When people mention “Montana license plate loophole,” they typically refer to affluent individuals registering their supercars to an obscure LLC created in Montana instead of their names, to avoid sales tax and registration fees. There are legitimate methods to accomplish this, but not every claimed tax-evader approaches this discreetly. The California Attorney General’s office has recently posted a “56-count complaint” accusing 14 individuals of various offenses including “conspiracy, filing false sales tax returns, failing to submit tax returns, perjury, and money laundering.”
Suspicious Montana license plates can be observed on vehicles nationwide, but even casual viewers can notice a higher frequency of them in California. You may have encountered at least one news article regarding “California’s crackdown on Montana plates” in recent years as well.
The California Department of Tax and Fee Administration (CDTFA) and the CA DMV have identified “approximately 500 California dealers engaged in over 2,500 sales since 2023 to customers asserting they would use the vehicle in Montana.” The state claims, “These sales, many involving luxury or exotic cars, cost California more than $10 million annually in lost tax revenue.”
Enforcement actions from investigations to date have reportedly recouped $2.3 million in revenue for the state. Car purchasers caught deceitfully declaring their vehicles as out-of-state may face severe penalties, including a requirement to pay 50% of the tax based on the vehicle’s purchase price.
This leads us to this week’s update: a 56-count felony charge filed against 14 individuals. The charges, detailed in a press release from California Attorney General Rob Bonta and in a 56-page complaint, involve “conspiracy, money laundering, perjury, and filing false tax returns to avoid $1.8 million in taxes on over $20 million in luxury vehicle acquisitions.” Essentially, some buyers allegedly procured fake bills of lading (a legitimate shipping document) and submitted falsified DMV and CDTFA forms claiming the cars were dispatched out of state, while in truth, the vehicles remained within California.
Included in the vehicles are notable names (Porsche 918, Ferrari TDF) and “everyday” exotics (Lamborghini Urus, Merc GLE). California AG Bonta’s official Facebook account shared a few images of high-end vehicles, though it’s unclear if those particular cars are part of this complaint. Here’s what I managed to extract from the legal documents:
- 2022 Lamborghini Urus
- 2022 Lamborghini Huracan LP 610-4 STO
- 2023 Lamborghini Huracan STO
- 2021 Lamborghini Huracan LP 610-4 EVO Spyder
- 2023 Lamborghini Huracan Tecnica
- 2022 Lamborghini Aventador LP 780-4 Ultimae
- 2023 Lamborghini Aventador Ultimae
- 2015 Lamborghini Aventador LP700-4 Roadster
- 2016 Ferrari F12tdf
- 2018 Ferrari F8 Spider
- 2020 Ferrari 488 Pista (Mistakenly noted as “588 Pista” in a document)
- 2023 Ferrari SF90
- Porsche 918 Spyder
- 2018 Porsche 911 GT2RS
- 2019 Porsche Speedster
- 2019 Porsche 911 GT3 RS (Mistakenly noted as “Porsche 311” in a document)
- 1960 Porsche 356
- McLaren Elva
- 2022 McLaren 765LT Spider
- 2020 BMW M2
- 2020 BMW X7
- 2022 BMW X7
- 2021 Mercedes-AMG GLE 63 S
- 2015 Aston Martin Vantage V12S
The state has yet to publish its master list of the “nearly 500” dealers it is monitoring for this fraud. However, the entities implicated in this recent significant operation are not merely small-time shady dealerships; some of these are major players. Here’s the roster:
- Ferrari of San Francisco (Mill Valley, CA)
- San Francisco Exotic Cars LLC
- San Francisco Sports Cars
- BMW of Murray (Murray, UT)
- Lewisville Autoplex LLC (Dallas, TX)
So, how did this particular group of alleged tax evaders get caught? And why were they targeted instead of every luxury vehicle sporting an MT tag? A quick review of the official complaint suggests that these individuals documented many of their illegal activities—allegedly.
One defendant messaged another conspirator, stating, “made me provide a fake bill of lading which cost $200 but did allow me to pickup the Urus.”
In coordinating a bill of lading, one text read, “just gotta throw some generic signatures” (to fabricate a convincing legal document).
Another text simply requested a co-conspirator, “Can you put some scribbles please and pdf it.”
My favorite is this: “am buying car. need to do Montana thing. Wuout. he is AWESOME!!!!!!!” (Wuout pertains to a co-conspirator allegedly at the heart of falsifying documentation to suggest vehicles were in Montana when, in reality, they were not.)
The AG’s office also cited quite incriminating texts discussing plans and explicit intent to avoid taxes and proper registration.
As explained by the AG: “The [state Department Of Justice] task force in charge of this investigation is the Tax Recovery in the Underground Economy Task Force (TRUE). The case is being prosecuted by DOJ’s Special Prosecutions Section. TRUE aims to combat and deter underground economic crimes in California. TRUE comprises attorneys, investigators, and special agents from the DOJ’s Special Prosecutions Section and Bureau of Investigation, alongside the Franchise Tax Board, Employee Development Department, CDTFA, DMV, Homeland Security Investigations, and the IRS. Through collaborations like this with DMV and CDTFA, the TRUE Task Force endeavors to tackle financial crimes in the underground economy.”
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**California Targets Wealthy Individuals Registering Exotic Cars in Montana**
In recent times, California has experienced a notable trend among affluent citizens who are registering their luxury and exotic cars in states such as Montana. This method, often termed “vehicle laundering,” enables these individuals to evade California’s steep registration costs, taxes, and strict emissions regulations. Consequently, California legislators and tax officials are amplifying their efforts to counter this issue.
**The Allure of Montana Registration**
Montana has emerged as a favored destination for wealthy car owners due to its absence of sales tax and comparatively relaxed vehicle registration regulations. By registering their vehicles in Montana, owners can save considerable sums, given that California enforces some of the nation’s highest vehicle taxes and charges. Furthermore, Montana permits “title-only” registrations, allowing owners to bypass the necessity for a physical presence in the state.
**California’s Counteraction**
In response to this trend, California’s Department of Motor Vehicles (DMV) and the Franchise Tax Board (FTB) are enhancing their examination of vehicle registrations. They are utilizing various methods to pinpoint individuals who may be circumventing state statutes. This includes data sharing with other states, scrutinizing social media for indications of vehicle ownership, and executing audits of high-value vehicle registrations.
California has also enacted laws aimed at closing loopholes that facilitate such actions. The state is striving to impose tougher sanctions on those found improperly registering their vehicles out of state. This encompasses prospective fines and back taxes owed to California.
**Legal Consequences and Implications**
Individuals apprehended for registering their vehicles in Montana while primarily residing in California may face substantial legal repercussions. Not only could they incur fines, but they may also have to pay back taxes and fees that should have been settled in California. Additionally, if a vehicle is involved in an accident or legal dispute, the owner may find themselves in a vulnerable position if their registration is ruled fraudulent.
**Public Sentiment and Ethical Considerations**
The act of registering vehicles in states like Montana has ignited discussions surrounding fairness and ethicality. Many contend that wealthy individuals should contribute their fair share to state revenues, especially in a state like California that grapples with significant budgetary challenges. Critics argue that such practices intensify economic disparity and undermine the integrity of state tax frameworks.
**Conclusion**
As California intensifies its efforts against the registration of exotic cars in places like Montana, affluent individuals must balance the financial advantages against the possible legal dangers. With growing scrutiny from state officials, the allure of tax savings might not justify the repercussions of non-compliance. The ongoing conflict between state revenue requirements and individual tax evasion tactics emphasizes the intricacies of modern vehicle ownership in a highly regulated context.
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