THE BREAKDOWN
- High-dollar cars with fraudulent Montana Registration lets buyers evade sales tax.
- California indicted 14 people for using this loophole to avoid paying tax on their expensive supercars.
- The cars involved include a McLaren Elva, a Porsche Carrera GT, and a Ferrari TdF.
For years now, if you purchased an expensive car but wanted to avoid paying the potentially high taxes on said car, you could register it in Montana. All you need to do is create an LLC in that state, then register your car to that business.
That allowed the owners of very expensive supercars to skirt paying taxes in their home states. Or at least it did, until a few states started cracking down on this practice. California has been promising to do so for years, but now it's finally taking action.
The office of California Attorney General Rob Bonta released a statement saying that 14 individuals have been indicted for tax fraud. Their cars were registered in Montana and wear Montana license plates, but are garaged and driven in California.
According to the Attorney General's office, the cars involved in this crackdown include a McLaren Elva, a Porsche Carrera GT, and a Ferrari TdF. Each one is worth well over a million bucks, and they're just a portion of the more than $20 million in vehicles owned by the 14 individuals involved in this crackdown.
The money that California collects from these taxes goes to the state's roads, schools, and community services. The taxes might be considered high by some, as California has the highest state-only rate in the country. However, other areas of the country can have higher city or combined tax rates.
Regardless, if you live in a given state and want to drive your car on those roads, you need to pay your taxes. And if you're buying million-dollar cars, you have the money to afford the tax hit.
Motor1's Take: Seeing a high-value car with a Montana plate, when you're not actually in Montana, has always been lame. Paying taxes is never fun, but if you can afford to buy the supercar, then pay your supercar taxes.
Or move to Montana.
