# California Closes Montana License Plate Tax Loophole

> California law ends tax evasion by luxury car owners using Montana shell companies.
- Title: California Closes Montana License Plate Tax Loophole
- Summary: California law ends tax evasion by luxury car owners using Montana shell companies. California's new law closes a tax loophole allowing residents to avoid…
- Keywords: california, montana, sales tax, shell companies, luxury vehicles, tax evasion, vehicle registration, cars, sports, Closes, License, Plate
- Source: Road & Track — https://roadandtrack.com/news/a74066365/montana-license-plate-loophole-closed-california
- Author: Emmet White
- Published: 2026-10-07T16:24:32+00:00
- Read time: 1 min
- Topics: california, montana, sales tax, shell companies, luxury vehicles, tax evasion, vehicle registration, cars, sports
## California law closes Montana tax loophole
California Governor Gavin Newsom signed SB 1046 into law on September 30 to end tax evasion by luxury car owners using Montana shell companies.
## How the loophole worked
California residents formed limited liability companies in Montana to register high-end vehicles and avoid home-state taxes while skipping vehicle inspections.
## Tax evasion impact
California lost $20 million annually in tax revenue since 2023 from luxury vehicle sales through Montana shell companies.
## New law criteria
The law requires shell companies to lack business activity, have no physical location outside California, and fail to employ staff with W-2 tax statements.
## Enforcement actions
California launched 80 investigations since 2023 and recovered $2.3 million in owed taxes from illegally registered vehicles.
## What happens next
California tax officials can now impose tax liability on vehicles registered through shell companies owned by California residents.
## Key takeaway

California's new law closes a tax loophole allowing residents to avoid sales taxes by registering high-end vehicles through Montana shell companies.