I am sorry this happened to you.

Your experience is often reported so oft-handed and thus is always discounted as hearsay when the subject comes up. To help us understand what happened and accurately spread the word, would you be willing to share a little more detail? I assume Montana LLC? How did CO discover it? What else was said by CO regarding the LLC? I realize it is an extremely difficult situation but this information really could be useful to many folks considering an LLC.

I never did it because of the "it really could happen to you" factor. Howard, our "resident" lawyer on this forum has waxed poetically on LLC and the "fine line" but we've never had the first hand experience, until now.

I thank you for coming forth and sharing you difficult plight.


-- Edited by RVDude at 20:07, 2008-03-24

If you can I also would like to hear more.
  We have Taken offshore delivery of our last two Yachts.
 Saving us Nearly 85K in taxes, we looked into the rules and followed them to the T. We live California and they will tell you how to do this legally.
How dose this differ from an "LLC"? Can someone please shed some light on this.

   Thank You,

What I would be most curious about is what specific CO law was violated and was this law always on the books or more recent.
There is clearly nothing illeagal in MT by forming the LLC, but many states feel differently. For the most part if you do not bring the vehicle into a state you avoid risk of that state catching you which is why many people think this is an OK stratagy for fulltimers. On the other hand a RV parked in a storage lot with MT tags is likely to get attention if noticed. So the question becomes what law did you violate and how did they catch you. Like many others I hope you will share some more.

Just to add some light on this, I can tell you what NJ does for boats registered in low tax jurisdictions (delaware mainly). Basically a use tax is due, that is equivalent to the sales tax, and they regularly patrol marinas looking for docked boats with DE state registration stickers.

In 2006, we bought a new RV in our resident state, Colorado. We had been told about L.L.C.'s in in several rally's and my husband wanted to try it out. The advertising ads on the internet were saying it was legal and safe, and new friends we meant gave us the name of a Montana Law firm. So we did it. Last year an investigative  TV reporter did a show about L.L.C.'s and how it was costing Colorado a lot of lost revenue. The Dept of Revenue went to all the dealerships and got their records. Then we had a criminal investigator from the Depart of revenue knocking on our front door collecting info. He called about 1-2 months later left a message saying the AG had accepted our case and so it began. We were served a summons for failure to pay  39-21-118  (3) and second degree forgery 18-5-104. Our attorney has been dealing with the AG to reduce the charges but never-the-less this has  been an eye opener. I have never broken the law before except one speeding ticket last year.  cont nx pg

I believe that this is the relevant Colorado law. The number is the section of the Colorado Revised Statutes (CRS). I don’t know how long these laws have been on the books and I didn’t spend the time to find out. I do know that they are been this way for over a year and probably a lot longer.

42-1-102. Definitions
(66) "Owner" means a person who holds the legal title of a vehicle; or, if a vehicle is the subject of an agreement for the conditional sale or lease thereof with the right of purchase upon performance of the conditions stated in the agreement and with an immediate right of possession vested in the conditional vendee or lessee or if a mortgagor of a vehicle is entitled to possession, then such conditional vendee or lessee or mortgagor shall be deemed the owner for the purpose of articles 1 to 4 of this title. The term also includes parties otherwise having lawful use or control or the right to use or control a vehicle for a period of thirty days or more.

To me, this last sentence says that if you are a Colorado resident and you have the mere right to use a vehicle for more than 30 days (I presume this means in any year) you are considered the owner for the purpose of vehicle registration. Notice that there is no requirement that you actually do use it. I think even if the vehicle is registered in another state but you have the right to use it, you must register it in Colorado.

I won’t bore you with the rest of the code but there is a code section that says an owner must register a vehicle within 60 days of purchase. You must also register any vehicle owned when you become a resident. There is a code section that says to register a newly acquired vehicle, you must first pay the sales or use tax. You must also pay an annual registration fee that is quite expensive.

All of that being said, it seems a little unusual that the OP mentioned be charged with a felony. Failure to register a vehicle is a traffic misdemeanor. While tax evasion can be a felony, it is very unusual for felony charges to be brought in these cases.

In any case, after reading the CRS it was enough to dissuade us in setting up a Montana LLC to own our RV as we are residnts of Colorado.

-- Edited by Retired Guy at 17:04, 2008-03-26

I think retired guy hit the nail on the head that the last sentence where it says use and control is a catchall.

In your situation I think being CO residents and buying at a CO dealer make it tough to argue about control and such.

I wish you the best and am sure the situation muse be difficult, as the governemnt can do as they like for the most part and it is difficult to fight them.

-- Edited by brucedelta at 23:39, 2008-03-26

When we bought our present coach I considered the LLC route for registration. After doing a lot, and I mean a lot, of research, I chose not to take the chance. We domicile in Texas and the Texas penalties for tax evasion can be stiff. One of the things I found in my research was that, unless you do run a legit business and register the vehicle as owned by the business, via LLC, then they consider the use of an LLC as for only one purpose and that is evasion of taxes. If the above mentioned circumstances about a business aren't met it is pretty hard to argue any other reason for the LLC. Tax evasion is a pretty serious issue and not one I cared to defend. Consequently I bit the bullet and paid the taxes.