The Montana License Plate Scam - Lehto's Law Ep. 5.16

hello and welcome once again to Latos law I'm Steve lato attorney law and state of Michigan today we talk about the pitfalls of the Montana license plate scam the Montana license plate scam it's back in the news David Tracy of Jalopnik good friend of mine and fellow Jeep aficionado wrote an article recently about how Georgia is cracking down on the Montana license plate scam there and I wrote an article a few years ago for your Jalopnik that he linked to and so I've gotten a lot of feedback on that as well someone asked me to do a video so here we are in case you don't know the Montana license plate scam works like this Montana has no sales or use tax and no vehicle inspections so if you were to buy a vehicle in Montana no sales tax which is simply a pretty cool thing but the problem is of course if you don't live in Montana how do you take advantage of that so there are websites out there run by attorneys and other people who will help you set up a limited liability corporation LLC and you set that up in Montana and this is how the thinking goes the LLC buys that super car or that RV that costs six figures and they own it and they registered or licensed it or if you want to call it in Montana and then of course you as the sole owner of the LLC can then just drive it around as your company car in any state you want including the forty nine that aren't Montana so if you ever go to a car show and you see a lot of high-end cars don't be surprised you see some with Montana license plates and if you go through a RV park or state park where they've camping you'll often see our v's with Montana plates and many of those people are not from Montana many of them are from other states and they simply did this to take advantage of the favorable tax situation in Montana so I wrote an article pointing out there's some pitfalls to this and almost immediately upon that going up onto the internet I got a frantic email from an attorney in Montana I said Steve quick take your article down and I'm here to tell you if I took down every article and everything I did that people disagree with on the internet I would have no internet presence at all so I wrote him back and said no but why and he said well I'm an attorney this is all I do you're gonna put a dent in my business unless you take your article down and I said well I got a question for you is there anything incorrect false or otherwise misleading or wrong about my article and he says well yeah the title because you call it a scam and I said well you're an attorney I'm an attorney we both know that scam is an opinion much the way if I said I don't like the Mona Lisa I think it's an ugly painting an art expert can't call me a liar because he believes it's the most beautiful painting on earth he would just say oh you have a different opinion than I do and we're gonna have to agree to disagree so I said so you don't think it's a scam I do what else and he said well I've helped a lot of people with this I said okay then he said can I call you now when someone asks that they can call you rather than communicate with you through writing you realize that either they don't like to type or they don't want their words remembered and I said well I prefer email because in case there's ever a discussion later about what we were actually talking about I don't want there to be any debate I said how about this you can call me if I can record the conversation and he wrote me back so why do you want to record it I said well because I don't want anybody to be able to say later that you and I discussed something and we don't understand what we discussed some time went by and finding said fine I'll call you you can record the conversation so he called me now I'm not gonna play you the recording of the conversation because it's too long and I also didn't ask for permission to broadcast and I simply said I want to record it for posterity but we had the discussion and he said Steve what we're doing is perfectly legal I said yeah probably in Montana it might be I don't know I said I'm a licensed in Michigan you're licensed in Montana two different worlds and he said okay how could I convince you that this is correct I said well let's just walk through the hypothetical okay I'm not an attorney in Michigan here I'm just a guy from Michigan he was okay I said I call you and say hey I want to buy a supercar million-dollar supercar can you help me with that and you say yes right yeah I said you set up an LLC in Montana for me you're the resident agent for it I pay you for this and then my LLC buys the million-dollar supercar and they own it correct yeah I said but then I get to drive it because I'm the sole owner of the LLC I could like a company car anywhere I want yes and I said and that does not run afoul of the tax laws and Michigan's no it does not and I said are you licensed in Michigan he said no I said so if I had just called you and asked you for some advice weren't you just dispensing legal advice and a state you're not licensed in and he said oh I'm sorry I never give legal advice outside of Montana because I only give legal advice inside Montana and I'm gonna speaking to people outside of Montana you say I'm speaking about Montana law I said so let me ask you the question again exactly as I phrased it before does this run afoul of Michigan law and he said oh you'll have to check with the local attorney in that one and here's the thing buried on these websites it'll say things like sales taxes generally do in the state of registration your vehicles will be registered in Montana which has no sales tax you will need to understand and comply with use tax laws in the states where the vehicles are located okay I said so I noticed you Blaine would like that on your website and I go and that's because you can't give advice outside of Montana correct he said yeah I said so when you tell people that I'm gonna do this for you do you then tell him oh by the way before I do this consult with a local attorney and he goes yeah sometimes I do I said oh okay sure you do so here's the thing he then said that he had another thing to add he goes by the way he goes I have a way to make this bulletproof and I go what's that he goes I tell my clients that once they licensed the car the RV in Montana he's I tell them keep it in Montana for a year store it in Montana and at the end of the year then you can take it out of the state drive it anywhere and probably even get it retitled in your state I said probably or do you know and he said well it depends in the state I said no I'm in Michigan he goes well I'm not sure you have to look that up so now he's gonna backpedal and say he does not know what happens in other states I go how many of your clients actually do that where they literally buy the car put it in Montana and leave it there for a full year before taking it out of the state and he goes well I don't know I don't actually keep track of these things because but I I advised them that that's a idea I said okay but you don't know how many people actually do that he said no so I said okay so whatever I decided not to pull down the article nor did I make any changes to it but the interesting thing is that with the recent thing in the news about how Georgia is now cracking down on this if you were one of the people who bought a car through an LLC in Montana and are driving in Georgia there's a good chance that the people from the tax office in Georgia I don't Liz called or to come knocking on your door one day and say hey you've got that super car in your garage with a Montana license plate on it what's that all about and you're gonna say oh well it's not owned by me it's owned by an LLC out of Montana and then you can make the argument with the people there in Georgia about whether or not what you're doing is legal or lawful and I'm not going to advise you on that cuz I can't I don't the law is in Georgia okay but it appears that the Georgia officials think the law is on their side and they're not chasing people down and say hey you know you owe us some taxes for this thing that you did and one of the things that frightens me is there are states out there that actually reward people who narc out their neighbors and say hey by the way my neighbor's cheating on his taxes and I know because he's got a Montana plated super car his garage I don't like the idea about there being a bounty on my head so I could never do this but then again I'm not gonna be buying a million-dollar supercar anytime soon but as your attorney joking of course but as an attorney my goal is to be paranoid on your behalf in other words you don't worry about things I worry about things okay and that's what you pay me for so when you come to me and say Steve I'm thinking about doing this LLC thing in Montana and I'm wondering if it's a good idea what kinds of problems should I be thinking about and I'm gonna tell you right now that the other problem no one ever addresses is the insurance okay and I mentioned this in my article the pitfalls of the Montana license plate scam that there's two problems one is with your local taxing authority it's not Montana and two the insurance on your super car so I had mentioned that in the article and in response to it very recently somebody went on there and said Steve you're an idiot which I hear quite often because I just call my agent and say hey put this car on my policy and he just asks what's to make what's the model what's the year what's the VIN and he types it in he says bump your premiums gonna go up but cars insured he goes so my car's insured no problem what do you think the problems going to be and I said well you have a problem because if you look at your insurance policy which no one ever does the contract underlying the arrangement you have with your insurer it'll say on it things like oh where do you keep your car where do you gurage car and it'll say things like you need to keep your car registered properly or you know comply with the law things of that nature so when you call your agent let's go through this hypothetical here you call your agent say I want to add my supercar I just got in a supercar I want to add it to my policy again the VIN make model year above above above and my policy premium goes up a little bit he said they're happy with that I'm happy with that you're an idiot to which I say oh I'm sorry you're jumping the gun because you're happy at the moment they're taking your premiums you're measuring the transaction at the wrong spot you need to measure the transaction as to what happens when you file a claim because of course when you're paying them money they're happy with you they'll take your money all day long when you file a claim you will discover the insurance company suddenly somehow arrives at a follow mood their mood changes there's suddenly no longer your friend there's someone that they consider to be adversarial to you because you want money from them so when you file a claim on your supercar and you say hey I was just involved in a car accident somebody damaged my supercar but hey don't worry I'm insured I added it to my policy they're gonna go wait a second first of all who owns the car because you are a person the cars owned by an LLC out of Montana did you even have an insurable interest in this car question number one question number two of course is why does it have Montana plates on it if you're driving it primarily in Georgia or Florida or California or Michigan why doesn't it have the correct plates on it and they might go dig through the policy someplace and find out that you've committed some form of fraud there because you've got the car plated wrong but again it's gonna depend on your policy and you have to check your own policy if you buy a supercar through an LLC in Montana to see if in fact you might run a follow of something but the point of the matter that I'm trying to make here is that when you file the claim with the insurance company they don't just stamp it approved and throw money at you in fact most insurance companies don't have an approved stamp they've got a denied stamp which they wear out and replaced fairly often but their approval I don't me wrong they do approve some claims but they approve the claims they have to approve because they're so solid and there's not much way they can weasel out of it but if they can weasel weasel they will and when you file the claim on your super car and say I was involved in a car accident somebody damaged my super car here in Michigan but the cars plated out in Montana and it's owned by an LLC there that's gonna raise some eyebrows and eyebrows being raised on the other side of the transaction you don't want to happen now the funny thing about it is I mentioned this to the commenter on Jalopnik who said I just called my agent and added what's the problem and I said because when you file your claim they might deny it based on what I just told you and he says well I'll sue their ass haha I added the haha but I could sense it in the way he wrote it I'll just sue their ass now you have to understand I'm an attorney i sued insurance companies before I've gone to courts I've stood in the courtroom and tried a case with an insurance company I've done this I can tell you what it's like when somebody who's never sued an insurance company who's not even an attorney tells you I'll just sue their ass it reminds me of the little toy Chihuahua that you see on the other side of a chain-link fence as you walk by and it starts barking at you like it's got rabies and it's barking incessantly and insanely to the point where you're looking at it going huh and you realize if you could translate what it was saying dog into English it's saying I will destroy you I will kill you all as soon as I get through this chain link fence and you look at the Chihuahua and you know that that's what it's saying and that's what it's thinking and you laugh ha ha stupid dog it's on the other side of the fence and if it got out here and tried to bite me it would injure its teeth on my shoes it can't do anything to me it's funny that it thinks it can but it can't so when the guy on Jalopnik comments because I'll sue their ass ha ha I'm reminded of the toy Chihuahua behind the fence because you threatening to sue an insurance company does zero you actually suing the insurance company zero they don't care they can suit all the time and as I pointed out in a previous video about how to vote for judges in Michigan to sue the insurance company even if you win you gotta pay your own attorney fees so you've got to find an attorney who will take your case and you have to pay the money upfront to screw their ass and when you go to your attorney's office and go hey I've got this great case I want to talk to you about he says sit on down show me your cakes and you go I was in an accident my super car it's got Montana plates on it it's owned by an LLC out of Montana and my insurance company seems to think that I committed some kind of fraud when they called him up says simply add this car to my policy even though Montana plates on it it's owned by an LLC in another state and what's funny is I've had people say Steve how would the insurance company know that the car was plated out of Montana I don't know the police report you don't just pay money because you'd call him say hey you owe me money they're gonna investigate the claim and say show us the police report we want witness statements gonna talk to people and one of the things our gonna say is can you show us the registration for the car and you go oh yeah the registration it's a Montana registration and it doesn't name me as the owner names an LLC the insurance company oh wait a second there's a disconnect between the person filing the claim and the entity that owns the car gee I wonder if they might jump on that like it's a loose ball in the end zone so the kind that I'll just sue their ass doesn't actually amount to anything because if you could find an attorney to take the case you get the payment of your own pocket and it's a very good chance you'd lose because if you look at your insurance policy and read it again which nobody ever does and dig through it you'll find language in that it actually says if you've made any false statements on this application or if you make any false statements to us in the future we can deny claims you make based on your false statements to us so when you go into court after you've sued their ass the attorney for the insurance comes to walk up the judge at the bench say your honor here's a copy of the policy here's a copy of the police report showing the car that was damaged you'll notice there's a big disconnect here like I just mentioned we want the case thrown out on that alone and there's a good chance a case to get thrown out now is it possible you might get lucky and this might get paid yeah it's possible but a better question would be what would happen to you if you were to actually call up your insurance company and say hey I've got my own car in my own garage here in Michigan and I want to add a super car to the policy and they said okay what's the VIN and say hang in a second I don't make sure it's clear I don't own the car I own the LLC that owns the car insurance person's gonna go what and you say yeah I bought it through an LLC in Montana because they've got favorable tax laws there but I'm driving it in Michigan with a Montana plate are we cool with that and see what happens so I've yet to hear from somebody who actually said I spoke to my insurance agent I explained everything to him and they were cool with it they said yeah sure go ahead we'll slide this super car onto your policy even though it's titled to somebody else in another state so and and again like I said the concept that you can just sue their ass won't help you any so that is the problem with the Montana license plate scam I'm gonna put the links to David Tracy's article and my article in the comments below questions or comments as always shooting my way thanks for watching thanks for listening bye bye

Channel: Steve Lehto

Views: 228,580

Rating: 4.5241017 out of 5

Keywords: Michigan Lemon Law, Lemon Law, Michigan Lemon Law Attorney, Michigan Lemon Law Lawyer

Id: ebDF-C7GJec

Length: 17min 51sec (1071 seconds)

Published: Mon Oct 29 2018