I posted this thread in response to a question which 316 asked me in the GOOD MORNING THREAD about original receipts and how carbon and cash register receipts can fade over time. Since this answer got kind of long, I didn't want to put it in the Good Morning Section and since this may be of some interest to others, I thought maybe it should be in it's own off topic thread.
The question posed by 316 was essentially "What happens if your original receipt or documents fade over time?" as this was part of a discussion about extended warranty companies requiring the original sales receipts, in some cases, in order to process extended warranty claims.
This is also an issue with the IRS and their audits, but they have allowed me to use photocopies of receipts and checks, etc. in the dozen or so audits I have had the opportunity to personally experience with them. This led to me explaining about the process we use to deal with this issue as well as what happened when I needed one of the original documents and was quite surprised to find out that it had vanished at a time when it was REALLY IMPORTANT.
Ok, Here we go.........
Funny you should ask. My wife always takes the receipts and makes a photocopy of them because she keeps everything in 3 ring binders alphabetically and chronologically by month, so she wants them on 8.5 x 11" paper so she can 3 hole punch it to fit in the 3 ring binders anyways and it's faster to copy the receipt than to try to tape it to the page. Then she puts all the original receipts in a clear pouch in the back of the 3 ring binder for that month so she has the original and a copy. We haven't had any of the originals fade to the point of "being invisible" yet but some are certainly on their way.
But I did run into an interesting problem with another important document, which was on a form of copy paper from being a multi copy document run through what looks like a dot matrix type printer. Some of my vehicles are registered and owned by a Montana LLC which is my personal name. So, the registration and title paperwork simply says my name, LLC and then at the Montana Address which is my Montana lawyers office in Missoula, MT.
The reason I have done this is a couple fold. Montana has no state sales tax on vehicle purchases (or any purchases for most things still, last I checked) and they also issue lifetime (permanent) license plates on many different vehicles like trailers and my Harley's, etc. Also, I wanted the extra personal liability shield which the LLC provides because when I started the LLC, I was "Semi Professionally Drag Racing" and there is a element of risk to going 0 to 230 mph in 1,320 feet or 0 to 180 mph in just 660 feet and should there ever be an incident, I wanted the extra holding company "entity veil". So my race cars, semi truck and trailer, motorcycles, track scooters, etc, etc. ended up being owned by the LLC., along with a couple of my personal vehicles like my Mercedes SUV, etc.
Well, I bought a 45' diesel motor coach a few years ago and the sales tax in Michigan would have been $26,000 plus the annual plates are something like $1,800 because it is based on value, etc. In Montana, if you are a resident, the permanent plates for that vehicle were something like $195. The sales tax on the Semi Truck and custom race trailer would have been another $30,000 plus in Michigan and in Montana, it was merely the cost to set up the LLC and the lawyers fees to maintain it, which was less combined than Michigan wanted just for the license plates for the Diesel motor coach annually. So needless to say, over a few years, it saves you a lot of cash.
Well, I was pulled over this spring on my Harley for 97 mph in a 70 mph zone and when I reached into my saddle bags and pulled out my certificate of insurance and registration, I hadn't opened the registration in a couple of years because it isn't renewable since it is a permanent issue. It also is on a 8.5" x 11" sheet of carbon copy paper and when I opened it up and handed to the officer, he looked at me and said "Do you realize that this is a blank sheet of paper?" (other than the Official State of Montana letterhead it is on) Sure enough, all of the printing was GONE since it was the carbon copy. Turns out the moisture from riding in the rain, etc. caused the page to "vanish", even though I had it in a plastic shipping label pouch stuck to the inside of the saddle bag but not sealed shut so I can slide the documents out when I need them.
I was shocked. I think he could tell by my reaction that I was as surprised as he was. I thought for sure I was getting a "free ride downtown". He ran my plates through the lien and background check and it came back clear. But what really seemed to break the ice was the fact that I had already stopped and was waiting for him when he had turned around to "speak with me". I knew he would be really "unhappy" if I made him run me down, which I knew from past personal experience. And I had my I.D. and CPL out when he arrived and immediately declared the firearm I was wearing. He "explained" that I should probably "cool it" and he also said I hadn't had a ticket since 1994. (Important note, I don't often ride or drive like I was in this instance. We had just made some "tuning enhancements" and I was trying them out. Normally, I am quite the responsible guy as evidenced by my 21 year ticket free history).
But he did say to me " I can assure you that if you keep these sorts of stunts up, that will no longer be the case". He was actually really cool about the whole thing and he mentioned that he appreciated I didn't make him "chase me". See, personal experience does pay off........ It also doesn't hurt that my brother is a Captain in the Sheriff's department so the officer was quite familiar with my last name, which is very unusual.
I have been through 3 State of Michigan tax audits because of my chronic IRS "relationship". While Michigan wasn't happy about me taking advantage of the "loop holes" which exist, there wasn't anything they could do about it. This is one of the reasons why most commercial vehicles you see all have plates from either Utah, Montana, some are from Delaware, Maine, etc, depending upon their state of corporate establishment and the tax regs which permit you to take these advantages if you know the law.
Check out the next UPS or Fed Ex truck you see and chances are the license plates will be from a state other than the one you live in. Also, most of the Luxury Motor coaches have Montana plates for the same reason. I am all for paying my share of taxes but I don't want to be stupid about it. I research the law and use every available legal remedy to keep as much of my own money. Yes, it has brought me into audits, etc., but I always represent myself and I have yet to lose one.
One more morsel to think about for those of you who are boat owners. I set up an LLC to own our boat when we purchased it, but it is NOT in my personal name because I want the LLC to be resalable to others. The reason I did this is because that way the boat is owned by and registered to the LLC and when you sell the boat, you actually sell the LLC company which owns the boat and that way the boat isn't subject to either state sales tax nor is it required to be re-registered, all of which are expenses and the larger the boat, the larger the registration and tax fees. It also provides you with the liability shield so you insure the boat through the LLC (same with all vehicles in any LLC). To avoid some goofy name that a new owner may not like, I usually just name the LLC similar to the boat so it makes sense. My boats LLC is a variation of the boats size and builder such as "The 45 Sea Ray Sun Dancer, LLC".
Hope some of you find this information of value to help minimize taxes, fees and liabilities legally......