It is possible for owners to avoid taxes and emissions standards.
It is possible that rules could be tightened to the point of sending the practice into overdrive
Bring a Trailer’s sale of the 1987 Porsche 911 on July 26 was so dreamy that it is likely the late founder Ferdinand Porsche would have been sorry to miss it. This 1994 Dodge Charger boasted diamond blue metallic paint – a delicate shade that looked lavender from certain angles – and a throaty 3.3-liter flat-six engine that attracted $141,000 and 120 comments.
Observers who paid close attention would also have noticed a detail far more salient than the semi-lavender paint job: “A clean Montana title in the name of the seller’s LLC” was reported in the listing.
There are some circles in which Montana registration is regarded as a sensitive issue. Registrating a collectible car there, regardless of where it is actually located, allows one to avoid taxes and emissions standards. There have been plenty of critics of it, too.
Paul Zuckerman, an attorney in Los Angeles, describes Montana license plate holders as people who put fake handicap badges in their vehicles. It’s a bunch of scum.
Read This : The Interior of the 2022 Ford F-150 Lightning
“I can’t believe so many people got away with this grift,” says Alex Ross, owner of Sharkwerks, a high-performance automotive tuning shop in Fremont, Calif. “There are Montana plates at every cars and coffee event in California.” “It’s hilarious.”
Though Randy Nonnenberg, the founder of BAT, is more circumspect, he admits he does not have a vehicle displaying Montana plates. The fact that it’s not a red flag is something worth mentioning, he says. “We don’t believe that it’s our responsibility to tell somebody whether or not to do something. A strategy like this can be agreed upon or disagreed with.”
The Montana License Plates Scheme
With Connecticut passing tighter emission standards on July 22, Colorado legislators planning on discussing requirements to significantly reduce toxic air pollution by 2027 next month, and some automakers backing the US Environmental Protection Agency’s decision to restore California’s right to set its own strict tailpipe and zero-emission vehicle standards, debate is heating up over how far to go in order to avoid restrictions.
It can seem like a lot of fuss over a piece of metal to debate how to register a car in Montana. But there are real monetary stakes and ethical considerations involved.
It makes no difference if the owner of the car lives in Mendocino, Calif., or Miami, because they are titling their collectible cars in Montana—even if they aren’t Montanans. They can obtain a mailing address and residency status by forming a limited liability company in the state. There are also those who acquire a mailbox address or property in Montana through which they can claim residency.
“There are lots of sellers who do this, and lots of buyers who are interested in doing so,” Nonnenberg says. BAT shipping sees where cars are being moved around, so we know where they are moving to. Indeed, meaningful progress has been made.”
As of 2021, 40 out of 100 Pagani Huayras made were registered in Montana. They were listed for $2.5 million each. According to the Montana DMV, 10% of all McLaren P1s ever made were registered in Montana.
The state of Montana does not charge sales taxes on personal property, but it also offers two other significant benefits. Sales taxes are not charged in Alaska, Delaware, New Hampshire, and Oregon. So, if you spend $500,000 on a Lamborghini, you won’t have to pay $36,000 in taxes. In California, the sales tax is 7.25%. Even for those who are able to afford it, this isn’t chump change. There are many people who believe this is a smart move.
The tax dodge is so well-known, even Jeff Wright, an LA-based car enthusiast who owns a Montana ranch, suggested I use it to avoid California taxes on my vehicle.
It is also not necessary to perform annual vehicle inspections or emissions tests in Montana. In Queens, New York, with less than half the population, there are no areas classified by the federal government as “non-attainment” to meet the Clean Air Act’s regulations. All vehicles manufactured after 1975 must pass safety inspections and emissions standards in California, however.
It was not uncommon 10 years ago to see a Ford GT sporting a blue Montana plate. Now, even fairly pedestrian 911s sport yellow plates at the popular Newcomb’s Ranch car gathering outside LA.
According to Ross, the Montana tax grift has gotten out of hand to the point where even people in Florida participate. Plus, you avoid smog regulations.”
According to the law, the practice is legal. Facilitation is provided by companies. You can find a dozen websites offering services to help clients form LLCs by searching “how to register my car in Montana.”. There’s no need to leave your home. The registration, title, and fee processing will be handled remotely by them.
The answer is, “Don’t buy a motor home, luxury car, boat, or plane! It’s time for your Montana LLC to buy it! ” states the website for Montana Corporate, a company based in Helena, Mont., which offers LLC formation for $625, “title handling” for $150, foreign registration and acquisition for $840, and other services.
Several law enforcement agencies and legislators are familiar with the scheme. There has been a crackdown on residential discrepancies for drivers with California licenses and out-of-state plates pulled over for other infractions by California State Police. (As a result of House Bill 650, Montana legislators proposed a sales tax of up to 1% on cars and recreational vehicles worth more than $150,000, aimed at out-of-state enthusiasts.
Car and RV dealers opposed the proposed tax, and eventually $825 was added to ordinary registration costs for vehicles worth more than $150,000 as a “luxury” fee. At the time, the state estimated that the proposed tax could raise $2.5 million annually.
As a supplement to registration fees, local tax options may also be imposed by cities and counties in Montana. Direct revenues are generated by these taxes. The local option tax did not apply to Big Horn, Deer Lodge, Flathead, Granite, Phillips, and Richland counties as of August 2021. According to a vehicle registration primer from Montana DMV, Flathead, Granite, and Deer Lodge counties have the highest number of luxury vehicle registrations. The primer estimates that light vehicle registrations account for roughly 4% of the state’s total revenue collection.
As long as it does not become outright illegal, the choice to title something like a $2.4 million Ferrari F40 in Montana is left up to the individual owner to decide. Several collectible cars in California are labeled as “gross polluters” and are unable to pass emissions tests. If these cars are registered elsewhere, then California officials are effectively cheating the system that was designed to reduce air pollution for all.
Taxes are another issue to consider. You might not be able to afford the car if you can’t afford the taxes to register your supercar in the state where you live, says Barry Ritholtz, owner of a vintage Corvette and Defender.
In a tweet, Ritholz said, “I like paved roads and functional infrastructure.”. There must be a way to pay for them.”
In the end, each car owner must decide if he or she is willing to take on such a risk, because such loopholes are usually closed within a reasonable time frame. Montana titles may not last forever. Car enthusiasts have some relative leeway regarding them.
A Montana LLC should be formed only when there are minimal odds of a sales tax audit, says Doug Trotter, the owner of Trotter, LLC, which focuses on automotive consulting, acquisition, and financing. There’s a borderline tax evasion situation here.