Quote:
Originally Posted by The J-Man
It is perfectly legal in all 50 states to establish an LLC for the purpose of a tax strategy.
This very issue went to the Louisiana Supreme Court many years ago, and they said the same thing.
https://law.justia.com/cases/louisia...13-c-1855.html
If I were in Louisiana, I would consider this settled law, and I would register my cars in Montana without a care in the world. |
I don't read the LA case that way. My take - Of course it is legal to establish an LLC for any lawful purpose, including to take advantage of different taxation (most commonly to have the entity's income passed through rather than taxed at the entity level and then again as a distribution to the member, but that doesn't really have anything to do with this issue.
This issue, and I think the LA case supports this conclusion, turns on the law of the state where you live and drive/garage the car, not on Montana law nor on the law of LLCs (with one exception discussed below).
The LA case as I read it clearly states that the issue of who owes the tax is a LA law issue and the court said a) the LLC owes the tax, not the individual member; and b) the LA legislature can change this law if it wants.
The exception I mentioned above is that the court said that whether the individual member can be held liable for the obligations of the LLC is a question of Montana law.
So my takeaway from the LA case is that the state can still assess the LLC for the tax and (I assume, I don't know this point of LA law), ultimately get a tax lien on the LLC's only asset (the car). And that assumes the legislature hasn't changed the law as some states have done.
There is no magic to the LLC as I read it other than on the issue of whether the individual is liable for the obligations of LLC. If your state's law provides that the obligation is the individuals, as the Iowa law mentioned in the Bloomberg article seems to provide, then the LLC does you no good at all.
It really still boils down IMO to where you live and what your state's (county's, city's) law says about what taxes are due. Getting an out of state plate doesn't change what your state's law says and if your facts meet the test of your state's law, you still owe the tax whether or not getting that out of state plate allows you to avoid detection for breaking the law. Conversely, of course, if your facts don't meet the test under your state's law, you don't owe the tax (e.g., taking delivery in Montana and then not bringing the car to CA until more than a year later).
Quote:
Originally Posted by The J-Man
Your second article has nothing to do with Montana LLCs - totally different issue - not parallel to the Montana issue at all. The LLC is key.
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I disagree with this as well. It is true that article doesn't discuss Montana LLCs but it is certainly parallel to the Montana issue and the LLC is not the key (except for one specific point as I discussed above).
The issue to me remains that you have to comply with your own state's law and getting out of state plates, whether in SD or Montana, whether via LLC or not, is not a magic bullet, except that it helps you avoid detection because the main method of tax collection is at registration and renewal of your plates. Avoiding detection has nothing to do with whether it's legal and whether it's legal turns on your own state's law, not the law of the state where you got the plates and not on whether you got them in that state individually or via LLC.
At least that's how I read it.