How drivers are evading taxes and other fees with Montana license plates
Utah and California are clamping down on owners of supercars and other exotic vehicles using a Montana loophole to shelter assets from sales tax, registration fees, and environmental rules in different states. Residents outside of Montana acquire these savings by forming an LLC in Montana, using the LLC to purchase an asset with no sales tax, and registering it with a Montana license plate.
As first reported by Bloomberg, Montana is home to nearly 200 agents who help people out-of-state use the loophole, with many of them being law firms. In late March, Utah Governor Spencer Cox launched a data-sharing arrangement to locate and evaluate tens of thousands of tax evaders, with a special focus on Montana-registered cars and boats. Those backing Utah’s effort say the initiative could yield up to $100 million in back taxes. After gathering data showing that 10,000 vehicles worth nearly $2 billion had been sold by California dealers to Montana LLCs since 2022, Golden State DMV officials are using surveillance systems and plate readers on roadways to identify Montana plates and, subsequently, tax evaders.
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“This is really an abuse of our tax system. They pay nothing to support our state, just a small fee to Montana for the opportunity to evade taxes in Utah,” Utah tax commissioner John Valentine said to Bloomberg. In California, sales tax on a supercar can exceed 10%, and the state also has an annual Vehicle License Fee based on an automobile’s value, according to Hagerty. California drivers registering a $300,000 supercar could easily save tens of thousands of dollars with Montana’s loophole, which also allows multiple registrations under a single LLC. California’s DMV retrieved $307,000 in taxes and penalties from one owner of numerous Montana-registered Porsches and Ferraris. Former Montana revenue director Dan Bucks estimated there are likely over 600,000 vehicles registered in Montana, but driven in different states.
The numbers don’t add up
According to Bloomberg, in 2023, Montana had 2.3 million registered vehicles but only 879,000 licensed drivers, more than double the national average. Montana has also registered a larger number of luxury and high-performance vehicles than more populous states. In 2024, Montana had 10,757 registrations of vehicles made by Aston Martin, Bentley, Bugatti, Ferrari, Lamborghini, McLaren, Pagani, and Rolls-Royce, according to Bloomberg’s data obtained through an open records request. In 2021, Montana recorded 30,000 LLC registrations, whereas Oregon, a state with nearly four times the population of Montana, had 55,000 LLC registrations, according to The Missoulian.
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Final thoughts
Drivers outside of Montana looking to register an exotic car in the state through an LLC, or already have, are likely in for a rude awakening. While Utah and California are the two states most actively pursuing tax evaders, California’s legislative practices tend to have a ripple effect on other parts of the country. In other words, there may soon be fewer Lamborghinis registered as company cars.