New California Law Closes Montana Tax Loophole

Buying a supercar can involve plenty of creative accounting, but California is making one popular approach harder to pull off. Governor Gavin Newsom has signed a law targeting residents who use out-of-state shell companies to avoid taxes on their cars. For anyone relying on a Montana-based LLC to keep the tax collector at arm’s length, the company name may provide considerably less cover now.

SB 1406, authored by Senator Jerry McNerney, was signed September 30 and took effect immediately. McNerney’s office says the so-called Montana loophole costs California approximately $20 million annually. The new law gives officials additional tools to collect those unpaid taxes from the people behind the paperwork.

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