From Autoweek · Mark Vaughn · · 1m 10s
California Closes Montana Tax Loophole for Luxury Cars
California bans luxury car tax evasion by shell companies in Montana.
In brief
California bans luxury car tax evasion by shell companies in Montana. California's new law closes a tax loophole where residents used Montana shell companies to avoid sales taxes on luxury vehicles. Originally reported by Autoweek.
California cracks down on Montana tax cheats
California is outlawing a tax strategy where residents used Montana shell companies to register luxury cars and dodge sales taxes.
Montana loophole tax evasion
California residents created shell companies in Montana to purchase luxury vehicles, avoiding California's sales tax.
California sales tax rates
California's sales tax starts at 7.25% but can reach 10.75% with local taxes added.
Ferrari example
A new Ferrari 12 Cilindri starts at $464,000 and can cost over $600,000 with options, adding $64,500 in state taxes.
Montana loophole cost
California lost $20 million yearly due to the tax evasion scheme, according to Senator Jerry McNerney.
SB 1406 law
California's new law closes the Montana loophole by treating Montana shell companies as California entities if a member is a resident.
Enforcement actions
California targets shell companies with no real business, using license plate readers and data analytics to recover lost tax revenue.
The essence
California's new law closes a tax loophole where residents used Montana shell companies to avoid sales taxes on luxury vehicles.
