Colorado expects to collect nearly $3 million from residents who registered their RVs out of state to avoid paying state and local sales tax and registration fees.
The Colorado Department of Revenue and the state attorney general’s office investigated 12 individuals, all of whom pled guilty to misdemeanor tax evasion charges in the spring. The court ordered them to register their RVs in Colorado, pay restitution totaling $93,450, and perform community service.
Colorado also ordered 122 other residents to pay a total of $2.7 million in unpaid sales taxes and penalties after illegally registering their RVs out of state.
“This issue has been an ongoing concern, and we have been pursuing such cases for several years,” said Mark Couch, public information officer and legislative liaison for the state revenue department.
The dozen individuals who pled guilty bought motorhomes in Colorado but registered them in Montana, Mr. Couch said. Montana has low motor vehicle registration fees and is one of five U.S. states that have no general sales tax.
Consumers who buy an RV in Colorado can sign a motor vehicle sales tax exemption form at the time of purchase. The form contains a sworn statement affirming that the vehicle will be removed from Colorado within 30 days and will be licensed, registered, and used outside of Colorado or in interstate commerce.
“The 12 individuals affirmed, either by the form or verbally, that they would not be housing their vehicles in Colorado,” Mr. Couch said. State officials’ investigation concluded that the motorhome owners weren’t keeping their promises.
Details of each case vary. Ten of the cases were prosecuted in Denver County court, and two in Boulder County court. But news outlets in Colorado have reported cases where residents formed limited liability companies, or LLCs, in Montana and then registered their vehicles there, under those company names. This practice is legal in Montana, where the vehicles are being registered, but not in Colorado.
Montana license and registration fees for motorhomes range from $97.50 to $282.50 per year, according to the Montana Motor Vehicle Division. Meanwhile, a Denver resident who buys a $150,000 motorhome could pay nearly $15,000 in sales tax, ownership tax, and registration fees for the first year of ownership.
Colorado’s state sales tax rate is 2.9 percent, but cities and counties may collect more. For example, the total combined sales tax for Denver residents is 7.72 percent of the purchase price.
In addition to the sales tax, Colorado collects an annual ownership tax, in lieu of a personal property tax. The ownership tax is assessed on the original taxable value of the RV, year of manufacture, and the date of purchase. For RVs, the taxable value is 85 percent of the manufacturer’s suggested retail price. The taxable value is determined when the vehicle is new and does not change during the life of the vehicle.
For the first year of vehicle ownership, the tax rate is 2.10 percent of the taxable value; second year, 1.50 percent; third year, 1.20 percent; fourth year, 0.90 percent; five to nine years, 0.45 percent; 10 years or more, $3.
Colorado officials say residents who do not register their RVs in their home state are depriving the state of much-needed tax dollars.
In an investigative report released in 2007, Denver TV station KUSA-TV calculated the fees that just nine motorhome owners would have paid to Colorado had they not registered their vehicles in Montana. The total: $227,400.
Ontario, Canada, Over-Length Permit
If you own a longer motorhome, you need a $50 permit to drive it in Ontario, Canada “” at least until the government amends a law to extend the length limit. The maximum length for a motorhome in Ontario is set at 41 feet (12.5 meters). Motorhomes longer than that, but not exceeding 45 feet 11 inches (14 meters), may qualify for a special over-length permit.
“We hope to amend our legislation so these longer motorhomes can operate legally, without permits, starting in 2010,” said Bill Cann, with the Carrier Safety Policy Office of the Ontario Ministry of Transportation.
The $50 permit is valid until December 31, 2009. The Ministry of Transportation began issuing the permits in early spring 2007. To communicate the permit information to RV owners, the Ontario government has posted a new section on its Web site called “Recreational Vehicle Information for Drivers of Motor Homes, Truck Campers and House Trailers”: www.mto.gov.on.ca/english/pubs/rv/index.shtml. Motorhome length is addressed under the “Maximum Vehicle Dimensions” heading.
“In order for us to legally allow longer motorhomes on the highway, we need to issue these permits,” Mr. Cann said. “Once the law is amended to make them legal, the permits will no longer be needed.”
Mirrors that extend beyond the front of the motorhome are not included in the overall length of the vehicle. Extensions or equipment affixed to the rear of the motorhome are included.
For more information about obtaining an over-length permit for a motorhome, visit the Web site above or contact the Ministry of Transportation at O/O Permits, Third Floor, 301 St. Paul St., St. Catharines, Ontario L2R 7R4; (416) 246-7166 ext. 6306; e-mail: OO.Permit.Department@Ontario.ca.
Indiana RV Excise Tax
Indiana will impose an annual license excise tax on RVs, replacing the current ad valorem property tax levied for state or local purposes.
House Bill 1125 was introduced January 8, 2008, and signed into law March 24. The RV excise tax portion of the law, which takes effect January 1, 2010, places RVs on an excise tax scale similar to the one used for cars and trucks.
Under the current personal property tax-based system, the taxes on an RV can vary depending on the local tax rate and how local assessors value the RV. Subjecting RVs to an excise tax instead will allow RV shoppers to find out the annual tax on a new RV before they decide to buy it.
The excise tax amount will be based on the value of the RV at the time it is first offered for sale in Indiana. The bureau of motor vehicles will determine the RV’s value, based on the factory-advertised delivered price, the port of entry price, or other information “” and then classify it accordingly.
The amount of tax imposed will be determined using the RV’s classification and age.
The excise tax is in addition to any registration fees imposed on the RV.
Illinois Camping Fees
It now costs more to stay at campgrounds on lands managed by the Illinois Department of Natural Resources (IDNR). Effective May 21, 2008, the IDNR raised the daily utility fee for camping from $5 to $10 to offset statewide increases in electric, water, and sewage rates. For Class AA campsites, which offer full hookups, the total daily fee increased from $20 to $25 ($15 camping fee plus $10 utility fee).
The IDNR also raised the camping fees for Class AA, Class A, and Class A premium sites by $10, but only during the Memorial Day, Labor Day, and Independence Day holidays. “Premium” campgrounds are those that operate consistently at capacity. The $10 increase on the premium sites took effect during the Fourth of July weekend.
The fees for Class B, C, and D campsites will not change. Class B and C sites do not offer hookups sufficient for motorhomes, and Class D is for tent camping.
The IDNR does not charge an entrance fee to any state-owned or -operated land except Wildlife Prairie Park in Hanna City.