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
How Can a Clean Title Go to Salvage?So how can a clean title go to salvage if you have no accident? Here’s a great example of how a title record may not be 100% accurate. This is a person who purchased a Tesla with a clean title, and then, after they purchased it, they found out that it’s a salvage and it’s going to cost $12,000 to fix it. Here’s how this happened.
The way that a salvage title can be created isn’t just one method. It can be created either by the insurance company, who pays a claim on a vehicle that says, “We paid out this much money to have this vehicle fixed, so now it’s a salvage.”
Other Ways a Salvage Title HappensAnother way to do it is if the owner of the vehicle fixes the car themselves and says, “I fixed this damage, and I want to make it a salvage to protect my liability if I sell it.” Another way is if the damage is detected by the factory or the manufacturer, and then they put it on the record. That’s what happened with this Tesla.
What happened was this Tesla was damaged in an accident. The owner of the vehicle at the time fixed it themselves. They didn’t want to go through their insurance. They didn’t want to put it on the title. They fixed it, and then they sold it to a third party.
What Happens When a Dealership Finds the DamageOnce that third party purchased the vehicle, they brought it to the Tesla dealership to have some repairs done. The manufacturer was able to determine that the car had been previously damaged both from the diagnostics on the vehicle. The computer said there was an impact; there was deceleration, and then also they did an inspection, and they found that the frame had been dented and the battery had been damaged. So the Tesla dealership put a salvage designation on it. This is completely legal. The salvage designation does not have to come from an insurance company. It can come from any method.
Why Buyers Must Be Extra CarefulSo this is why it’s very important when you’re purchasing a vehicle not only to check the title record. In this case, the buyer checked Carfax. Now keep in mind, even if the car had been filed through an insurance company, Carfax doesn’t catch everything. Carfax is not 100% accurate. It’ll even say in their disclaimer that the records aren’t 100%. So you may have Carfax records that are not complete. But the only way they do get it at all is if it goes through an insurance company. They’re not going to pick it up if the owner did it or if the manufacturer did it.
What to Check Before Buying an EVSo be very diligent, especially on these electric vehicles, to check out the frame. Check out the underneath. Check out the battery. Do a battery test. But also make sure that the physical examination doesn’t indicate there was damage, even if the title doesn’t show salvage on it.
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Court-Ordered Title Process Gaining PopularityMore and more states are advising their department of motor vehicles offices to go directly to a court-ordered title process when there’s some type of complication on the title. Many states for years did not have knowledge at the DMV level that you could get a court-ordered title when you didn’t have the right paperwork for the DMV. We’re seeing more local DMV branches directing their customers and their clients to go right to the court process. In fact, some courts even now have this as part of their paperwork. Here’s an example from a Florida county.
Example from a Florida CountyA county in Florida says in their court’s instructions for vehicle ownership application: “It is sometimes possible to obtain an order to assist you in obtaining a title for a vehicle you own, but which you did not receive a title for at the time of purchase.” Does that sound like you? That’s 99% of the people who have title problems. Either they didn’t get a title when they bought it, or they did get a title and they lost it. The court may issue an order directing the Department of Highway Safety and Motor Vehicles.
What Is a Court-Ordered Title?That’s what the DMV is called in Florida, to issue a certificate of title for your vehicle. This is exactly what a court-ordered title is. It’s a court order that tells the DMV, “You must issue this person a title.” And many times people think, “I don’t want to deal with the court or go to court.” It’s not a big Law and Order Jack McCoy court case. It’s all administrative. It gives you all the series of steps you have to go through to do the process. In this case, there’s a bunch of different steps.
Follow the InstructionsYou have to go through, but it’s all paperwork. It’s all documentation. And if you follow the instructions carefully, you can have the court become your friend, your ally in dealing with the DMV. Remember, the DMV or whatever it’s called in your state. Some states call it Department of Transportation. In Illinois, it’s Secretary of State. In Pennsylvania, it’s called PennDOT. Every state has an agency that issues titles. They have certain rules they have to follow. They cannot give you a title.
Why Courts Can Override the DMVNo matter how much they want to, no matter how much they like you, no matter how much you think you have the right paperwork, unless you have the prior title signed over to you, they’re not allowed to give you a title. However, their get-out-of-jail-free card is the court. The court can override the DMV by looking at your bill of sale, looking at your cancelled check, looking at letters you have, or something proving that you bought the vehicle, and they can say, “Okay, this person has the right stuff.”
They sign a document, you bring it to the DMV, you slap it on the counter, and they have to give you a title. So, a court-ordered title is actually preferred by the DMV when you have title problems because it gives them an out. They don’t have to fight with you about what you have or don’t have. The courts like to do it because they like to help you. In fact, this memorandum you’re looking at on the screen came from official court documents.
Challenges in Form PreparationThe problem is – I shouldn’t say the problem, but the hard part is – in order to prepare the forms for the court, it’s not like a blank fill-in-the-blank type document you’ve seen before. It’s not like name , address . You have to create these sheets of paper from scratch and figure out a way to put the wording on it. Our website will give you some more information on doing that. Every county’s a little bit different, and sometimes you’ll still have to navigate the court. One very important thing to keep in mind is: don’t go into the court in person and start asking them how to do it. They can’t tell you. Sometimes they’ll tell you, “We don’t know how to do it,” or they might even tell you, “We don’t do it.” They may not know.
Mailing the PaperworkEven if you have all the paperwork put together, ready to go, don’t bring it into court in person. Always do it by mail because you want to have it filed in their system without having to talk to somebody that maybe has the wrong information. So, in our experience, if you send it by mail, you’ll have way better success than if you bring it in person. I know it’s tempting. You want to bring it in and talk to somebody and try to control it, but a lot of times that’ll be your undoing and they won’t accept your paperwork. But if you mail it, you’ll be in better shape.
Why Courts Are HelpfulSo, the court-ordered title process is – you know, it’s been used for decades. We’ve been doing it for decades, but more and more courts are actually having forms like you see on the screen. More and more DMV locations are telling their clients, their customers to use this instead of trying to go with the DMV because their hands are tied. They can only do so much. So, use it to your advantage.
The Power of the CourtGo over the head of the DMV. Go to the authority that can tell the DMV what to do. Look what it says right here: The court may issue an order directing the department to issue you a title. That’s what you want. You want somebody to direct the DMV to give you a title. Think about how much of a runaround you’ve gotten from the DMV. Think about how frustrating it’s been. How would it be to have somebody with power to be on your side to tell the DMV, “No ifs, ands, or buts, give this person a title”? That’s what the court can do for you.
Charging Storage Fees To Get A TitleSo how do you—and can you even—charge storage fees for a vehicle in order to get a title? Many times we have clients that come to us and say, “Look, this car has been sitting on my property for 5 years. I’m going to charge $10 a day, so the owner has to give me $50,000, otherwise I’m going to own the car. That’s my rate for storage.” And that sounds like a great idea, but the law typically says otherwise. Now, the good news is there are ways to get a title for a vehicle that’s been sitting on a property that you own.
Storage Fees May Waive Your RightsIf a vehicle has been sitting on your property for a long time, charging storage fees is not the way to do it. If you do it the wrong way, you might actually waive your rights to that vehicle. How does that work? Well, here is a section from the statutes of the state of Illinois about storage fees. And the reason we selected Illinois is because it’s the same as most states, because most states go by the federal UCC, or Uniform Commercial Code, which talks about storage fees and storage liens. So the law says section 770 of the Illinois code states:
Written Notice RequirementAny person, firm, or private corporation seeking to impose fees in connection with the furnishing of storage for a vehicle in the person’s possession must provide written notice by certified mail prior to the assessment and accrual of fees. What does that mean? That means before you can even start the clock on charging storage fees, you have to give the owner of the vehicle or lien holder notice that you’re going to start charging them storage. You have to give them an opportunity to inspect the vehicle.
Vehicle Access RequirementThe vehicle must be accessible where the vehicle is stored within two days of the request. So if you send out that notice to an owner and lien holder and you tell them you’re going to charge them $10 a day, you have to give them access within two days to be able to inspect the vehicle and take possession of it. What happens if you don’t do that? If you fail to comply with this notification of storage fees, first of all, storage fees shall not be assessed, and the owner or lien holder shall be entitled to injunctive relief for the possession of the vehicle without payment of storage fees.
Legal Consequences Of Non-ComplianceWhat does that mean? Basically, if you don’t send them notice before you start charging fees right away, you can’t charge fees and they can get the car back. That’s the short answer.
Only For Licensed FacilitiesMaybe somebody tells you, “Hey, just start charging storage fees.” It doesn’t work. It’s not how it works. The only time it works is if you are a licensed automotive facility—storage, auto body, repair, towing—and you have a signed contract with the vehicle owner that authorizes you to charge storage, or if you towed it under a legal tow (like the police told you to tow the vehicle), then maybe you can do something. There are also other requirements in this law that can create liability for you. But if you’re a private citizen, even with a self-storage facility that stores people’s personal goods, you can’t generally charge made-up storage fees and just rack up the clock on that. You have to go through a process.
Storage Fee Method Not For Private CitizensSo if the thing you’re trying to do is get a title for a vehicle, that’s fine—you can do that. Don’t try to do it using storage fees. You might think that’s an easy way to go and clever, and “I thought of this great thing.” It’s not going to work. And it’s actually harder, takes longer, and it’s going to result in you losing the vehicle rather than if you do something else to get a vehicle title.
Use Legal Methods To Get A TitleLike a bonded title, magistrate title, VT transfer, prior owner contact—the website will give you the actual valid and successful ways to get a title rather than storage fees. And sometimes people think, “I’m going to use storage fees because I want to try to stick it to the owner” or do something clever, but it’s really not a title method. It’s a method that can be used in last resort scenarios where nothing else has worked, but you first have to try the other things.
The Myth of the Abandoned VehicleToday we’re going to talk about one of the most common subjects that comes up in our operations department, where people call in with questions about abandoned vehicles. Many times they use the phrase “abandoned vehicle” because they want to get a title for a vehicle. They say, “I want to file for an abandoned vehicle title.” This often comes from a preconceived idea that if they say it’s abandoned, it’s “finders keepers” and they get to keep the vehicle through some process for a title just based on it being abandoned. The thinking goes: if somebody doesn’t want it and I want it, I get to own it.
Abandoned Doesn’t Always Mean YoursWhat we’re going to show in this article is that if you declare something to be abandoned, many times you won’t get to keep it. Most times, the vehicle technically isn’t legally abandoned under the definition that you might think it is. For example, if you buy a vehicle from somebody and they don’t give you a title, you might say, “I’ll just file for an abandoned vehicle.”
It’s Not Abandoned if You Bought ItThat vehicle is not abandoned—you bought it. Even if somebody brings a car to your business or parking lot, or if you had a vehicle that was left for storage and the person didn’t pay their bill, that’s really not an abandoned vehicle. That is a storage lien.
We’re going to talk first about what an abandoned vehicle really is and what you can and can’t do to get a title. Then at the end, we’ll discuss how you can get a title for vehicles that you might think are abandoned but really aren’t.
The Georgia Law ExampleFirst, here’s an example from the state of Georgia. We’re picking this as a sample procedure because Georgia has an abandoned vehicle procedure that’s very similar to most states. Most states actually follow federal law for abandoned vehicles, so they’re all going to be similar.
Per Georgia law, a business or person removing an abandoned or unclaimed vehicle from public right-of-way or public property must go through a process to ensure the rights of the vehicle owners, lienholders, and security interest holders are protected. A certificate of title for an abandoned vehicle cannot be issued on a bond (or on vehicles not required to be titled, model year 1985 and older).
Rights of Owners and LienholdersWhat does that mean? That means before you become the owner of that vehicle that you’re saying is abandoned (which it probably really isn’t), all of the other people with interest in that vehicle have to have the right to redeem it. If there’s a previous owner, they have to be notified and told, “Hey, your car is going to be transferred to new ownership. Do you want it?” Any lienholders must receive the same notification.
Storage Fees Aren’t That SimpleYou might say, “Well, I’m going to just put a storage bill on it.” You probably won’t be able to put a storage bill on it unless you have a signed contract from the owner of the vehicle agreeing to pay you storage. You can’t just make up storage fees out of thin air. Even if you are a licensed automotive shop with legitimate repair bills, you can’t call it abandoned—you have to call it a mechanic’s lien or storage lien, which is a different process.
Lien Process vs. AbandonmentThe law states that information on handling abandoned vehicles requires towing and storage firms to notify vehicle owners and lienholders by law when a motor vehicle has been towed and impounded. Authorized businesses that want to foreclose on a lien—see what that says? It’s not an abandoned vehicle; it’s a lien sale, which is different.
Notification is RequiredWhat are the links to do this? Notice of an abandoned vehicle—those are the notices you have to send out. Disposition of derelict vehicle. Apply for a title and tag for an abandoned vehicle after a court order.
Court Order is a MustWhat does that tell you? That tells you if you want to get a title for an abandoned vehicle, you can only do it after you get a court order. So why bother with all this? Why not just do a court order title (which you see us talk about quite a bit)? Because once you declare it abandoned according to the abandoned motor vehicle act described here, you have to go through a process of all these notifications and public sales, and you’re probably not going to end up keeping the vehicle.
Don’t Jump In Without Knowing the RisksBefore you jump instinctively to saying “abandoned vehicle, I’m going to file for it,” you need to be very careful. If you start using some of these forms—for example, “Notice of an Abandoned Vehicle”—what’s going to happen is you may block yourself from ever getting a title because you’re going to have to show that you used this form.
A “Notice of an Abandoned Vehicle Request for Information” requires the company removing or storing the vehicle to complete the towing and storage information, and you have to have a license for this. You can’t just make up storage in your driveway or in your business parking lot. You have to notify all the parties.
You Swear Under Penalty of PerjuryIf you see the very clear instructions, it will tell you that you have to do this under penalty of perjury: “I swear and affirm that the vehicle described was unattended, removed at the request of a police officer or private property owner in compliance with the motor vehicle act.”
You Could Lose the TitleWhat’s going to happen is after this vehicle has been transferred (or is in the process of being transferred), the owner of the vehicle is going to get a letter from the DMV saying, “Hey, remember that car that you used to own? It’s being transferred to somebody else. Do you think that any of these facts are not true?” If they dispute or contest any of the facts, guess what’s going to happen? They’re going to revoke your title, and they might even take action against you for doing the process the wrong way.
Final Takeaway and Alternative OptionsThe takeaway from this is: don’t make “abandoned vehicle” your first idea for getting a title, even though you might have read about it on web forums, chat groups, or heard about it from classic car enthusiasts. Abandoned vehicle is not the process of getting a title—it’s a process of getting rid of a vehicle, which is probably not what you’re trying to do.
If you have more questions about how to work through all this, click the link below and we can tell you more about it. If you found this helpful, be sure to check out other articles on our site to see if there’s further information that could give you more insight into resolving your particular situation.
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