FreedomRoads LLC, a Chicago-based RV retail chain, is hiring a lobbyist to fight a Montana law that allows out-of-state business entities to purchase cars and RVs in the state, which has no sales tax.
The law has spawned the formation of thousands of limited-liability corporations – LLC’s – by out-of-state residents for the sole purpose of buying recreational vehicles.
Terming the practice a “form of tax evasion,” FreedomRoads Chairman and CEO Marcus Lemonis said his company would be “engaging one or multiple lobbyists in surrounding states and in Montana to challenge this law.”
FreedomRoads does not have any dealerships in Montana.
“It’s come to my attention that our dealerships have been losing several deals due to this loophole,” explained Lemonis, whose company accounts for over $1.2 billion in sales through 50 stores nationwide. “If we were losing business to Montana because of better product or better service or lower prices, then that’s a different story. But when they condone what I feel is a fraudulent loophole, then we need to take action.
“I think we need to take a stance to protect not only our interests,” he added, “but also to make a point for the industry that it will not tolerate this type of business practice. And we are willing to spend our resources to get this accomplished.”
Montana’s Motor Vehicle Division estimates that 4,000 to 5,000 LLC’s have been established for purchasing RVs, generating $3 million in annual revenue from out-of-state RV registrations, according to the Billings Gazette. But Lemonis contends the law actually is taking money away from local community coffers.
“Basically,” he maintained, “the law is eroding a significant amount of money from the local tax base.”
The Gazette reported that legislation was proposed three years ago to “close the loophole that allows vehicles to be registered in Montana without being garaged here.” However, the newspaper reports, the initiative was effectively defeated by lobbyists representing LLC lawyers and RV dealers.
“I am very familiar with past legislation, and it bothers me that lobbyists and dealers in Montana have supported this law,” Lemonis said. “If Montana wants to allow their dealers and citizens to purchase under this program, that’s fine. But when they allow out-of-state residents to purchase under this loophole, that seems highly unethical.”