Dear Dr. R.V. Shrink:
We are about to spend ten times more on a new motorhome than our first house cost forty years ago. It makes me a little uneasy to spend this kind of money on a vehicle that will be traveling down the road depreciating. It has always been my husband’s dream. It sounds appealing to me so I am throwing caution to the wind and sailing away with him. However, he is trying to penny pinch on taxes using what I would call borderline legal schemes and dishonest practices. He has been looking into setting up a Montana LLC. We live in Ohio. He says it would cost us about twelve hundred dollars and save us thousands. Then he talked to a friend that never renews his license plates. The theory is: pay the fine instead of the tax. I have been very supportive of this new lifestyle but my husband is upset because I won’t go along with the tax cheating. Am I being too closed minded? Are others doing this? Is it legal?
--Honest Abby in Akron
Yes, others are doing this. Many are very nervous now because various states have caught on to the practice and are now pursuing these folks for back taxes and penalties. As for the plate renewal I would think that would catch up to you very quickly in this age of computer data. I would assume law enforcement could run your plate for various reasons on the fly in any state and know immediately that you are running on expired plates. If you are heading out on a grand adventure, spending big bucks for a new home on wheels, and looking forward to a relaxing lifestyle, do you really want to be looking over your shoulder all the time wondering if someone is after you? You have to pay to play. My suggestion would be to follow the rules and travel worry free.
If, however, you sell your property in Ohio and change your residency to a state with little or no sales tax, you can enjoy that savings without fear of prosecution. Many people who are full-timers use services available in states like South Dakota to establish residency, mail forwarding service, and taxes. Taxes are a necessary evil. I was an accountant in the Marine Corps, so if you want to know where your taxes go, just ask me. If you want to use Military accounting practices to save money, just start at the bottom line with what you want back and work up.
--Keep Smilin’, Dr. R.V. Shrink