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Old 09-11-2014, 01:55 PM
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Save 5.5%-7% below invoice AND zero sales tax!

Well, for forum regulars we all know about the group buys in DC and TX (5.5%-7% below invoice pricing)...but did you know there is a way to pay zero sales tax too? I didn't either until today.

Miami-Dade power couple lowers (their own) taxes, raises eyebrows - Miami-Dade - MiamiHerald.com

Note: I do NOT condone this, nor would I do this. I am posting this as an interesting article. While I don't think you should pay more in taxes than you are legally obligated to pay, this scheme smacks of cheating and unfair to those that pay the sales tax. I paid like $3K in sales taxes on my Summit purchase and these people are paying zero....

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Old 09-11-2014, 02:07 PM
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Re: Save 5.5%-7% below invoice AND zero sales tax!

Yep, I agree.

But unfortunately there're people in this country that feel tax laws are unfair...so because they feel the taxes are to high, they shouldn't be required to pay them.

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Old 09-11-2014, 02:38 PM
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Re: Save 5.5%-7% below invoice AND zero sales tax!

This is nothing new and fairly commonplace for people with the knowledge to work the system.
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Old 09-11-2014, 02:43 PM
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Re: Save 5.5%-7% below invoice AND zero sales tax!

Which jail term is longer- tax cheating or insurance fraud?
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Old 09-11-2014, 05:28 PM
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Re: Save 5.5%-7% below invoice AND zero sales tax!

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Originally Posted by bmrisko View Post
This is nothing new and fairly commonplace for people with the knowledge to work the system.
Yep - but they usually don't park them all the time in their home driveway for personal use versus business use. This crosses the line...they are flaunting it...welcome to Miami (area). LOL

Another scheme that I was made aware of recently is foreigners without work visas ("green cards") in the U.S. (some are here legally, some illegally and some in the gray area of "visa overstayers") working. The commonality is the U.S. law says they do not have the papers to be employed "work" in the U.S. So, they will set up a company (usually an LLC since easy and inexpensive to set up) and contract the company to do business with other people. They are allowed to own a U.S. company just not "work". Well, they then "do the work" as a non-employee of the company and the money that would normally go to the employee is paid to the company instead...which is really them. A one person company that gets paid for work the company does but may not be considered "earned income" and hence not subject to FICA (Social Security and Medicare taxes). The good news is they are working, the bad news is they aren't paying all the taxes they should be and are not playing by the rules which harms the other legal immigrants who do play by the rules and go through the process for their papers to work, etc. Sorry for the rant...we don't need new laws, just effectively enforce the ones we have.
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Old 09-11-2014, 05:30 PM
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Re: Save 5.5%-7% below invoice AND zero sales tax!

they do this here where I live with rv's where they'll register it in Montana to avoid the 5%.think about that on a 150k rig. however, my state caught on finally, and couldn't understand why all of these Montana plates were doing in Iowa.
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Old 09-11-2014, 07:30 PM
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Re: Save 5.5%-7% below invoice AND zero sales tax!

Quote:
Originally Posted by Dan JGC View Post
Yep - but they usually don't park them all the time in their home driveway for personal use versus business use. This crosses the line...they are flaunting it...welcome to Miami (area). LOL

Another scheme that I was made aware of recently is foreigners without work visas ("green cards") in the U.S. (some are here legally, some illegally and some in the gray area of "visa overstayers") working. The commonality is the U.S. law says they do not have the papers to be employed "work" in the U.S. So, they will set up a company (usually an LLC since easy and inexpensive to set up) and contract the company to do business with other people. They are allowed to own a U.S. company just not "work". Well, they then "do the work" as a non-employee of the company and the money that would normally go to the employee is paid to the company instead...which is really them. A one person company that gets paid for work the company does but may not be considered "earned income" and hence not subject to FICA (Social Security and Medicare taxes). The good news is they are working, the bad news is they aren't paying all the taxes they should be and are not playing by the rules which harms the other legal immigrants who do play by the rules and go through the process for their papers to work, etc. Sorry for the rant...we don't need new laws, just effectively enforce the ones we have.

You needn't fret about people with LLC's not paying taxes. They pay all the same taxes that everyone else does.

All the profit from an LLC counts as income to the owners and then is taxed at the owners personal tax rates. It's just like a sole proprietorship (someone who works for themselves and reports income on 1040 schedule C). An LLC is a way to pay personal tax rates instead of corporate tax rates (which may or may not be higher)- but for most it's more important function is it protects you personally from getting sued into oblivion - someone that sues your business can only take the LLC's assets and not your personal stuff like your house.

You are correct the owners dont pay FICA/payroll taxes on their own income but instead you pay "self employment tax" which is equal to the employees FICA and the employers FICA for people that work for someone else. Many would prefer to pay 'payroll taxes' on their income- but the stupid messed up tax system wont allow it- since you dont pay payroll taxes you get no state disability insurance so you have to buy your own and you also dont get unemployment credits so god forbid your business goes under you get zippo for unemployment.

The only way to possible game the system is that you only pay the self employment tax on what you would count as salary and the profit over and above that is treated more like investment income so no fica. BUT the IRS is all over that and you must pay yourself a typical salary- so if you are a plumber and the business makes 100k profit you can't pay yourself 1,000 dollars for salary and then 99k without fica- they'll be on you faster than you can say 'i got over'.

It's probably just a way for people without working papers to avoid being asked for proof of eligibility to work. But the same tax rules apply.
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Old 09-11-2014, 07:58 PM
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Re: Save 5.5%-7% below invoice AND zero sales tax!

I wouldn't do it myself as i think it's too much of a headache for not enough payback.

But I'm on the fence to it's morality/legality. Basically the tax code is stupid and should be reformed, and until the morons in washington do something it's full of all these dumb loopholes. Half of my thinks since they exist and it's legal you might as well take advantage- Burger King moving to Canada as an example. Rather than whine and vilify BK, the pols should FIX the stupid system. But they don't becasue they actually enjoy the mess and their ability to create these crazy loopholes for their friends (aka the people that bribed them). The other half of me hates when people don't pay their fair share, as much as i hate taxes in my heart i understand the roads don't pave themselves so you gotta do what you gotta do so i don't mind in my head when i pay them.

As to the headache-

so you buy a 50k vehicle. You save yourself maybe 3-4k taxes depending on where you live. For that you have to pay to set up an LLC (article is full of it that it costs 1200- if you are a weasle you aren't paying a lawyer to 'do it right- so it probably costs you for like 2-300 on legal zoom)- then you have to pay an annual registration fee to the state to keep it alive. Then since you dont have a physical address in the state you have to pay a lawyer or a service to be your 'registered agent' each year- basically someone physically available to get papers served if you got sued. Then each year you have to waste time/effort and/or money to your accountant to file another set of taxes to the feds and now montana. So maybe over the course of owning the vehicle you spend another grand or so of your 'savings' but in the process you have to spend your life looking over your shoulder waiting on the shoe to drop. If you are that hard up for a couple grand over 5 years or so you're probably doing a lot more illegal stuff on your taxes that the IRS is going to go crazy ape over, so you're just giving them one more reason to sniff around your tax returns.

And along with all that you have to hope that montana never gets around to creating a law that sets a minimum LLC tax for out of state owners without any real business in the state.

I guess if you have a 150k RV or are like the politician in the article with a pile of vehicles it might make more economic sense, but still you have to hope Montana does not figure out they can make a big windfall on non-residents. And i guess there is always karma
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Old 09-11-2014, 08:29 PM
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Re: Save 5.5%-7% below invoice AND zero sales tax!

Just paying a one time sales tax would be nice what I hate is paying the sales tax and then this crazy property tax every year on top of that. $1500 property tax on my GC this year and that's every year it declines with value but very slowly.
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Old 09-11-2014, 08:53 PM
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Re: Save 5.5%-7% below invoice AND zero sales tax!

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You needn't fret about people with LLC's not paying taxes. They pay all the same taxes that everyone else does..
Nope, not really. I understand the passthrough tax structure but they don't pay social security since it isn't earned income - they pay themselves zero salary. That's the rub. If they don't worry around the "green card" laws and the visa laws they sure the heck don't worry about tax laws too including "FICA" which is the social security and medicare tax whether via a paycheck or through self-employment taxes. They don't care if audited because they will just close up one business and start another...by the time the IRS catches up to them the have morphed into something else. Plus, can always just return to their home country without consequences. That's how the mortgage fraud became so rampant...defraud lenders out of $1M (tax free) and hope a plan back to South America, etc.

A huge abuse is the refundable tax credit fraud that isn't being audited which basically allows people to pay zero tax AND get money back above and beyond what they ever paid into withholding. It is an open secret that no one is getting audited for it...I have even heard some illegal immigrants openly brag about it which explains all the tax prep shady store fronts in questionable areas. There are now several refundable tax credit laws and are being taken advantage of.

Sorry about the rant but unless you live in an area where there is rampant ongoing fraud and abuse of U.S. laws you just won't understand ... or even believe it is happening!
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Old 09-11-2014, 09:47 PM
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Re: Save 5.5%-7% below invoice AND zero sales tax!

Quote:
Originally Posted by Dan JGC View Post
Nope, not really. I understand the passthrough tax structure but they don't pay social security since it isn't earned income - they pay themselves zero salary. That's the rub. If they don't worry around the "green card" laws and the visa laws they sure the heck don't worry about tax laws too including "FICA" which is the social security and medicare tax whether via a paycheck or through self-employment taxes. They don't care if audited because they will just close up one business and start another...by the time the IRS catches up to them the have morphed into something else. Plus, can always just return to their home country without consequences. That's how the mortgage fraud became so rampant...defraud lenders out of $1M (tax free) and hope a plan back to South America, etc.

A huge abuse is the refundable tax credit fraud that isn't being audited which basically allows people to pay zero tax AND get money back above and beyond what they ever paid into withholding. It is an open secret that no one is getting audited for it...I have even heard some illegal immigrants openly brag about it which explains all the tax prep shady store fronts in questionable areas. There are now several refundable tax credit laws and are being taken advantage of.

Sorry about the rant but unless you live in an area where there is rampant ongoing fraud and abuse of U.S. laws you just won't understand ... or even believe it is happening!

totally agree with what you wrote her- basically an illegal who is flaunting the law isn't going to care about paying FICA/Self employed/income taxes. But it has nothing to do with them being an LLC and everything to do with them ignoring the law. They could make a bogus C corp, and S corp, an llp, an llc, whatever. I was just trying to make clear that an LLC isn't evil in and of itself and IS subject to taxes like anything else- just that they're doing something fishy.

So I'm guessing making an LLC is more to avoid people asking for working papers. Any business that pays an LLC more than $600 a year has to submit a 1099 to the feds. To submit a 1099 the business typically demands an EIN (employer ID number which is like a SS# for a non-person) before they will send anyone a check for services rendered. To get an EIN you have to tell the IRS who is the "responsible party" and supply that persons SS#. So at some point someone vouched for the LLC with a SS#. This number might be stolen but if you have stolen SS# then you could just forge papers and work anyway.

AND if you just created a corporation- which takes no longer nor more money then forming a LLC (I've done both an LLC and an S Corp)- then a business actually doesn't need your EIN because they can pay corporations all they want without having to 1099 them. So why not just create a bogus corporation and never even need an EIN?


So I'm not sure why they would bother spending the money to create an LLC with an existing SS# when you could just pay for forged documents. OR- make a bogus corporation for the 100-200 fee to the state? Maybe they want to work just for homeowners who want to pay by check so the LLC needs to exist for the bank to cash the check? But wouldn't most non-business customers just be happy not to pay by check in exchange for a discount? (like plenty of American Citizens do to avoid reporting income to the IRS...) And again why not make a corporation?

Just a WILD GUESS- i think anyone can get a SS#- even if you dont have papers to work- apparently they issue SS Cards that say stuff like 'not valid for work' or the like . Or people that WERE once legal had a SS card but don't have the other papers required to go with it to complete an I-9 form- the SS# never goes away. But if you have the SS# then you can apply to be an LLC and be a responsible party.

Now if they pay their taxes after that point i have no idea- but in theory it's a loophole that the IRS wouldn't rat you out to ICE and you could keep working and get all their income from a K-1 (the w-2 like form you get from an LLC). And since it's not on a W-2 then there's nothing illegal about it- would be the same as owning real estate in the US. If that's the case then they have every incentive to pay their correct taxes to keep the IRS and others from asking questions.

On the flip side they might just sign up an LLC and get the EIN and run away and use some bogus address and so the IRS can never find them. But again making up a bogus corp is one less step (of needing to get an EIN).

Interesting hypotheticals. Thanks for posting. (PS- I live in a more rural area with lots of farms, my wife works for the government and deals with illegals regularly- so understand the background- I think up here mostly people are passing around SS #s or getting paid cash - havne't heard the bogus business route yet)
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Old 09-11-2014, 10:28 PM
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Re: Save 5.5%-7% below invoice AND zero sales tax!

^^^ Come to Miami and find out what is REALLY going on here! LOL Seriously, it is crazy. $100M fraud is nothing here. The local FBI office won't answer a phone call for under $1M fraud. It really is shocking.

The illegals you are taking about are here to work, the ones I'm talking about are here to take, laws mean nothing except to lull the law abiding people into being trusting sheep.

I know someone who put her condo up for sale (she lives several states away). Her realtor (a convicted federal felon that spent about 4 year in federal prison and about a half dozen state criminal things - yes, you can get a real estate license in Florida with that background, who knew - like I want this person to have access to homes when the owner isn't there) moved in furniture and leased the place out without her knowledge and pocketed the money (changed the utilities too as a "favor"). No joke. I mentioned this to several seasoned realtors and they were like "yeah, that happens" without even a hint of surprise. Still no joke. The police did nothing - it's civil matter. Oh, and the realtor then sued the owner for not getting a commission later knowing he'd get a pay off just to make him go away so she could close using another realtor.

You can own an LLC (or whatever business entity you wish that is a separate entity from the individual) as a foreigner so setting one up isn't the issue.

Just watch American Greed on CNBC - 1 out 2 or 3 are about South Florida. Seriously, I watch it and say "hey there's my city, there's my street that I live on, there's my condo building, there's that strip mall I go to, there's that guy that is always on the street, etc." One of the scenes I can literally freeze and see what is on my balcony...

Now I know why title companies in Miami will no longer accept bank cashier's checks for real estate closings....only wire transfers due to cashier check fraud. Again, no joke...although it is so outrageous you have to laugh (as long as you're not the victim).
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