- Associated Press - Tuesday, February 18, 2014

LINCOLN, Neb. (AP) - A Nebraska lawmaker and the Department of Revenue are trying to collect taxes from state residents who register their recreational vehicles elsewhere.

State Sen. Galen Hadley of Kearney has introduced a bill that would target recreational vehicle owners who register their RVs through limited liability corporations in Montana, where there is no sales tax. Nebraska officials say the state is losing tens of thousands of dollars each year in sales tax revenue due to such efforts.

Hadley said in an interview Tuesday that lawyers are setting up LLCs in Montana specifically so that people who live out of the state specifically so they can license their RVs there.

Tax Commissioner Kim Conroy said about five years ago, her agency saw an increasing number of recreational vehicles with Montana plates.

“It’s an attractive way to avoid taxes, especially on a large purchase,” she said. A $200,000 RV could have $14,000 in sales tax, she said. Some of these RVs may have cost $500,000, she said.

Under Hadley’s bill, the Nebraska Department of Revenue or the Department of Motor Vehicles would determine whether a vehicle is owned through a shell company, the owner has 30 days to pay sales tax and registration fees. Owners who do not comply would face a 50 percent penalty.

“We just hope to see that it’s a mechanism that we can use to discourage the use of a separate entity owning these,” Conroy said.

Iowa enacted a similar measure last year, but its law applies to all motor vehicles, not just RVs.

Iowa created a settlement period for those who wanted to step forward and pay a 10 percent fine and the registration fee, which is 5 percent of the vehicle’s purchase price. The state collected more than $600,000 during its settlement period of August to October, said Victoria Daniels, public information officer for the Iowa Department of Revenue. The money was put toward a road maintenance fund.

In Nebraska, the Department of Revenue estimated 10 assessments from those who will not come forward voluntarily, Conroy said. The department expects about $95,000 in sales tax during the next fiscal year. The money would be used in part for road maintenance.

The Revenue Committee voted unanimously earlier this month to send the bill to the Legislature for full debate.


The bill is LB851

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