If you’re anything like us here at Jalopnik, then you’re tired of watching the ultra-wealthy exploiting loopholes to avoid paying their fair share of the taxes that you and I pay, whether it’s dodging income tax, or dodging sales tax on million-dollar supercar registrations. The U.S. Treasury estimates that the richest 1% of U.S. citizens underpay their taxes by $163 billion every year, and though the Montana car registration loophole might not equate to as much in skipped taxes, it’s yet another way that the rampant income inequality in our country is intensified. All that wealthy car owners have to do is spend around $1,000 to open an LLC in Montana, then use the LLC to purchase a car with no sales tax — and said car is not subject to vehicle inspections or emissions testing.
This tactic isn’t employed by one or two people; as of 2023, there were 2.3 million vehicles registered in the state of Montana, though there are only 879,000 licensed drivers in the state. That comes out to 2.68 vehicles per licensed Montanan, which is by far the highest vehicle-to-driver ratio in the United States, and more than double the national average according to Bloomberg. And it gets worse.
The numbers don’t add up
Looking at publicly available data from the Montana Motor Vehicle Division, Bloomberg Tax found that there were 10,757 registrations of vehicles made by Aston Martin, Bentley, Bugatti, Ferrari, Lamborghini, McLaren, Pagani, and Rolls Royce in 2024. When looking at Washington state’s 2024 registrations from the same automakers, a state that has seven times the population of Montana, just 2,479 were registered.
5,281 Ferraris were registered in Montana in 2024, compared to just 837 in Washington, a state that’s home to 10 Fortune 500 companies. Washington has 7.81 million residents, and Montana has just 1.13 million, yet we’re supposed to believe that Montana had over five times the number of Ferrari registrations? Okay, sure.
That’s not the only glaring statistic. Washington had 0 Bugatti registrations in 2024, while Montana had 131. Montana had 1,966 Lamborghini registrations in 2023 while Washington had 340. 920 Rolls-Royces were registered in Montana compared to 155 in Washington. According to Bloomberg, former Montana revenue director Dan Bucks said there are likely more than 600,000 vehicles registered in Montana but operated in other states.
California and Utah are finally fighting back
The state of California is home to more cars than any other state in The Union, and its DMV says 10,000 vehicles worth nearly $2 billion were sold by California dealers to Montana LLCs since 2022. As a native Angeleno, I often see million-dollar hypercars at shows and on the streets sporting Montana plates, so what’s the Golden State going to do about it? Apparently, the DMV is now using surveillance systems and plate readers along state roadways to search for vehicles with Montana plates and find registration violators and tax evaders.
Utah is taking even more drastic measures to put an end to this way that the rich are getting out of paying the same taxes as everyone else. Bloomberg reports,
“Utah Gov. Spencer Cox (R) signed a law on March 25 launching the most ambitious enforcement campaign in the country—a data-sharing arrangement to locate and assess tens of thousands of Utah tax evaders, with a particular focus on the owners of cars and boats registered in Montana. Supporters say the effort could yield up to $100 million in back taxes, penalties and registration fees.
This is really an abuse of our tax system,” said Utah tax commissioner John Valentine. “They pay nothing to support our state, just a small fee to Montana for the opportunity to evade taxes in Utah.”
Two wrongs don’t make a right
In Montana, several businesses have formed to aid the ultra wealthy with their tax evasion, including “tax jails” and consultants to help people through the necessary processes. Bloomberg cites a Florida business called Dirt Legal that publicly advertises that it has formed Montana LLCs for nearly 47,000 customers across every state. It appears these businesses have no shame about their immoral ways; Dirt Legal has customer testimonials on its site including one Bloomberg cited that reads,
“”Dirt Legal made registering my new 2024 Mercedes AMG GLE coupe seamless, saving me around $6k in taxes—an absolute no brainer!” read a February online posting from someone identified as Tyler F.”
If the tax evaders trying to take advantage of the Montana plate loophole happens to live in a state like California that requires vehicles to be delivered and kept out of state for a minimum of 12 months, that’s where “tax jails” come in handy. These tax jails are warehouses and storage facilities that store and care for these often exceedingly valuable vehicles in the state of Montana for the necessary amount of time to maintain legality when they’re eventually shipped to the state that their owners actually live.
In most states, this shady practice is not technically illegal
California has a law that says residents don’t owe sales tax on vehicles if they’re delivered to another state and kept there for at least 12 months before being brought into California. The California Department of Motor Vehicles is using its plate readers to find vehicles with Montana license plates and investigate whether the vehicle spent 12 months outside of California before it entered the state. If the DMV finds that the vehicle didn’t get delivered and spend the legally required 12 months outside of the state, the owner may be fined. Florida has a similar law that requires vehicles spend 6 months outside of the state, and Arizona has a similar 90-day rule. Since implementing the surveillance tactics, California DMV investigators say they have collected $1.6 million in taxes, registration fees, and penalties on 62 vehicles. As far as Utah goes, Bloomberg reports,
“Cox signed SB 52 last month, and the state launched plans for a comprehensive enforcement initiative that will cross-check data from the Tax Commission and the state’s Uninsured Motorist Identification Database to create a list of names and home addresses of potential tax scofflaws.
After a public awareness campaign this year, violators will have 60 days to remit unpaid sales taxes and registration fees for vehicles and vessels plated outside of Utah. Failure to voluntarily comply could mean enhanced enforcement and penalties.”
Here’s the problem
We live in a society that values money over everything else, and despite having more money than the other 99% of society, the wealthiest 1% can leverage their absurd wealth by paying someone to make sure that every move they make is as lucrative as possible. Capitalism dictates that those who “earn” their way into obscene wealth through “hard work,” and definitely not through nepotism, exploitation, or generational wealth, shouldn’t have to waste their “hard earned” money on the rest of the country that doesn’t make as much money as them.
The taxes that these folks are evading exist to fund public works projects like roadway management, upkeep, and projects to minimize the environmental impact of cars. These people then drive their cars on the very roads whose upkeep they opted out of funding, despite having such vast surpluses of money that they can afford to drop a couple million dollars on a Bugatti, pay to form an LLC in Montana, pay to have it stored for a year, then pay to have it shipped to their home in Malibu so they can pay to insure it, maintain it, and fuel it. All while citizens with average incomes who struggle to make ends meet end up paying their state taxes every year. Sure there are ways to do this that don’t technically break any laws, but they are immoral, unjust, and slimy. It actively makes life worse for everyone else in their state who breathes air, drives or ever uses roads, because multimillionaire John P. Moneybags decided that it’s more important for him to save a few grand on his million-dollar Ferrari than it is to pay his fair share to maintain the roads he drives said Ferrari on.
Let us know in the comments below, are you as enraged by this as me? Or do you, like the noble Jordan Belfort, choose rich every freaking time and think it’s a smart way to save money?
