Got Montana Plates? States Ramp Up the Scrutiny on Tax Dodgers

It would be easy to miss the drab gray building along South Main Street in Kalispell, Montana. But it’s home—at least on paper—to more than 100,000 cars and trucks, scores of sailing vessels, and 800 aircraft, including a Gulfstream IV jet once owned by Jeffrey Epstein.

The single-story structure is headquarters for All Day $49 Registered Agents, one of nearly 200 Montana agents helping out-of-state owners create limited liability corporations to shelter assets from sales taxes, registration fees, and environmental rules in the other 49 states.

The pitch to out-of-staters is simple: Form an LLC in Montana; use it to purchase an asset with no sales tax; register with a Montana license plate; and drive, float, or fly anywhere in the country without hassle. The pricier the vehicle, the higher the savings.

In 2023, Montana was home to more than 2.3 million registered vehicles but only 879,000 licensed drivers. That 2.68 vehicle-to-driver ratio is by far the highest among states and more than double the national average, according to a Bloomberg Tax analysis of Federal Highway Administration data.

That number means potentially hundreds of thousands of vehicles plated in Montana are parked and driven elsewhere, costing the outside states billions of dollars in lost taxes and fees, according to state revenue officials.

“I see these Montana plates at various car shows and I’ve asked the owners about it. I think the attitude is: Catch me if you can,” said Lamborghini Club America president Andrew Romanowski.

But now, finding little support from Montana, states are cracking down on residents hiding behind these tax shelters.

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.”

California’s Department of Motor Vehicles amassed data showing that 10,000 vehicles worth nearly $2 billion had been sold by California dealers to Montana LLCs since 2022. Now, the DMV is using surveillance systems and plate readers along state roadways to search for Montana license plates and find registration and tax violators.

In one case, the department clawed back $307,000 in taxes and penalties from a single owner of multiple Porsches and Ferraris. Finding additional tax cheats is a “top-of-my-list” priority, said Christina Michel, chief of the department’s investigations division.

The Multistate Tax Commission, which coordinates tax uniformity and compliance initiatives across the states, plans a training session on tax losses due to Montana LLCs during its annual meeting for state revenue officials in July. The discussion will focus on the enforcement models emerging in California and Utah, commission counsel Brian Hamer said.

Some Montanans see the state’s flexible vehicle registration rules as a competitive advantage. One state lawmaker, Republican Sen. Greg Hertz, is even touting a bill, SB 327, that cuts annual fees roughly in half, boosting an incentive for out-of-state drivers to plate their vehicles in Montana.

“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 Hertz. “It encourages people to register their vehicles in Montana, it helps them save on taxes, and it creates jobs.”

A Strategy is Born

In the late 1990s, Bretz RV & Marine, the largest dealer of motor homes and travel trailers in Montana, helped customers structure the ownership of their rigs through LLCs as an asset-protection strategy. Bretz realized there were tax implications for their out-of-state customers and contacted Bennett Law Office, a small practice in Missoula.

After inquiries from the law firm, Montana’s Attorney General and Motor Vehicle Division confirmed that business entities could legally register and own vehicles. Moreover, the attorney general determined nothing in state law prohibited Montana businesses controlled by non-residents from doing the same.

Bennett Law partner Thaddeus Brinkman later worked with the state legislature to pull the attorney general’s interpretation into Montana’s commercial code. Over time, lawmakers approved additional language defining the domicile of a business for vehicle registration purposes and clarifying the procedures for businesses to register a vehicle.

The idea took off as legions of retiring baby boomers purchased RVs and headed for the open roads. Dozens of non-lawyers set up as registered agents and promoted LLC ownership for other expensive assets, including yachts and jets.

Montana has advantages over the four other no-sales tax states—Alaska, Delaware, New Hampshire, and Oregon.

Vehicle owners in Montana benefit from relatively cheap registration and low annual renewal fees. They also face no requirements for vehicle inspections or emissions testing, common requirements in states with high levels of air pollution.

In addition, the LLCs aren’t required to publicly identify their owners, shielding them from scrutiny.

Establishing an LLC in Montana is simple. Kalispell-based 1 Dollar Montana LLC boasts it can provide license plates and registration documents to clients in two weeks. Neither the purchaser nor the vehicle need to be in Montana to close the deal. The cost depends on the services, but 1 Dollar Montana says it’s willing to handle the job for as little as $1,049.

Dirt Legal, a Florida-based agent with a broad social media footprint, says it has formed Montana LLCs for nearly 47,000 customers, with clients in every state.

“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.

Statistical Anomalies

There is no distinct database tracking the number of vehicles owned by Montana LLCs. However, Montana’s 2.68 vehicles per licensed driver suggests thousands of out-of-staters are driving with Montana plates.

Former Montana revenue director Dan Bucks said there are likely more than 600,000 vehicles registered in Montana but operated in other states.

Janice Lucero, president of MVD Express, which holds an exclusive contract with Montana to process driver licenses, vehicle registrations, and LLC formation documents, agreed.

“When you look at how could they have so many cars per person, the answer is: they don’t,” she said.

Montana also has registered more luxury and high-performance vehicles than more populous states.

Last year, the state reported 10,757 registrations of vehicles made by Aston Martin, Bentley, Bugatti, Ferrari, Lamborghini, McLaren, Pagani, and Rolls Royce, according to Montana Motor Vehicle Division data obtained through an open records request.

The nearby state of Washington has seven times the population but registered only 2,479 of the same high-end car brands, according to online data from its licensing department.

Supercars sporting Montana plates certainly get noticed in other states. A Reddit string titled “Montana Plated Cars” last year drew hundreds of comments, many of them calling out tax avoiders.

“It is kinda obnoxious seeing that. I saw a 918 in Newport with Montana plates and it’s like dude… if you can afford a 918 you can afford to pay taxes like the rest of us,” one poster wrote, ostensibly about a Porsche owner.

Wrote another: “I’ll never understand why the car enthusiast community is okay with this sh–.”

Defenders attacked the already high taxes in their state. One wrote: “If our tax money was spent more wisely, I would care.”

Tax Jails

Montana LLC promoters preach the virtues of “tax avoidance,” but regulators outside of the state assert many of their clients are engaged in “tax evasion”—deliberate misrepresentation to reduce a tax liability.

Legitimate tax avoidance requires a refined understanding of the law in the 49 states beyond Montana because many create legal strategies to escape sales taxes, said Bennett Law partner Duncan McMullin.

Under California law, for example, residents don’t owe sales tax on vehicles if they are delivered and kept out of state for at least 12 months. Florida has a similar six-month rule and Arizona has a 90-day rule. Even residents of highly restrictive states such as Iowa and New York can legally put Montana plates on their vehicles and avoid taxes if they have residential ties to Montana or store the vehicle in another state.

McMullin says he arms clients with a clear understanding of the perils for violating the holdout and storage rules in their home states. Anyone ignoring his warnings “should be prepared to get out their checkbooks,” he said.

The rules also have seeded a cottage industry in Montana: “tax jails” where high-end vehicles wait out the clock.

In late February, a brown aluminum-clad warehouse off a rural road near Bozeman held more than 50 supercars valued at roughly $100 million, including Ferraris, Lamborghinis, Paganis, and vintage speedsters from Alfa Romeo, Bugatti, and Porsche. Most will eventually move to California, where the facility owner, Auto Concierge, has three other sites for clients to store their luxury vehicles.

“These are living, breathing machines—and they need to be cared for as you would care for your children,” said Auto Concierge president Scott Elrod. “So we start them up, we run them through a heat cycle, we exercise them, we manage every facet of ownership.”

Elrod operates a separate 85-vehicle storage facility in Missoula, and said he plans to open a second 200-vehicle site in Bozeman by the end of the year.

Auto Concierge offers a bridge to legal out-of-state ownership of Montana-plated vehicles, but it’s ultimately a niche player catering to a small group of deep-pocketed car aficionados. A larger group of Montana LLC owners are interested in plating Buicks, not Bugattis, with help from high-volume registered agents found online.

Brinkman and McMullin worry about the impact from the LLC factories. Most, they say, aren’t run by attorneys and offer clients misleading advice. They predict the agents will ultimately attract unneeded scrutiny from law enforcement outside of Montana.

“Those organizations are going to be the downfall of everything because they are marketing this to everyone, and this is not for everyone,” Brinkman said.

Non-lawyer registered agents aren’t particularly worried, said Michael Willing, president of Deer Creek Corporate Services Inc. and the high-volume agent LLCTLC in Helena.

“A Montana LLC is a Montana LLC and Utah has no jurisdiction over it, nor does California,” said Willing, 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.”

All Day $49’s Jason Coen said Montana’s low fees for business formation and vehicle licensing “has made it a popular destination to form LLCs with vehicles registered to them.” While the tax implications for out-of-state clients vary, “we ensure the services for which we are hired are in full compliance with the state of Montana.”

No Place Like Home

Every state has laws requiring residents to properly register, plate, and insure vehicles in their home jurisdictions. Most also have strict requirements for the payment of taxes and fees, inspections, and emissions testing.

Non-Montanans driving cars with Montana plates generally can’t hide beneath an LLC invisibility cloak, and many states have won court rulings stating as much, according to Paul Steier, director of vehicle programs at the American Association of Motor Vehicle Administrators.

In Iowa, where Steier once oversaw vehicle investigations, auditors raised alarms after noticing RVs with Montana plates at the state fair and University of Iowa football games, he said. In response, the state enacted a 2013 law specifying that vehicles owned by a “shell business” but controlled by an Iowa resident will be subject to state registration and taxes.

Illinois actively audits vehicle transactions and imposes assessments on residents who claim the true owner is a Montana LLC. The assessments generally haven’t been contested since the department won a string of tax court rulings against residents purchasing RVs through Montana LLCs, according to revenue spokeswoman Maura Kownacki.

One 2010 ruling targeted an unidentified Illinois taxpayer who created a Montana LLC called Doe Farms and used it to purchase a $123,000 RV from a dealer in Casper, Wyoming. Another, from 2013, called out an Illinois resident’s Montana entity as “a sham.”

The Massachusetts Department of Revenue frequently relies on a 2017 Appellate Tax Board ruling that chided a Massachusetts couple over their Montana-plated RV bought by a “mere shell organization with no economic substance.”

But investigations by state vehicle administrators and revenue agents are tedious, and Montana officials aren’t always cooperative, Steier said.

“We have talked to Montana and—what can I say, they like the revenue. And if they are collecting the revenue and these people aren’t using their roads, it’s a pretty good deal for the state,” said Steier. “They see this as the other state’s problem.”

Emilee Cantrell, a spokesperson for Attorney General Austin Knudsen, said Montana “does what it can to share helpful information with other states” within the requirements of current state law. She didn’t elaborate.

Tired of Hide-and-Seek

Utah lawmakers had enough after learning their state is home to 16,000 vehicles and 4,800 boats that were registered in another state, causing a tax loss of more than $120 million.

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.

“I don’t run in circles with people who have Lambos, but I do see these vehicles on the street and I’m always shocked that someone would be joyriding a high-end sports car from Montana down to Utah,” said bill sponsor Sen. Brady Brammer (R). “That just doesn’t seem very reasonable.”

Utah’s strategy, Steier said, is innovative because it focuses on a wide swath of offenders at the same time, rather than the one-by-one assessments common in most states. If successful, it could become a model for other states.

Since California started focusing on out-of-state registrations, DMV investigators say they have collected $1.6 million in taxes, registration fees, and penalties on 62 vehicles.

Late last year, the California Department of Tax and Fee Administration issued a public warning to dealers in the state, reminding them about penalties if they fail to properly document their transactions or violate the state’s 12-month rule and out-of-state delivery requirements. The department also instructed dealers to make sure buyers understand those legal risks, and that they could be liable for a 50% penalty on unpaid sales taxes.

In the past two years, the DMV has issued 23 search warrants and developed dozens of cases, according to investigators. They say they now have 74 open cases, including 10 felony and 11 misdemeanor tax evasion cases. They declined to release details but say some cases involve dealers, their employees or transporters who allegedly falsified documents to say the vehicles were delivered to buyers outside California.

The Multistate Tax Commission’s Hamer said the states need to be proactive in their efforts to identify taxpayers using Montana LLCs and extract taxes and fees legally owed in their home jurisdictions.

“For a department of revenue not to act and essentially give a free ride to some wealthy people sends a message that they can get away with conduct that is very troubling,” said Hamer, a former director of the Illinois Department of Revenue. “You don’t want to create that kind of culture in your state.”

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