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Sales Tax/Coach Licensing
When one purchases a Coach does anyone consider sales tax and licensing locations in their purchase decision? That is to say some States have high licensing fees vs others do not. Some have no sales tax others very high. From what I remember Mississippi funds education through high vehicle licenses and Wisconsin uses property taxes for educaton. Licensing in a big rig in Mississippi would be more expensive than in Wisconsin or Montana. How does one make a decision on what State to purchase and license the Rig in?
Beware of little expenses; a small leak will sink a great ship. ~Benjamin Franklin
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96 Replies
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Oh absolutely you need to consider it. It can get dicey, though, and you need to make sure that you have either a corporation or an actual residence in the state in which you choose to license your bus. If you compare a bus purchase in California, for example, vs. Montana, we’re talking tens of thousands of dollars in savings!
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Don’t know about the other states but sales tax here in Texas and tags by weight. My coach on papers weighs in around 42000 lbs and tags run $528 a year. Remember many years ago my old Boss bought a few Prevosts from Excutive Coach (1980’s) and had them tagged in Oregon for tax and tag savings.
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My Ms. tags are less than $75 a year and first Lic 8 years ago was about $80. Now that is low!!!
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Hey Dan, I thought all your bus expense was paid for by Hollywood Casino!:)
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Michael,
The least expensive way to license a bus is in Montana by forming an LLC. There are many variables and your going to hear lots of opinions on this topic. Just look at the tags on many Prevost Motorhomes you see and you’ll get the picture…
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I have no direct experience as I haven’t purchased anything of note yet, but I have seen numerous threads on other RV forums concerning sales tax. As I understand it, Montana may be the way to go if you don’t have a primary residence in another state. There seems to be loads of stories about many states going after who they perceive as sales tax avoiders and nailing them not only for the sales tax, but interest and fines as well. Easier for full timers I guess who can chose anywhere as their residence state. ‘Other’ state taxes may come into play at that point. As a non-US resident I am looking at either the LLC or just pain Montana residence as strong options. Income tax is irrelevant in my case.
Sales tax threads must be one of the most popular together with gas mileage and insurance!
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There is no doubt a Montanna LLC allows you to evade (not avoid) the sales tax. If you have a residence in the state, have a justification of the LLC in Montana or can justify the LLC for any other purpose other than tax evasion by all means do it.
The use of the word evasion was intentional because that is what is being done and some states are actually gaining access to the Montana LLC lists and are collecting the taxes that they were legitimately entitled to, and to make the point they are also assessing punishing fines. There have also been questions about whether the coaches that are LLC owned are now commercial vehicles and if they are that has the potential to require a commercially licensed operator and adherance to commercial bus regulations.
I guess there is a risk versus reward calculation that each owner needs to consider. The best way to stay below the tax collector’s radar however is to make sure the toad and bus are both licensed in MT. You cannot prevent the tax collector from getting at you if he has access to the records of RV licenses of LLCs, especially if you park the bus in your garage at your home state.
If you opt to go the MT license route, try not to brag about it to a jealous neighbor. You don’t need to be encouraging anyone to report you for tax evasion, even if you have a legitimate reason for the MT tags.
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We looked at options out there when we bought out coach. In the end, we decided to stick with title/registration in our “home” state of GA. Sure we had to pay sales tax and that was a good amount of money, but it did a couple things.
Made it so our coach is titled and registered in the state we currently reside in. This means there are no questions in regards to insurance/etc. since we keep it here.
The other thing was with the new GA law, we pay once up front for tax (no more annual ad-valorem fees, which was still cheaper then CA annual reg even with their sales tax up front!) and get a VERY cheap annual tag fee (think it’s $250). No need for annual inspection (like Texas) and keeps the revenuers from coming after us down the road for tax dodging.
And of course there is the one item Jon mentioned in regards to commercial vehicle designation. More states are getting picky on what constitutes commercial VS private. I don’t want to have that discussion on the side of the road when the reg is to a LLC and not an individual and my non CDL isn’t sufficient in the eyes of the local constable.
1999 XLV X-6872, liberty #440 -
I agree with what Jon said and have heard a lot of horror stories over the years… one thing that is a dead giveaway is having a toad with another state licence plate… make sure the toad is also with a Montana tag as it raises a red flag and I have heard they are trying to get permission to impound any rig that is illegally tagged…. that is a lot more than I could handle… makes the tax look cheap all of a sudden !!
Cheers, Diane
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I also thought the Montana tag with a car tagged in the home state was a big give away, but I don’t think anyone really gives a crap. There were plenty of those at OKC and I see it all the time. Unless your neighbor blows you in, I doubt it’s an issue. Unless of course you live in CA…
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Wisconsin is pretty straightforward. I paid sales tax of 5.6% on the declared purchase price when I bought the coach and then annual registration of maybe around $100 (which includes personalized plates).
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Thanks to all of you for the great information. I have learned so much just by reading all the posts from “experienced” Rv’ers. Looks like I will be looking for a non-slide 1995-2000ish unit like a H3-45. I need to see if I should buy it in Arizona or Wisc. or something in between. It is really crazy to have to think about what State is the best to reside based on Taxes. Thanks again to all I will keep reading the posts and looking. Cheers to all
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I seriously doubt that a person should decide on a state based on taxes. With the exceptions of the extremes, such as CA or NY on the high end of the scale, compared to a state on the low end of the scale if taxes are going to be a consideration, it should be on exposure to income taxes for example rather than a one time sales tax for a coach.
Because all states are hard up for cash they are getting very creative in finding ways to catch up to tax evaders.
This has been going on for as long as we have had coaches (24 years) and while almost all who register in a state where they can avoid sales taxes, while actually residing in another succeed at avoiding taxes, those that do get caught suffer a great deal. If I was full timing and had no specific permanent state of residence then I would look at the overall tax picture to see if just the sales tax is enough justification, or if in the long run I would be better off with selecting a state with favorable income tax treatment.
Wwhat are the ongoing costs associated with an LLC? Do you have to pay a state corporate fee or franchise tax? Does the LLC need to file an annual tax return? Do you have to pay a registered agent an annual fee? How many years does it take before those fees eat up the tax savings? What about insurance? Do you as a private individual pay less for coach insurance than you would if the coach is LLC owned? How about it Montana LLC owners…….what’s the pertinent poop?
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Another interesting thread. The rage in the late 90’s was to purchase your coach in Oregon and tag it there, cheap license fees and no sales tax. Actually was pushed by a few of the “then” dealers where they would set up an address in an RV Park for a few months and off the proud new owner went…..unfortunately mostly to California. Didn’t take long before all of that exploded when California decided that type of behaviour was criminal and, of course, the advent of more sophisticated computers. I know several people who were caught in the midst of that and by the time fee’s, penalties and the like were paid, any perceived savings was wiped out. Most of those “big named” dealers also disappeared as well.
I guess the Montana LLC rage is still on however that one, as in Oregon, is no panacea. A Prevost in California with a Montana tag means you will be stopped, doesn’t matter if you live in Maine…..you will be stopped. Better have a Montana address on your drivers license or things may start to get complicated. Certainly if you pull out a California DL things get even more complicated and expensive in an instant. A little known fact is that California offers a bounty to law enforcement for uncovering these kind of things…….. There are 101 guys online that will offer to set up a Montana LLC in a day, will speak of all the benefits but rarely mention the challenges.
Now to Arizona, they have a very nice little law about “casual sales between individuals” which in essence means no sales tax if purchased from a private party. Doesn’t matter what state the transaction was in however it will only benefit those of us who live in Arizona………
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From what I have read, Texas and Florida seem to be the favourites for full timer domiciles. Mainly to do with zero income tax I believe as well as ease of being able to do all your “Housekeeping” stuff remotely. Loads of stuff on the FMCA forums.
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