{"id":240599,"date":"2026-03-28T08:23:29","date_gmt":"2026-03-28T08:23:29","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ca\/240599\/"},"modified":"2026-03-28T08:23:29","modified_gmt":"2026-03-28T08:23:29","slug":"california-senator-introduces-bill-to-close-montana-loophole-for-good","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ca\/240599\/","title":{"rendered":"California Senator Introduces Bill to Close Montana Loophole for Good"},"content":{"rendered":"

California is continuing its crusade against the so-called “Montana Loophole,” a tax evasion process used by many sports car and supercar owners in the Golden State and other parts of America. And this time, the state’s officials are using legislation as their weapon.<\/p>\n

On Wednesday, California state senator Jerry McNerney (D-Pleasanton) announced new legislation that would close the Montana registration loophole for good. The bill, officially known as SB 1406<\/a>, would expand California’s definition of who is a resident under state use tax law to include a shell company when at least one member of the business is a California resident. In other words, forming a limited liability company and registering your McLaren in Montana will no longer work if your primary residence is in California.<\/p>\n

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MARK RALSTON\/\/Getty Images<\/p>\n

“The Montana loophole is widening, with increasing numbers of tax evaders creating bogus shell companies so they can avoid paying sales taxes on Ferraris, Porsches, and pricey RVs, costing California tens of millions in revenue,” said Sen. McNerney, chair of the Senate Revenue and Taxation Committee. “SB 1406 will close the Montana Loophole for good and restore much-needed state revenues to fill potholes and make other essential road repairs.”<\/p>\n

SB 1406 will attempt to identify out-of-state shell businesses by looking for a lack of specific business activity, failure to maintain a physical location outside of California, failure to employ people or provide W-2 wage statements, and failure to file federal and state tax returns. The California Department of Tax and Fee Administration estimates that the Montana Loophole has been used in at least 2500 vehicle sales involving California residents. This accounts for approximately $20 million in lost annual revenue, the Tax and Fee Administration claims.<\/p>\n

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ERIC THAYER\/\/Getty Images<\/p>\n

This proposed legislation comes after California attorney general Rob Bonta charged 14 Bay Area residents<\/a> with failing to report $20 million in luxury vehicle sales earlier this month. The complaint filed in the Superior Court of the State of California in Sacramento County reveals that the owners of a McLaren Elva<\/a>, a Porsche 918 Spyder<\/a>, and a Ferrari F12 TdF<\/a> were all caught using Montana license plates allegedly obtained through questionable shell companies. The California DMV says it has launched over 80 investigations into illegally registered vehicles since 2023, recouping around $2.3 million in owed taxes.<\/p>\n

A California Senate Committee will examine the bill in the coming weeks. California isn’t alone in this approach, as Utah pledged to investigate state residents with cars and boats registered in Montana late last year. If this bill eventually passes, the implications for Montana-registered car owners are clear: pay up.<\/p>\n

Related Stories\"Headshot<\/p>\n

A New York transplant hailing from the Pacific Northwest, Emmet White has a passion for anything that goes: cars, bicycles, planes, and motorcycles. After learning to ride at 17, Emmet worked in the motorcycle industry before joining Autoweek in 2022 and Road & Track in 2024. The woes of alternate side parking have kept his fleet moderate, with a 2014 Volkswagen Jetta GLI and a BMW 318i E30 street parked in his Queens community.<\/p>\n","protected":false},"excerpt":{"rendered":"California is continuing its crusade against the so-called “Montana Loophole,” a tax evasion process used by many sports…\n","protected":false},"author":2,"featured_media":240600,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[7,9,8,47544,108180,9569,9568,108179],"class_list":{"0":"post-240599","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-california","8":"tag-california","9":"tag-california-headlines","10":"tag-california-news","11":"tag-content-type-news","12":"tag-contentid-9d43b971-55de-4e36-9211-a9370d3bdf4f","13":"tag-displaytype-standard-article","14":"tag-locale-us","15":"tag-shorttitle-california-wants-to-close-montana-loophole-forever"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/240599","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=240599"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/240599\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/240600"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=240599"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=240599"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=240599"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}