One financially attractive thing about the Treasure State is no sales tax on autos (light duty vehicles). I’ve been looking into hiring a registered agent to set up a Montana LLC for me. It seems that as long as there is no lien on it, I can lawfully register any and all of my cars to my Montana LLC and pay no sales tax. Potential savings are in the thousands of dollars.
Has anyone else done this and if so, any recommendations or cautions you would share with me?
A “friend” has considered registering his vehicle in Montana or South Dakota for tax optimization, but has held off on pursuing it.
The primary issue he’s concluded is that registering a vehicle to a LLC does not protect you from liability in case of an accident. Insurance companies may frown upon it and deny a claim if their investigation concludes that the vehicle is primarily used out of state.
Additionally, some states have talked about fining vehicles that are not paying local taxes and consider it tax evasion. He’s not sure if this would be enforced, but it is still something to consider.
So basicly, my “friend” recommends consulting with a tax professional or attorney to fully understand the legal and financial implications of registering a vehicle in a state other than where it is primarily used. They can help you weigh the potential savings from not paying sales tax against the potential risks of denied insurance claims or fines for non-compliance with state laws.
I know Maine only charges tractor trailers $5 (something very cheap) to register a full length trailers, and this is commonly why you notice long trailers (typically logs) will have a registration from Maine but the vehicle is registered somewhere else.
I went to the registered agent link, and saw that they charge $800. If that’s an annual fee you’ll need to figure that into the comparison. I’d also wonder about how to insure the vehicle. The LLC buys and owns the vehicle, so insurance would be in the name of the LLC.
I resolved to just never buy again from a dealer, only for sale by owner. Exchange cash or cashiers check with signed over title. Don’t do a bill of sale. Don’t write in the sale price on back of the title. Go to Utah DMV to register and… pay just a little bit of sales tax.
You will find commercial insurance (which will be required) is 30% more than personal. In addition you now have a registered business in another state which may then require annual filings. I know to keep my c corp in Nevada was very expensive each year.