Massachusetts LLC enforcement

[diplomatman2002]

Massachusetts has announced a crackdown on Massachusetts residents registering their vehicles in another state. I have been advised by Massachusetts State Police that they have been instructed to give special attention to vehicles registered under an LLC and other forms of registration used to avoid Massachusetts' fees.

Massachusetts joins a list of other states such as Connecticut, Colorado and California that are taking action against the use of LLCs.

Paul DuBois

FMCA Governmental and Legislative Affairs Committee

[ctq@chmpagneridge.com]

Massachusetts has announced a crackdown on Massachusetts residents registering their vehicles in another state. I have been advised by Massachusetts State Police that they have been instructed to give special attention to vehicles registered under an LLC and other forms of registration used to avoid Massachusetts' fees.

Massachusetts joins a list of other states such as Connecticut, Colorado and California that are taking action against the use of LLCs.

Paul DuBois

FMCA Governmental and Legislative Affairs Committee

I guess your comments beg several questions and a comment in itself.

How will the Mass. State Police determine that vehicles registered under an LLC that this was done to avoid Massachusetts' fees.

If a Massachusetts resident has an LLC in another state and the legal entity owns and registers a vehicle/vehicles that are used in the ordinary course of business... I don't see how they can "crackdown" ? The LLC certainly has a right to do what it is doing in the state where the LLC resides. I would think this is nothing different where leasing companies have vehicles registered in other states than where they are.. or is Mass. saying if you cross its borders and your vehicle is owned and registered by an llc you will be given "special attention".. which means?

Could you shed some light on what actions Connecticut, Colorado and California are taking against LLC's? and how they are succeeding or not?

Comment .. I would think depending upon the actual implementation of this that this "crackdown" would have a large chilling effect on tourism in those states? and for what purpose.. to stop a very few people for establishing an LLC in another state? Personally I do not see how far this can really go. And with State and local budgets bursting at the seams you would think they would have enough to do then to exhausting themselves to seek out vehicles with an LLC registration. Just demonstrates yet again where government's priorities are!

btw I do not live in any of the states mentioned, I do travel them frequently, and I do have an llc that has several vehicles.

[danstep@nuthinfancy.us]

Ever notice the stormtrooper boots they wear? In MA, you are guilty until you've spent a lot of money to prove your innocent.

[Guest Wayne77590]

I don't want to beat a dead horse, and I admit to not knowing anything about an LLC, but if an LLC is designed as a business for "Limited Liability Company" would a Commercial Drivers License then be necessary in certain situations?

If it would be, and one is not obtained for driving a MH over the weight limits, would limited liability still be effective?

I have no idea.

[alanhyde]

I am a Californian who has an LLC out of state. Here are a couple of questions that would have to be answered if the officials want to try to collect from me. #1. Is it legal to own a company outside your state of residence? Answer is obviously yes. #2. Is it legal for that company to own vehicles? Answer: I don't know of any sate where it is illegal to own a vehicle. #3. Is it illegal to drive, park, store or otherwise use a vehicle belonging to an out of state company? Answer: Here again, I have not found any rules, laws, regulations that make this practice illegal. As a retired police commander, I can report that California has a law that states that a "resident" of the state must register his/her vehicle(s) within 10 days of becoming a permant resident. Since the company is not a resident, only its' members are or may be, I don't see how California is going to enforce their will upon the LLC people without a fight. There was a rumor that the Governor had told the California Highway Patrol to stop pursuing the LLC's as it was a waste of time and produced little revenue. In essence, it cost more than it was worth. Again, that is just a rumor. (Albeit a good idea!)

[PeteH]

A couple of remarks:

1. In WA. the patrol looks at the license plate of the towed vehicle vs the coaches plates. If they are from different states, they then run the "out of state" plates and come after you that way. WA. has a law that says if a vehicle, RV or boat is used in the state for more then 6 months, it must be registered in WA. I just got had on this law. It will cost me 8% of the RV's value in "sales tax" to register my coach now. In regard to the "value" WA. uses the list price of the vehicle for the first 4 years of its existence. On the RV, since it is now 10 years old, we are having "discussions" on its value but whatever they finally agree on, it will be an 8% charge.

2. My coach was registered in Oregon since it doesn't have a sales tax. We put it under our OR. company's name, but since I had moved it to WA., to my WA. home in late 2008, they are going to get me now. WA is really strong on this since they have to deal with the OR. state deal all the time In fact, the WA. state patrol runs checks on all OR. licensed vehicles in the Vancouver WA. (just across the border from OR.) just to "catch" people that are WA. residents and buy cars sales tax free in OR. (saving themselves 8% of the price on the car).

3. I suspect the other states with a sales tax are going to do the same thing to get the "tax revenues". Good luck on "beating" this.

[jrmonna]

All the entities that shill for some lawyer invariably not from your state of residence assure you that registering your RV in their state usually by setting up a LLC violates none of their state's laws. This is, of course, correct. What they don't go into is whether it violates the registration regulations where you live, have your driver's license and/or where you and the RV spend the majority of your time. They also probably have no standing in defending you if you are caught trying to avoid the sales and/or property taxes associated in your actual state of residence and they certainly don't indemnify you against any penalty or costs associated with trying defend yourself if caught. I'd guess these costs would exceed any savings even if your defense is successful.

If you continually travel outside of your actual state of residence and driver's license you might get away with it but if you're in residence more than a month or two at a crack you better have indoor storage where the vehicle license isn't on display and cross the border when heading out as soon as possible.

[jrmonna]

Another consideration on out of your state of residence LLC registration to avoid sales and/or property taxes has to do with your insurance. Evey policy I have ever had requires the data on the the vehicle and driver to be accurate including where it's domiciled. If you lie on the insurance application relative to the location where it's stored and need it for some major coverage of your RV the insurance company might us this ploy of out of state LLC registration to avoid payment.

No big deal unless you have a major event.

[Guest Wayne77590]

Just face it. The States are cracking down. If you get stopped, or heaven forbid have a major claim, do you have the money for a lawyer to fight it? I sure don't. So beware, and be prepared.

Happy trails.

[diplomatman2002]

In the 47 plus years that I have been in the Commercial transportation field both in the safety and operational ends, I have seen people that choose to follow the letter of the law and be safe and those who choose to ride the edge, sometimes with success other times with dire results. Today the name of the game with the states is where can I get money and how much. You will see enforcement today like you would not have seen in the past when times were better. As to the question of how will they find out if I am legal or not, If you are stopped for any reason for instance speeding , light out or a road check , They will ask you for license and registration. If you have an LLC they will assume that you are a business. They will then check to see if you have an IFTA fuel sticker which indicates that you are registered to pay fuel tax, if not you are in violation of law and they will be looking for payment of the fuel tax plus a fine. They can then check your license , if you do not have a CDL then you could be charged with driving out of class. and if you are involved in an accident this could have other impacts. Bottom line is are you going to risk this and the expense ? Or are you going to play it safe? and follow the law to the letter.

Diplomatman2002

[tbutler]

This discussion has been preceded by a similar discussion some time ago. You might like to take a look at Montana LLC for further information. In particular, there are two items (and links) cited by TMoning that are pertinent. Likely, there are few people who are caught in this situation but the real question is do you want to risk being one of the people who gets caught? Those of us who are full time are clearly on the fringe of society, barely imaginable to the average person. Anyway, the LLC is on the outside fringe. My father used to say, "You pay your nickel and you takes your chances." Good luck if you decide to go this route. Times are perilous. Watch your back side!