- Registering a new car in Montana has a loophole that allows owners to avoid paying sales tax.
- The state has the highest number of registered cars per person in the United States.
- A new Utah law is aimed at cracking down on those who are using the Montana loophole to dodge paying taxes.
Montana is a famously empty state, 147,000 square miles but a population that’s not even a million people. So, yes, you probably need a car to cross those vast open spaces—but Montana weirdly has the highest car ownership by population in the United States, more than double that of car-crazed California. Should you happen to live in California, especially near Los Angeles, then you already know the reason that there are so many Montana-plated cars out there, because you’ve probably seen a supercar wearing one rolling up to your local Cars and Coffee.If you set up a limited liability corporation (LLC) in Montana, something that’s easy and not expensive to do, it’s possible to register an asset without paying any sales tax on it. So registered, you’re now free to take that asset anywhere you like, and if it’s a Lamborghini Revuelto, no one says you can’t be driving it down the PCH while dodging California’s 7.5 percent tax on new cars. That’s tens of thousands of dollars saved.Further, vehicle registration is inexpensive in Montana, and there are no vehicle inspections or emissions testing. Setting up an LLC costs as little as slightly over $1000, so it’s not just the supercar owners that are taking advantage here.However, if you want to talk high-end brands, the Montana Motor Vehicle Division reported nearly 11,000 registrations of everything from Aston Martin to Bugatti, McLaren, and even Pagani. Almost half of the registrations were for Ferraris.Obviously, lawmakers in other states aren’t happy about the practice of dodging sales tax via the Montana LLC loophole. There are storage rules in place to clamp down on this, but it’s relatively easy for the owner of a Ferrari to have the car delivered to Montana and stored there for 12 months, after which it’s aged into legality. There are companies operating large storage facilities for this specific purpose.georgeclerk|Getty ImagesStill, state government is fighting back. Utah Governor Spencer Cox signed a law last month that includes investigations into Utah residents who own cars and boats registered in Montana. They’re going after what could be $100 million in back taxes and penalties.Likewise, California’s DMV is using plate readers to sniff out Montana-plated cars and then tracking registrations to catch would-be sales tax evaders. Bring that Montana-plated 296 Speciale back to California a month early, and the DMV is going to be looking for you.Montana officials don’t seem much bothered by the LLC loophole, and why would they be? People are paying registration fees and funneling money into LLC mills, while at the same time not causing wear and tear on infrastructure because they aren’t driving their cars in their own state.But Utah’s new law, bill SB52, may mean that the Montana plate loophole is drawing to a close some time in the future. If more states follow Utah’s lead, then it’ll be trickier to dodge the sales tax on fast cars. Unless, that is, you actually live in Montana. It is, after all, a big, empty state, and that means open roads and little traffic. Brendan McAleer is a freelance writer and photographer based in North Vancouver, B.C., Canada. He grew up splitting his knuckles on British automobiles, came of age in the golden era of Japanese sport-compact performance, and began writing about cars and people in 2008. His particular interest is the intersection between humanity and machinery, whether it is the racing career of Walter Cronkite or Japanese animator Hayao Miyazaki’s half-century obsession with the Citroën 2CV. He has taught both of his young daughters how to shift a manual transmission and is grateful for the excuse they provide to be perpetually buying Hot Wheels.
Source: caranddriver.com
