz.  

 Or is there actually a law on the books that dictates if the vehicle is in the state for X amount of time then it must be registered in state.  (which sure sounds like the sketchy part to me,  since its impossible to prove and cars arent people)

Actually there are VERY specific laws concerning this with every state.  I have multiple friends that have been fined for this exact issue.

 Yup, when my dad moved to Dallas, the same officer who must have seen him a bunch finally pulled him over for having NY plates. He had to finally change the registration to Texas.

[Kaan]

How many of us left our cars registered (or "garaged") in Hburg... you know, lower taxes, lower insurance, no emissions testing, etc. This is the poor college kids version of registering super cars in Montana...

[.RJ]

There are more business registered in Delaware than any other state because of favorable business/tax conditions, no matter where they actually conduct business. The company I worked for last was registered there, FWIW.

How is that any different? Is it really illegal?

Sounds like GA is just being salty and using rich guys to make them an example of.... something, other than hating rich guys I guess.

[JPolen01]

So if its not legal in Georgia,  he question is,  what in Georgia law specifically prevents private citizens from conducting legal business in another state?  
Are they making shit up so they can go after all those "rich" people to take their money,  which you appear to be cheering on?   Or is there actually a law on the books that dictates if the vehicle is in the state for X amount of time then it must be registered in state.  (which sure sounds like the sketchy part to me,  since its impossible to prove and cars arent people)

It's not tax evasion. It's tax avoidance which are two very different things. Technically (from the video) GA requires that all cars residing in GA are registered in GA within 30 days (how do you prove this?). However this was never enforced per Ed (vinwiki) so it was seen as acceptable by dealerships to register the cars in Montana per their client's request. It seems that now GA is going after all this money they have not been receiving. Based on the second video it seems as though a new guy at the GA Revenue Dept was trying to make a name for himself and began to figure out ways to eliminate the loophole. Sounds like he should have gotten into the legislature though if he is looking for a policy change. 

People might hate the rich for exploiting loopholes (I get it, it frustrates me from time to time), but it's not illegal. Don't get mad that they are using legal actions to skirt the IRS.

[G.Irish]

the tax revenue has to come from somewhere.  

....unless government spending was lower.

Beat me to it

The two of ya'll got so triggered that you didn't even read 5 seconds longer to see that I said :  

some other tax would have to go up unless spending were drastically cut

[WRXtranceformed]

the tax revenue has to come from somewhere.  

....unless government spending was lower.

Beat me to it

The two of ya'll got so triggered that you didn't even read 5 seconds longer to see that I said :  

some other tax would have to go up unless spending were drastically cut

YOU'RE ONE OF THEM GERALD

[G.Irish]

As some of you may know, there's a tax avoidance/evasion scheme that some car guys have been using for a number of years where they register their car to Montana so they can avoid paying sales tax (or car tax).  
I'm kinda like, if you're gonna use a sketchy tax loophole, don't cry when the tax man comes for dat azz.  

So is it a loophole,  or is it tax evasion scheme?  
One is legal,  one is not legal.  
Its 100% legal from Montana's perspective, and Montana will happily take your ~$200 in registration fees and you can legally be on your carbon-fiber and V8 way.  

So if its not legal in Georgia,  he question is,  what in Georgia law specifically prevents private citizens from conducting legal business in another state?  
Are they making shit up so they can go after all those "rich" people to take their money,  which you appear to be cheering on?   Or is there actually a law on the books that dictates if the vehicle is in the state for X amount of time then it must be registered in state.  (which sure sounds like the sketchy part to me,  since its impossible to prove and cars arent people)

Georgia requires you to register the car in state if it is primarily garaged there.  Apparently the tax cops monitored theses guys at their houses, on instagram and via their toll cameras to get proof of where the cars were.

These guys were not just registering the cars in Montana, they were creating LLC's and registering the cars to those LLC's.  On one hand that might be enough to win in court since technically the car is not registered to the person that lives in Georgia but to the company registered in Montana.  But it appears like a lot of the offenders only set up the company to avoid the tax and not to pursue legitimate business which is what might push it into 'tax evasion' territory.

I think the people that at least made a show of running a business from their Montana LLC might have a chance of prevailing in court.  Apparently a similar thing went down in Louisiana with an RV owner over this issue and the RV owner eventually won.  The RV owner won on the point that the RV was registered to a Montana business.

And under the same rationale,  Servicemembers who register their domicile in Florida because there is no state income tax there yet they dont live (which Florida grants with a smile)  there should similarly be prosecuted for tax fraud and should not "cry when the tax man comes for dat azz" ?

I grew up on bases in the US and overseas typically there are a number of specific affordances offered to service members so that they don't get caught out while they're deployed or stationed elsewhere.

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the tax revenue has to come from somewhere.  

....unless government spending was lower.

Beat me to it

The two of ya'll got so triggered that you didn't even read 5 seconds longer to see that I said :  

some other tax would have to go up unless spending were drastically cut

YOU'RE ONE OF THEM GERALD

A supercar owner?  Not yet.  Personally, I'll dodge taxes by having my Mclaren shipped over in parts as a kit car.  Not much difference in build quality .

[WRXtranceformed]

A supercar owner?  Not yet.  Personally, I'll dodge taxes by having my Mclaren shipped over in parts as a kit car.  Not much difference in build quality .

Would they not nail you with property tax when you went to register it?  Or do kit vehicles not qualify for property tax?  I would doubt that

[Kaan]

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A supercar owner?  Not yet.  Personally, I'll dodge taxes by having my Mclaren shipped over in parts as a kit car.  Not much difference in build quality .

I talked to a couple of SuperLite-Car owners.... both say the most common way for them to register this kit car was still in Montana. I don't remember exactly why (it might be registration overall)... but you will still likely need to head out to Montana.