Bad news for the few of us who casually drop six figures on a car but don’t want to pay a few thousand more on taxes. California has become stricter on supercar owners trying to avoid the state’s higher sales tax and registration fees.
If you have noticed a ton of Montana license plates at California car shows, that’s because rich people are using the “Montana license plate loophole”: wealthy car owners create LLCs in Montana so they can register cars under them, since the state has much lower taxes and fees — and avoid the dreaded smog test. This is technically illegal if you don’t live or do business in Montana, but that hasn’t really stopped California residents ever. I even thought about it when I was stupid enough to consider a Beast Alpha.
This week, the California Attorney General’s office just charged 14 people using the Montana license plate loophole for “conspiracy, filing false sales tax returns, failing to file tax returns, perjury, and money laundering.” Being cheap and sensible saved me once again.
According to the California Department of Tax and Fee Administration (CDTFA) and the California DMV, around 500 California dealers have been identified. They’ve conducted over 2,500 sales since 2023, all of which have involved working with buyers to register the vehicles in Montana. The CDTFA wrote: “These sales, many of which involved luxury or exotic cars, cost the state more than $10 million a year in lost tax revenue.”
Boohoo. I hate to side with cheap rich guys, but I’m not rooting for the government to take more taxes from us either. I mean, the state tried to make us feel bad for them.
“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.”
I guess when I see those fixed roads and see actual solutions for the homeless, I’ll thank the government for saving me from these villainous supercar owners. Some of the supercars mentioned in the filings, by the way, include Lamborghini Huracans, a Ferrari SF90, Lamborghini Aventadors, a Porsche 911 GT3 RS, a McLaren 765LT Spider, a BMW M2, and a Ferrari F8 Spider, among others. Be on the lookout for these sinister tax avoiders.
It looks like California has been digging into the Montana loophole since 2023, when the DMV launched over 80 investigations. A 2024 investigation by the DMV, CDTFA, and California Department of Justice revealed a “scheme” going as far back as 2018, which saw the car sellers working with buyers to prepare and submit false CDTFA forms, DMV forms, and other documents that pretended the vehicle was purchased and used outside of California. The vehicles in this particular investigation included a $1.8 million McLaren Elva, a $1.5 million Porsche 918 Spyder, and a $1.26 million Ferrari F12TDF.
It’s a real shame, because I was definitely going to buy a McLaren Elva as long as I could then save a few bucks by registering it in Montana. Looks like that car is out for me now.
In December 2024, the CDTFA issued a warning letter to California dealers, urging them not to use out-of-state LLCs or face the consequences. The city with the most instances of shady auto dealers was Beverly Hills. It looks like these warnings were ignored and exotic dealerships continued to mess around with various loopholes.
Is California really ripping off supercar owners that much?
Is it really worth all this sneaking and lying and, apparently, illegal maneuvering? For many supercar owners, it is. The poor, poor guys.
It all starts when you purchase the vehicle. California’s vehicle sales tax is about 7.75% to 10.75% in most areas, although it gets even higher in some regions. Yours truly pays about 9.5% in Los Angeles, but Palmdale reaches over 11%. Let’s take the $1.8 million McLaren Elva. At 9.5%, you’re looking at $171,000 in sales tax.
Montana has a 0% sales tax on vehicles. So that would be zero dollars in sales tax, saving me — I mean, the buyer — $171,000 right up front.
The registration fee is recurring each year. California’s registration fee is 0.65% of the vehicle’s value the first year, but goes down every year for 10 years to coincide with the likely depreciation of new vehicles. After that, it remains the same. But the first year, the Elva would be $11,700. Over in Montana, the registration fee appears to max out at $217 for a new car. This would save the Elva buyer another $11,500.
So in conclusion, yes, California definitely is ripping off supercar owners. Although supercar owners should know the extra fees upon purchasing the vehicle and accept their fate, according to the CA DMV. But a new car is fun. New taxes aren’t.
It’s not only California, however. Popular YouTuber Cody “WhistlinDiesel” Detwiler was recently arrested over in Tennessee for continuously registering supercars — which he’d later destroy — in Montana. He later said he was innocent, making a whole video about his alleged “tax evasion.” His quotation marks, not mine.
