Owning a recreational vehicle is getting more expensive in Iowa.
State legislators tell RVers that since you’re rich, you can pay more. It’s time RVers paid their fair share!
In an earlier story I reported that the Iowa Senate approved a bill intended to prevent tax evaders (their words, not mine) from using out-of-state shell corporations to avoid paying registration fees on million-dollar recreational vehicles and other luxury vehicles.
In a later development this new rule affecting all current and future RVers was inserted in a catch-all bill approved by Iowa legislators.
As reported by The (Cedar Rapids) Gazette, the state has already recovered about $1 million in unpaid tax and registration fees and a law change that went into effect July 1 is expected to channel more revenue into the underfunded state Road Use Tax Fund.
“It’s well worth our time and effort,” Maj. Paul Steier of the Iowa Department of Transportation motor vehicle enforcement unit, said.
Okay, I think I finally get it! It’s a game to wring more and more out of the already overtaxed population. Tax grabs are simply a band aid solution to a larger problem. Could it be possible that the state has a spending problem?
The DOT and Iowa Department of Revenue are going after Iowans who have established limited liability corporations in Montana to register their RVs there to avoid paying the 5 percent Iowa registration fee on vehicles and annual registration fees.
Montana does not charge sales tax, so it’s become a haven for RVers from numerous states who want to avoid this and other over reaching tax grabs.
We’re talking $5,000 on a $100,000 RV—and that may well be the tipping point for the already overburdened tax payer.
However, that’s a fraction of the penalty if an RV owner is caught registering the motorhome in Montana to avoid the Iowa fees. Steier said the Department of Revenue can slap them with a penalty equal to 75 percent of the purchase price.
John Barnes at the Montana Department of Justice doesn’t know how many Iowa vehicles are registered there because all the information he sees shows Montana addresses. Although Iowa may consider it illegal to register RVs there, Montana considers “it is lawful to establish an LLC for the sole purpose of titling and registering vehicles here.”
However, there are barriers to Iowans setting up sham LLCs to avoid registration fees, said Jeff Engelbart, co-owners and vice president of Lasso E RV Sales at Anamosa.
“I talk to (my customers) about the ramifications of licensing out of state. I just explain that the registration fee is to take care of roads and highways. It’s not like it’s disappearing into the general fund.”
Now try telling that to RVers who bump along I-80 as they across the state.
Iowa is not alone in cracking down on RV fee avoidance (I call it avoiding a tax grab).
The National Conference of State Legislatures reports California and Massachusetts have passed legislation to prevent citizens from taking advantage of Montana’s vehicle registration laws.
Since the mid-2000s, Iowa investigators have been working on their own as well as with colleagues from other states to catch folks trying to avoid the registrations fees, Steier said.
Sometimes it’s as easy as walking around the parking lot at a college football game to check on RVs with Montana license plates. Sometimes it is more difficult.
Once investigators uncover the owner’s true address and build a case, the information is forwarded to the Department of Revenue to collect the fees and penalties.
Steier agrees with Engelbart that most Iowans want to do the right thing (i.e., pay more taxes). He also noted that toward the end of June — just before the new law went into effect, county treasurers reported RV owners coming in to ask about the change and how to be in compliance.
“Word has gotten out,” Steier said. “Hopefully, as time goes on, (we’ll) see fewer of those Montana plates.”
Apparently in Steier’s world it matters little that seniors have worked for upwards of 35 years contributing to the state economy and paying taxes and scrimping and saving in order to enjoy their senior years in the RV of their choice.
In my many years I have come to a conclusion that one useless man is a shame, two is a law firm, and three or more is a congress.