# California Closes Montana Tax Loophole

> California cracks down on Montana LLCs hiding luxury cars from sales tax.
- Title: California Closes Montana Tax Loophole · Motor1 | Shortify
- Summary: California cracks down on Montana LLCs hiding luxury cars from sales tax. California's new law closes the Montana tax loophole by targeting shell companies…
- Keywords: california, montana, sales tax, ferrari, lamborghini, sb1406, tax evasion, shell company, cars, Closes, Tax, Loophole
- Source: Motor1 — https://motor1.com/news/810827/california-closes-montana-tax-loophole-wealthy-owners
- Author: Anthony Alaniz
- Published: 2026-10-05T18:00:00+00:00
- Read time: 1 min
- Topics: california, montana, sales tax, ferrari, lamborghini, sb1406, tax evasion, shell company, cars
## New California Law Targets Montana LLCs
California enacted Senate Bill 1406 to close the Montana tax loophole for high-end vehicles.
## Montana Loophole Explained
Montana's lack of statewide sales tax allows out-of-state owners to buy vehicles without paying California sales tax.
## Law Targets Shell Companies
The law includes shell companies with at least one California resident business member and imposes tax liability on individuals.
## Evidence of Tax Evasion
Shell companies without business activity, physical locations, employees, or tax filings risk tax penalties.
## California Loses $20m Annually
California estimates $20 million in annual tax revenue lost through the Montana tax loophole.
## Senator McNerney's Statement
Senator Jerry McNerney said wealthy tax evaders used Montana LLCs to buy Ferraris and Lamborghinis to avoid California sales tax.
## Tennessee Crackdown Example
Tennessee arrested YouTuber WhistlinDiesel for tax evasion using a Montana LLC to buy a 2020 Ferrari F8 Tributo.
## Key takeaway

California's new law closes the Montana tax loophole by targeting shell companies that avoid sales tax on high-end vehicles.