California May Close the Montana Luxury Car Registration Loophole
27th March 2026
A loophole that allows supercar and luxury car owners to register their vehicles in Montana to save on taxes could be endangered because of a new bill in the California legislature.
The workaround costs the Golden State some $20 million a year in lost tax revenue, according to the bill’s sponsor, Jerry McNerney, a Democrat from Pleasanton. Montana has no car registration fees or state sales tax, allowing car buyers to set up shell companies to register cars there and avoid taxes in their home states. The loophole is well-known among car collectors, which is the reason why one often sees Big Sky Country license plates on cars at shows in many places that aren’t Montana.
“The Montana Loophole is widening, with increasing numbers of tax evaders creating bogus shell companies so they can avoid paying sales taxes on Ferraris, Porsches, and pricey RVs, costing California tens of millions in revenue,” McNerney said in a statement.
I like Steve Jobs’ trick fo buying a new car, driving it with the temporary tag until that expired, and then trading it in on a new car, rinse, repeat. A very good way for a billionaire to preserve his anonymity.
McNerney’s bill would target the shell companies used to facilitate the Montana registrations. “SB 1406 would close the Montana Loophole by expanding California’s definition of who is a resident under state use tax law to include a shell company when at least one member of the business is a California resident. SB 1406 would also authorize CDTFA to impose tax liability on the individual members of a shell company,” according to a press release.
So you back up one—the shell company that owns the car is in turn owned by a shell company that doesn’t own a car but is owned by a California resident. Then the use tax law applies to the near shell company but not to the far shell company that has no California resident owners.
No Democrat drone legislator is as clever as a billionaire-employed lawyer. I guarantee it. Certainly not Jerry McNerny.