Bad News For Rich People: California Has Put an End to the Montana Loophole

In March 2026, California State Senator Jerry McNerney (Democrat) presented SB 1406, meant to close the “Montana Loophole.” Governor Gavin Newsom signed it into law this week.

With SB 1406 in place, California residents can be held liable for unpaid sales tax, interest, and penalties if they are caught with an LLC in Montana that has no physical location, no real business purpose, and no employees.

“For years, wealthy tax evaders have avoided paying California sales taxes by setting up phony shell companies to buy Ferraris, Lamborghinis, and other luxury vehicles in Montana and then bringing the vehicles back to our state,” McNerney said.

For the full report, click here.