CA lawmaker pushes to crack down on Montana luxury car tax-evasion scheme

The scheme is known as the “Montana Loophole.” State Sen. Jerry McNerney, D-Pleasanton, introduced Senate Bill 1406, which aims to close the loophole.

The bill further defines shell companies and states that any shell corporation with at least one California resident as a “shareholder, partner, member, or beneficial owner” is subject to California tax law.

Under existing law, California has jurisdiction over any closely held company or limited liability company in which California residents have 50% or more of shares or membership interests. Under the new bill, the language would expand to include any “partnership, limited partnership or limited liability partnership” where half or more of the interests are held by partners who are California residents.

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