With all those Montana license plates clustered in Phyllis Smith’s driveway, you might reckon it’s a cowboy convention.
No, the rodeo has not rolled into town. Smith, a North Miami Beach councilwoman, and her husband, Woodrow, have simply hit on an obscure way to avoid paying the taxes that everyone else pays.
Those plates are a telltale sign that someone has created an LLC — or Limited Liability Company — in the state of Montana. That allows them to buy vehicles and avoid paying the 7 percent Miami-Dade sales tax. The LLC costs up to $1,200 to set up, but that would be far offset by the sales tax savings on the vehicles in the Smith family’s driveway, which include two canary-yellow, king-size Hummers, a yellow (yellow is the councilwoman’s favorite color) Chevy SSR, and another vehicle indistinguishable under a protective cover.
Consumers can duck the Florida sales tax even if they buy the vehicle in Florida, provided the car, truck or van is registered in Montana in the name of the company.
The Montana plate tax-avoidance formula is touted on the Internet at sites like rv-dreams.com and mtvehicles.com. They offer help with setting up the LLC and with obscuring the names associated with the company in public records.
Florida law says motorists are supposed to change their auto registration within 10 days of moving to the state, provided they have a job or have children in school. To violate that is a second-degree misdemeanor, punishable by up to 60 days in jail and a fine up to $500. Councilwoman Smith, who is not a newcomer to Florida, works as a Realtor.
However, the Montana LLC apparently validates the out-of-state-plates gambit. Julie Malady, a manager at Dimmitt Cadillac, said the practice is not uncommon. She and an individual at Devoe Hummer said dealers will fill out the registration paperwork and send it to the buyer.
Sunpass tallied 7,000 Montana plates on Florida’s Turnpike last year.
This has been going on for years, and some states have tried to crack down on the practice. California set up a program called CHEATERS to lasso the bogus Montanans, and Massachusetts established a hotline for reporting longtime residents displaying out-of-state plates. Nebraska adopted a law this past April targeting “shell” LLCs set up solely for avoiding taxes.
“They belong to my husband’s business, and I have no idea about that,” Smith said when quizzed about the Montana-plated cars. “He has businesses in three states, and I’m not involved. I don’t know what he does. You would have to ask him.”
Woodrow Smith did not return calls seeking comment. The signs on the side of the Hummers advertise his business, Central Plumbing W.S. Company, which has a 305 area code. No hint of a branch in Montana.
Although Councilwoman Smith says she doesn’t own cars and often catches a ride to city hall with others, her campaign biography does note that she is a member of the Hummer Club, a national organization devoted to the boxy, gas-gulping vehicles.
Besides no sales tax, there is apparently another incentive for following the Montana license plate plan. By keeping the vehicles “garaged” in Florida but registered and insured in Montana, a motorist can theoretically enjoy cheaper insurance rates. According to insure.com, an independent consumer insurance website, Florida was listed in the top 10 states for highest average cost for auto insurance rates in 2014.
It might all be legal, but that doesn’t mean it is politically smart. Tax avoidance by someone whose job is to vote on setting other people’s property tax rates could raise eyebrows.
Councilman Anthony DeFillipo said “it looks bad” to have a colleague regularly drive a car that is registered in another state.
“I’ve seen her in the big yellow Hummer and the yellow Chevrolet, plus the big white car. At the end of the day, she’s an elected official, she’s homesteaded and she’s a licensed Realtor in the state of Florida,” DeFillipo said.
Councilwoman Barbara Kramer said she gets angry thinking about it, although there is nothing to be done because the practice is apparently legal.
“But to me, it’s cheating,” she said.
Councilwoman Marlen Martell initially said she would not comment, but then recalled that when Smith first ran in 2007, the plates became a hot topic of discussion.
“That got a lot of people huffing and puffing,” she said.