Montana has long served as a tax haven for supercar owners who don’t want to pay the full sales tax on their pricey rides. The recipe is simple: form a limited liability company in Montana, buy and register your supercar through the business, and avoid thousands of dollars in home-state taxes.
But this legal loophole is rapidly closing, as other states have begun to crack down on the evasive practice. Utah led the way last year, pledging to investigate state residents with cars and boats registered in Montana. California then joined the party by deploying license plate readers to identify Montana-registered vehicles that regularly roll around in the Golden State.
This plate reader scheme was seemingly effective, as on Friday, California Attorney General Rob Bonta announced charges against 14 Bay Area individuals for failing to report $20 million in luxury vehicle sales. Specifically, AG Bonta, alongside the California DMV and California Department of Tax and Fee Administration, claims that the state lost out on over $1.8 million in taxes after various supercars were purchased and registered for use outside of California while remaining in the state.
Wes Duenkel
“A 2024 investigation by DMV, CDTFA, and the California Department of Justice (DOJ) revealed a scheme stretching back to 2018, in which the defendants, working individually and in concert with each other, prepared and submitted false CDTFA forms, DMV forms, and bills of lading, indicating that vehicles were purchased for use outside California. However, none of the vehicles were shipped or used outside of California — they were delivered, driven, and stored within the state. The vehicles included a $1.8 million McLaren Elva, $1.5 million Porsche 918 Spyder, and $1.26 million Ferrari F12TdF, among others,” the release, which was brought to broader attention on Reddit’s r/cars forum, reads.
Now, AG Bonta doesn’t explicitly say the Porsche 918 Spyder and Ferrari F12TDF were wearing Montana license plates—but the complaint filed in the Superior Court of the State of California in Sacramento County does. The Treasure State is the only one where such tax evasion remains possible, and the complaint shows significant discussion among defendants about registering their vehicles in Montana. In the case of California’s illegally registered machines, the California DMV says it has launched over 80 investigations since 2023; in total, the Golden State has recovered $2.3 million in owed taxes.
Martyn Lucy – Getty Images
California plans to continue cracking down on evaders. “Every dollar of unpaid taxes is a dollar taken from California’s roads, schools, and the vital services our communities rely on. Schemes that defraud the government of millions in taxpayer money will not be tolerated. Today’s announcement should serve as a reminder: If you break the law and engage in fraud and theft, my office will hold you accountable,” Attorney General Rob Bonta said.
Montana is not the only state where questionable registration practices have been seen. Vermont previously acted as a registration refuge for vehicles 15 years or older for, well, anyone, as the state didn’t require a Vermont address to receive a valid registration. However, this practice was generally seen as less about tax evasion and more about keeping aging clunkers on the road legally. Still, Vermont officially closed the loophole in 2023, citing the need for motor vehicle owners to establish a legitimate connection to the State of Vermont. Given these charges—and continued pressure from neighboring states like Utah—we wouldn’t be shocked if Montana reforms its registration process in the future, either.
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