- California charged 14 over the Montana registration loophole.
- Investigators say $20M in exotic cars stayed in California.
- Officials now scan Montana plates using cameras statewide.
There’s little doubt that the wealthy are closely linked to savvy tax maneuvers. Montana offers famously friendly vehicle registration laws that allow some to avoid paying far more in other states. It’s come under fire plenty of times in the past as have those who leverage the so-called “Montana license plate loophole”.
Now, California says it’s charged 14 individuals tied to more than $20 million worth of vehicles that were were allegedly registered and plated out of state, despite actually spending their lives in California.
The complaint includes charges ranging from conspiracy to commit tax evasion to money laundering and perjury. According to the New York Times, investigators say the group arranged purchases and paperwork designed to make it appear that the cars were destined for Montana even though they were delivered, driven, and stored in California. The cars in question aren’t mainstream either.
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The complaint lists several, including a $1.8 million McLaren Elva, a $1.5 million Porsche 918 Spyder, and a $1.26 million Ferrari F12tdf. Just for reference, the sales tax in California is 7.25 percent so buyers have to pay $72,500 in registration fees there on a one-million-dollar car. Clearly, the folks who registered the aforementioned cars saved even more by doing so in Montana. At least, they did initially.
Evidence From Phone Messages
The case against these owners might change that, and the evidence against them doesn’t look great. In text exchanges included in the complaint, we find a few rough quotes. “Don’t want the state of California to know anything about this car,” one text message read.
Another defendant openly compared the state to Montana, saying “70k saved — I can’t believe the registration lasts for 5 years — that’s crazy… Stupid California. Paid 3k to own a 600k car for 5 years (referring to Montana) — lol in Cali that’s like 75k for 5 years. Hella dumb.”
“When bad actors abuse legal loopholes and submit fraudulent documents to evade their obligations, the California Department of Justice will not stand idly by,” said Attorney General Rob Bonta. “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.”
How Does California Track Montana Plates?
Importantly, this isn’t a new or unexpected tactic from California. The state says it has been using automatic license plate readers (ALPRs) and other tools to investigate the issue since June 2023. Officials compare those plate sightings with registration and tax records to determine whether vehicles are registered out of state despite being primarily driven and stored in California.
So far, the effort has recovered $2.3 million in registration fees and taxes tied to what the state calls “fraudulently registered vehicles.”
“The partnership between DMV and CDTFA quickly produced results that will recover critical taxpayer dollars to the State,” said DMV Director Steve Gordon. “We encourage all Californians to do the right thing and register their vehicle here if they are operating it in California.”
At this point, each defendant will get their chance to plead their case. If it goes anything like the way it’s gone for Cody Detweiller in Tennessee, we could hear a lot more about this situation before it’s all said and done.
