Montana LLC Vehicle Registration: Everything You Need to Know
A Montana LLC vehicle registration is an option some out-of-state residents choose in order to purchase a vehicle without having to pay sales tax on it. 3 min read
2. Sidestepping Sales Tax on Large Vehicles
Updated November 5, 2020:
A Montana LLC vehicle registration is an option some out-of-state residents choose in order to purchase a vehicle without having to pay sales tax on it. They create an LLC in Montana and then buy and register the vehicle in the LLC's name. Typically, they register in a Montana county that doesn't have a local-option tax.
Establishing a Chain of Ownership for Your Vehicle
It's easier to establish this chain of ownership if you form an LLC in Montana prior to purchasing a vehicle. You'll simply need to produce the certificate of origin from the manufacturer. If you bought it from a private party or dealer, you'll need the title. The exact name of your LLC has to be listed as the buyer.
If your name — not the LLC name — is on the title (likely because you bought it before forming your LLC), you'll have to establish a chain of ownership. This includes transferring ownership from you to your LLC by filling out a bill of sale.
You must have your bill of sale notarized. When you sign the bill, complete the buyer section the same as you would a Montana title application. You'll sign your name as the manager acting on behalf of your LLC. Include your LLC's address in Montana.
If you purchased the vehicle from a private party, send in the title the private party gave you, with either the LLC name or your name listed. Include the bill of sale as well.
Your bill of sale, title applications, and anything else regarding the title work has to be original, although it's OK if your LLC paperwork is a copy.
Submit your completed vehicle registration packet. This will include the following:
- Montana Title Application
- Chain of ownership document (original copies)
- Montana LLC or corporation registration
You'll submit your paperwork to the DMV/treasurer's office of the county where your registered agent is.
Sidestepping Sales Tax on Large Vehicles
Recreational vehicles, also known as RVs, can be quite expensive. Some people want to avoid paying the thousands of dollars in sales tax when they purchase an RV. They can skip the sales tax if they purchase and register an RV in a state that has no general sales tax, such as one of the following:
- New Hampshire
Out-of-state residents may form an LLC in Montana and use the in-state company to purchase and register the RV. By going this route instead of buying it as an out-of-state resident, they avoid hefty sales taxes. Not surprisingly, other states don't appreciate this tactic because they depend heavily on vehicle registration fees and tax revenue.
If someone previously registered a vehicle in another state, the Montana DMV will require him or her to show a proof of sales tax payment. However, Montana isn't currently cracking down on shell corporations set up for the sole purpose of purchasing vehicles in the state because state law doesn't require someone to specify the LLC business purpose when they register the LLC.
Some state officials insist that vehicle registrants have an actual interest in real property in the state, but the requirements for showing this are extremely minimal.
Some states are willing to use extreme measures to secure tax revenue on pricey vehicles that their residents purchase out of state. They depend on that money to fund the following:
- Social services
Someone who resides in a state that has a sales tax is legally prohibited to avoid paying sales or use tax on goods that will be used, consumed, or stored in his or her home state. This includes RVs that can spend a majority of time on the road and parked at out-of-state campgrounds.
While it's legal to purchase pricey vehicles and avoid paying sales tax in Montana, other states frown upon the practice when their residents set up LLCs out of state for the sole purpose of avoiding these taxes. Some states are taking measures to crack down on residents who set up shell corporations in other states, including suing for tax evasion. Still, many people are willing to risk taking advantage of this loophole in the law.
If you need help with vehicle registration using an LLC, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.