Millionaire Supercar Owners Are Skipping Taxes And States Are Furious

Many of us have experienced something a bit odd in our travels. A supercar rolls by or sits idle in a parking lot with a Montana license plate despite being several states away from Big Sky country. No, that owner likely didn’t drive the car across the nation. Instead, they most likely just registered the car there to avoid taxes. Now, some states are trying to crack down on that practice, and they could rake in millions as a result.

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Montana has no sales tax and no mandatory vehicle inspections, which makes it a haven for exotic car buyers looking to save tens of thousands on registering their new car. Thanks to a legal loophole, owners can form an LLC in the state and register their vehicles under that LLC. The best part? They don’t even have to set foot in Montana to make it happen. Companies in the state are more than happy to assist wealthy buyers in pulling off the setup.

5,281 Ferraris And Counting

According to Bloomberg, the state is home to 2.3 million registered vehicles but just 879,000 people, more than double the national average. As noted by Jalopnik, the state also saw 10,757 registrations in 2024 for exotic and ultra-luxury vehicles from brands like Aston Martin, Bentley, Bugatti, Ferrari, Lamborghini, McLaren, Pagani, and Rolls-Royce. Of those, 5,281 were Ferraris, 131 were Bugattis, 1,966 were Lamborghinis, and 820 were Rolls-Royces. For comparison, Washington state, home to seven times Montana’s population, had just 2,479 registrations from the same luxury brands last year.

That said, several other states aren’t too happy about missing out on that tax revenue. California and Utah are all working to combat the practice and get that cash back into their own hands.

States Strike Back: Utah & California Get Tough

Utah Governor Spencer Cox signed a new bill into law on March 25 that allows the state to locate and assess tens of thousands of tax evaders. It focuses heavily on those who own vehicles registered in Montana. Those who support it say it could yield $100 million in back taxes, penalties, and other fees.

“This is really an abuse of our tax system,” said Utah tax commissioner John Valentine to Bloomberg. “They pay nothing to support our state, just a small fee to Montana for the opportunity to evade taxes in Utah.”

California has its own idea about how to handle this situation. It uses cameras to track Montana plates and then investigates after the fact. The law there requires that a vehicle registered outside of the state stay out for 12 months, after which it can be in California without having to pay sales tax. Violators face fines, but clever tax avoiders have a solution there, too. They simply take their car to jail.

That’s right, there’s something known as a tax jail where wealthy folks leave their cars in Montana for whatever the legally required time limit is. In Florida, it’s six months; in Arizona, it’s 90 days. Then, the cars get set free with fresh Montana plates and no additional tax penalties.

The Big Sky Viewpoint

Montana lawmakers don’t seem to have any issue with this situation. “The nice thing about this country is we have 50 states that act competitively to attract business, and that’s what our current LLC law does,” said Senator Greg Hertz. “It encourages people to register their vehicles in Montana, it helps them save on taxes, and it creates jobs.” He’s working on a bill that would make it even more attractive to register cars in the state.

“A Montana LLC is a Montana LLC and Utah has no jurisdiction over it, nor does California,” said Michael Willing, president of Deer Creek Corporate Services Inc., whose business has registered more than 50,000 vehicles for out-of-state owners. “It’s imperative to remember that the federal government and states view LLCs as independent entities. So, they have all the rights and obligations that we as individuals do.”

Undoubtedly, the legal grey is becoming a lightning rod for debate. Where does smart financial planning end and tax evasion begin? It’s hard to fault someone for trying to save a buck (or in this case several thousand) on their taxes. Most of us hunt for every deduction we can get. It just so happens that some people are doing that same thing with six-figure supercars and a legal team in tow.

Maybe the real issue lies with lawmakers who left such a loophole open in the first place. If the game is rigged, it’s hard to be shocked when some people play it well. Still, if you’re registering your Bugatti in Montana but driving it in Utah or California, don’t be surprised if the DMV or a tow truck comes calling.