Beginning March 14, Flathead County residents will start experiencing shorter wait times at the county Department of Motor Vehicles as the Treasurer’s Office halts its processing of title work for limited liability companies (LLCs) and their registered agents — clientele that accounted for nearly 7,000 of the titles processed by the division in 2018.

Longstanding state laws have allowed out-of-state residents to establish LLCs in-state, which then permits them to register their vehicles in Montana. The process has granted thousands the ability to legally skirt hefty taxes in their home states. Those wanting to establish an limited liability company go through a “local registered agent,” or company that acts as a sort of third party in assisting the out-of-state entities.

“Do you think all massive Fortune 500 companies live where they incorporate their company? There is no reason whatsoever to be a personal resident of Montana to own a Montana LLC,” notes the website of one local agent service in Whitefish, $49 Montana Registered Agent LLC. The website goes into other details, outlining why Montana is a good choice for saving thousands of dollars on title work by establishing an LLC.

For years, registered agents in Flathead County have gone through the county Motor Vehicle Division. County Treasurer Adele Krantz said the influx of LLCs over the years, combined with Flathead County residents needing to take care of their title work has clogged the phone lines and office lobby.

According to Krantz, some residents have cited wait times of up to three hours.

“We’ve kind of been bombarded by the lots and lots of LLCs coming through,” Krantz said. “We’ve had to staff more and pay overtime to accommodate them.”

Starting next week, those from out-of-state looking to have their title work processed, as well as LLC registered agents, will be outsourced through a company called MVD Express instead of going through county resources. They will also pay a $25 fee for registrations to MVD Express.

The change for Flathead County comes after local officials brought their concerns regarding LLC titles to state officials.

They highlighted, among others concerns, how LLCs seeking in-state vehicle registrations have flocked to Flathead County in particular, because there is no county option tax. So those who register their vehicles in Flathead County have not been required to pay a tax when doing so, whereas other counties, such as Missoula, collect several million dollars a year from residents by having such a tax in place.

“Let’s say I live in California and I own a $500,000 motorhome and I register it as an LLC in Montana,” County Commissioner Phil Mitchell said, citing an example. “If I register it in my home state it would probably cost $3,000 to $4,000 a year in taxes. If I do it here in Flathead County, it’s $125 bucks.”

Mitchell said the decision to not have a county option tax was voted on years ago by Flathead County residents, and should residents ever wish to add one, it is something that would have to again be decided by voters.

Mitchell said he thinks it’s unlikely that would happen, because low-cost title work is something that benefits everyone as is.

“With this [no county option tax] we are trying to take care of our local people with Montana 7 license plates [plate number for Flathead County],” Mitchell said. “The system was being abused by all the LLCs coming to our county.”

Krantz said because the county has no county option tax, the money collected by the local Motor Vehicle Division goes to the state instead of the county, with the exception of a $5 administration fee for each “specialty plate” that’s issued. Regardless, the county has continued to hire additional staff in order to manage the volume of those looking to register vehicles, all while not being reimbursed by the state. According to state data, Flathead County collected and distributed to the state, approximately $3 million just for LLC title and registration fees.

According to data provided by Krantz, the Motor Vehicle Division processed the most LLC titles in 2018 during the month of August when 720 titles were processed. During this time, Mitchell said it wasn’t uncommon for wait times of about an hour and a half.

Krantz says the department doesn’t anticipate any lay offs within the local department, but predicts overtime pay will be greatly reduced.

Reporter Kianna Gardner can be reached at 758-4439 or kgardner@dailyinterlake.com