New legislation looks to crack down on RV fee scammers - KWWL - Eastern Iowa Breaking News, Weather, Closings

New legislation looks to crack down on RV fee scammers

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DES MOINES (KWWL) -

Troy Mininich owns one of the many RVs lined up tailgating this weekend at the NCAA Wrestling Championships in Des Moines.

Paying registration fees on these high-end vehicles, however, is no picnic.

"It's not worth going the route that some of these bigger RVs do," he said.

All Iowa vehicle owners are required to pay an initial 5 percent in new registration fees when making the purchase.

The Iowa Department of Transportation is finding, however, that not everybody is.

"People that are residents of the state would establish an out-of-state limited liability corporation solely for the purposes of being able to register and title their vehicle," said Major Paul Steier with the state's Office of Motor Vehicle Enforcement.

A $1 million RV purchased in Iowa would, for example, cost $50,000 in new registration fees.

To get around that, scammers are setting up fake businesses in states like Montana, where there is no charge for new registrations.

Instead of paying $50,000, the scammer obtains his registration by merely paying a small fraction of that in lawyer fees.

"It's really somebody intentionally trying to set up a corporation that has no legitimate purpose other than to avoid paying the Iowa fees," Steier said. 

Because of a loophole in the Iowa code, officials can only issue a $150 citation if the scam is detected.

A new bill that recently cleared the Iowa Senate would pit the tax evader with criminal charges and penalties.

"If you evade over $1,000, that is potentially a felony," Steier said.

The Department of Motor Vehicles has already discovered 36 businesses set up to evade more than $800,000 in registration fees.

Officials say there are more investigations pending.

Registration fees go toward the Iowa Road Use Tax, which fund much-needed improvements to Iowa's roads and bridges.

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