Home » Articles » Uncategorized » Montana LLC Title – Is it legal?
Many vehicle owners in high-tax states have heard about a seemingly clever strategy: forming a Montana LLC to register their vehicles and avoid paying hefty sales and registration taxes in their home states. This practice is especially popular among owners of luxury cars, exotic sports cars, RVs, and boats. But make no mistake—despite its popularity and the many businesses facilitating it, this tax avoidance scheme is illegal in most circumstances and carries serious consequences.
The strategy is straightforward: A resident of a high-tax state forms a limited liability company (LLC) in Montana, makes that LLC the official owner of their vehicle, and registers the vehicle in Montana with that LLC’s address. The appeal is obvious—Montana charges no sales tax on vehicle purchases and has relatively low registration fees.
“Under Montana law, a business entity formed in Montana can title and register vehicles it owns in Montana no matter where the vehicles are located.” (Draneas, 2024)
Companies specializing in this service advertise widely, with some charging as little as $1,049 for a package that includes LLC formation, registered agent service, and vehicle registration assistance.
Despite what service providers might claim, this isn’t a legal “loophole”—it’s tax evasion when the vehicle is primarily used in another state. Most states have clear laws requiring residents to register vehicles in their state of residence if the vehicles are primarily kept or operated there.
In California:
“California law also provides that an LLC formed in another state but owned at least 50% by California residents is treated as a California resident for vehicle-registration purposes.” (Draneas, 2024)
In Utah:
“The law specifically says that if a business entity has a vehicle and operates that vehicle primarily within Utah, the same standard applies. That business entity is deemed to be a domicile area of Utah or resident of Utah for purposes of registration as well.” (Gephardt, 2023)
Similar laws exist in Georgia and most other states. The legal reality is simple: if you live in a state and your vehicle is primarily operated there, you are required to register it there and pay applicable taxes—regardless of any Montana LLC ownership structure.
The penalties for this form of tax evasion can be substantial, involving far more than just paying the evaded taxes:
In Utah, if caught, vehicle owners face “all the back sales tax and 100% penalty of the sales tax amount that wasn’t paid. So basically, double sales tax” (Gephardt, 2023). On a $100,000 vehicle with an 8% tax rate, that means $16,000 instead of the original $8,000 tax.
In California, owners must pay:
Beyond financial penalties, there can be criminal consequences. In California, a resident named “Trevor” faced potential criminal charges after authorities executed a search warrant on his home and seized his Montana-registered sports car (Draneas, 2024).
In Georgia, authorities conducted what they called the “largest criminal investigation ever into the Montana tax scheme,” executing search warrants on homes and properties belonging to exotic car collectors. The investigation targeted two wealthy Georgians who had purchased approximately 50 exotic cars between them over a four-year period, allegedly depriving Georgia of more than $1 million in tax revenue (WSB-TV, 2019).
Authorities can and do seize improperly registered vehicles. In California, vehicles were seized during the execution of search warrants (Draneas, 2024). In Utah, officials warn that boats with improper registrations “might get impounded and won’t be released until state taxes are paid and settled in court” (KSL, 2024).
States are becoming increasingly sophisticated in their methods to detect improperly registered vehicles:
In California, investigators have visited repair shops to identify vehicles with Montana plates being serviced locally (Draneas, 2024).
In Georgia, authorities have:
Utah recently considered legislation (SB52) that would allow insurance records to be compared with DMV databases to identify vehicles registered out-of-state but insured in Utah (KSL, 2025).
Enforcement actions and public awareness campaigns can quickly change behavior. After Georgia’s WSB-TV aired an investigation into Montana registrations, officials reported that within 24 hours, owners had changed the registration on about 20 cars from Montana to Georgia, resulting in more than $100,000 in tax revenue (WSB-TV, 2019).
In the California case, authorities seized the vehicle owner’s cell phone during their investigation. Why? Cell phones contain a wealth of evidence:
Beyond legal issues with state authorities, this scheme creates potential insurance problems. Many insurers might refuse to pay claims if they discover a vehicle resides somewhere other than what is listed in the policy (Gephardt, 2023). This leaves owners vulnerable to significant financial loss in case of an accident.
While the Montana LLC vehicle registration scheme might seem like a clever way to save money on taxes, the financial risks, legal consequences, and increasing sophistication of enforcement make it a dangerous gamble. With states actively cracking down on this practice and penalties often doubling the original tax obligation (not to mention potential criminal charges), the short-term savings simply aren’t worth the long-term risks.
If a Montana LLC vehicle registration service claims this strategy is perfectly legal, remember that few things in life are certain except death and taxes—and trying to avoid the latter can lead to serious consequences.
Sources:Draneas, J. (2024, June 17). California Cracks Down on Montana LLCs. Sports Car Market. https://www.sportscarmarket.com/columns/legal-files/california-cracks-down-on-montana-llcs
Gephardt, M. (2023, February 21). Utahns save thousands in sales tax by registering new cars in Montana. But is it legal? KSL. https://ksltv.com/526269/utahns-save-thousands-in-sales-tax-by-registering-new-cars-in-montana-but-is-it-legal/
KSL. (2024, November 12). Registering your boat or OHV out of state to save on tax money is illegal warns Utah officials. KSL. https://ksltv.com/ksl-investigates/registering-your-boat-or-ohv-out-of-state-to-save-on-tax-money-is-illegal-warns-utah-officials/705364/
KSL. (2025, January 23). Lawmakers seek crackdown on Utahns illegally registering their vehicles out of state to avoid sales taxes. KSL. https://ksltv.com/politics-elections/utah-legislature/lawmakers-seek-crackdown-on-utahns-illegally-registering-their-vehicles-out-of-state-to-avoid-sales-taxes/730140/
Winne, M. (2019, November 23). Wealthy Georgians with exotic cars accused of cheating local taxpayers. WSB-TV. https://www.wsbtv.com/news/local/wealthy-georgians-with-exotic-cars-accused-of-cheating-local-taxpayers/858532353/
WSB-TV. (2019, November 23). $100K in taxes paid after Channel 2 investigation into exotic cars. WSB-TV. https://www.wsbtv.com/news/2-investigates/more-than-100k-in-taxes-come-in-after-channel-2-investigation-into-exotic-cars/860469930/
Jalopnik. (2018, November 4). Georgia Is Cracking Down On Instagram Bros Registering Supercars In Montana To Avoid Taxes. Jalopnik. https://www.jalopnik.com/georgia-is-cracking-down-on-instagram-bros-registering-1830035589/
Atlanta Journal-Constitution. (2018, October 25). Luxury car owners dodge Georgia tax with Montana scheme. Atlanta Journal-Constitution. https://www.ajc.com/news/luxury-car-owners-dodge-tax-with-montana-scheme/eF1HopLGbDX8EuvYzgNo6J/
Missoulian. (2023). ‘The Montana scheme’: How the wealthy avoid taxes on luxury vehicles, RVs. Missoulian. https://missoulian.com/news/local/business/montana-luxury-car-tax-avoidance-non-residents/article_1f46105e-4c36-11ee-86ad-5bb0a78abd77.html
Bozeman Daily Chronicle. (2017, January 22). Out-of-state car buyers use Montana LLC’s to evade taxes. Bozeman Daily Chronicle. https://www.bozemandailychronicle.com/news/out-of-state-car-buyers-use-montana-llcs-to-evade-taxes/article_b4b37d29-e894-523e-b0ed-be7c0bf7e398.html
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