California Cracks Down on Montana-Plated Vehicles as Tax Dodge

California revenue officials will gain new authority to pursue residents behind the shell companies used to dodge sales taxes and fees on cars, trucks, boats, and aircraft under legislation signed Wednesday by Gov. Gavin Newsom (D).

The bill (SB 1406) by Sen. Jerry McNerney (D) targets what’s known as the Montana loophole, which results in about $20 million annually in lost tax revenue for California according to state estimates. Californians taking advantage of the loophole purchase and register vehicles through limited liability companies formed in Montana to avoid sales tax and registration fees at home.

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