California closed the Montana license plate loophole

blagie

> “The bill would hold any officer, manager, partner, beneficial owner, or member of a shell company personally liable for any unpaid taxes, and any interest and penalties on those taxes, the nonpayment of which may constitute a crime, due on the purchase of a vehicle, vessel, or aircraft.” Is dumb. You want comprehensive enforcement with reasonable penalities. You don't want draconian laws randomly enforced.

SoftTalker

Next headline: More wealthy people leaving California. These shenanigans with vehicle taxes happen whenever a neighboring state has a significantly better deal. People register vehicles in friends or families names who live in that state, or form a legal entity there which can own the vehicles. Of course then the high-tax state writes more and more convoluted definitions of "residency" for the vehicle to make it subject to taxation, which are either hard to discover/enforce as a practical matter or someone finds a new loophole and the avoidance games continue.

blaufast

Thank you California Our willingness as a society to tolerate the expense, danger, and health issues brought by extensive car use will be looked back on with bewilderment. You can start to see the insanity when a 'classic' car drives by. It's noisy, heavy, dangerous, and smelly. It's allowed to noticeably pollute any area it passes through. We've made progress, but that level of noise, danger, and pollution is how every car on your street used to be. Car culture has a unique flavor of regressive entitlement. Every bit of societal and legislative progress that has made cars cleaner and safer has been fought tooth and nail by this group. Our government created a vast, expensive, open to use resource in roads and infrastructure, offers minimal restrictions an licensing for its use, barely enforces existing safety laws, and the combustion crowd shows outrage at the loss of their illegal activities. I wish our culture was less tolerant of this behavior. It is a tiny percentage that costs the rest of us constantly. Sometimes its a motorcycle club, others it just rich people shucking the social contract. I'm looking forward to the last Harley getting recycled.

jhallenworld

I've seen car dealers in MA use Montana dealer plates. At the very least they are cheaper, avoids $220 / year excise tax and registration fees vs. $25 for Montana. I don't think it helps with any sales taxes- dealers don't have to pay when they buy cars, unlike customers. It would help if dealer uses the car personal reasons instead of just having it for resale. Hmm... maybe I should start a car dealer just to avoid taxes on my next car.. The Montana plate for owners reminds of registering your boat in Wilmington Delaware to avoid state sales tax. You had to create an LLC to do this I think.

fedpost

Can I just take this moment to mention that I think we need a better system for car registrations across the board? I don't like that there are all these edge cases with titles, insurance, inspections/smog, window tint, plate expiry, taxes etc whenever you move or even travel. It feels like we've just turned vehicle ownership into a profit opportunity for the police to harass everyone over completely inconsequential nonsense the second you cross any state line (emissions/insurance aren't nonsense but bear with me pedants). Similarly it creates a mountain of work every time you move. I wish you could just register under an LLC or trust or something wherever and have a generic plate that can go anywhere and force the states to agree on a set of standards that apply across the country. Alternatively allow people to keep their plates indefinitely like phone numbers. Yes, this creates arbitrage opportunities but maybe we should be bringing up the standards of the arbitrage states instead of having assholes threaten everyone with guns for random infractions. I'm kinda just throwing ideas out there but this current system is Kafkaesque.

turlockmike

Eventually everything will be a use tax. It's the only fair tax and there will always be loopholes otherwise.

hparadiz

I don't get how it's constitutional for them to levy a tax on an officer of a company that does not live in the state just because one officer of the company does live in the state. Even weirder the law does not require the one officer that does live in California to have a company car. In other words they are trying to tax out of state cars with no proof those cars were ever in the state. This is gonna cause a mess in the courts.

bradlys

I think the tax hole loop is a bit annoying but I also find it annoying that CA won't allow you to register a shitload of cars in the state, period. It's due to the asinine carb laws. Even if you have a car that would pass smog, they won't let you register it. I don't see this doing anything when a ton of vehicles get a pass. For instance, all motorcycles don't fall under this rule and they are the biggest polluters out there. It's just dumb. All these complaints people have about cars - yet don't see any legislation out there that's bringing the clean energy public transit revolution. Just more rules without any relief.

fhn

this is all about the money, nothing else. California will get more money out of citizens any way it can.

dboreham

Montana person here. I'm on the other side of this trade: trying to buy cars in California[1] that I'm going to register in Montana. My experience has been that it's very hard to exploit this "loophole". I know that because even not trying to exploit the loophole. I have to jump through hoops to prove to a dealer that I really live in Montana. And then the car has to be either put on a transporter, taken to the border (or all the way to Montana), or driven by an employee of the dealership to the border. Then we have to get paperwork notarized by someone at the border that the vehicle really left CA. You also have to pledge in writing that you wont bring the car back into CA except for maintenance. I've had dealers in LA just plain refuse to sell me a car because I lived in Montana. So it was not in recent years anything like as easy as "put a Montana plate on it" <waves hand>. The article calls the ownership entities "fake LLCs". They were in fact completely real kosher Montana LLCs. The issue at hand is that CA wants to disallow the case where the LLC is owned by someone who is a CA resident. That's not the same as "fake". Finally, anyone from California should experience the Montana DMV (called MDT here). It's like checking into the Four Seasons compared to the CA DMV! You can phone them and they'll answer within a few rings and help you out. You can go down to their office at the court house and perhaps have to wait in line for 5 minutes, but perhaps just walk straight up to the counter. They will help you figure out vanity plate letters, endlessly checking whether ideas you have are already registered. I almost make up excuses to go to the DMV, it's so nice there. Montana also has a system of sponsored plates. There are about 100 of them, which allows you to choose a plate of almost any color, which is nice if you want it to match the car color. [1] Why do that? Well there are 100X more cars for sale in CA, and the prices are lower.

subhobroto

There seems to be a lot of varied and interesting perspectives and lengthy debates on this thread, but the core issue is California is in debt and needs all the money it can get. The California DMV is a fees collection arm and not customer friendly. For example, a lot of Californians don't even know that there is something called PNO, or "planned non-operation", a status possible for vehicles they don't plan to run or use on public streets, where they stop paying recurring registration fees that are now in the hundreds of dollars a year. Every year, I'm aware of at least a few people who do not have an operational car or have a second car in their garage that they are still paying registration fees for, or the state of California places a lien on their unused vehicle, just because that person is unaware that they can just stop paying registration fees on their car by filing a PNO in time. First you have to know this PNO status exists, and then you have to file it correctly within a short 90 day window. There are no exceptions, even if you prove you were in a coma or out of state or country. I'm not going to go into the details of how draconian the process of bringing a car out of PNO is. For example, if you have a car that has passed smog in October, you put a PNO in October and you bring it back out of PNO in November, they're going to make you smog it nonetheless - pretty expensive process that costs now atleast a hundred dollars all in, which runs counter to California's own policy of not requiring a smog within 90 days of the recent smog test. If the DMV was customer empathetic and friendly, they would have by default, placed any cars that have not been registered in time, on PNO. Later, the person who pays the registration then automatically gets their car moved from PNO to registered status. However, this is not how the DMV operates: They will continue to tax you and fine you and add interest on top of all the fees for a car you do not plan to operate. So all the debate about whether this is right or if there is another way of doing it etc is missing the entire point because none of that is the objective. The entire point is to collect taxes and fees to fund a ballooning, unchecked and ever-growing expense account.

kart23

pretty sure in a lot of these cases it’s already illegal, enforcing the law is another matter. someone actually has to pull over the montana plate owner, then the state has to sue them for tax evasion, build the case, etc. Thats just not gonna happen. ideally there would be a nationwide standard for registration and taxes. also the new hot thing in california is to have dealer plates on your million dollar car. you never register it, never pay taxes, but it’s still legal to drive. you just need to own a dealership, but on paper again that’s not hard if you’re rich

keepkalm

My first thought is that this is a pricing problem, especially considering the cost of enforcement. Also, please consider this is just for registering the vehicle, gas taxes actually pay for road use.

yieldcrv

this has been my synopsis on tax matters, if you talk about it then it will get changed so everyone should just pretend that they’re paying sky high taxes and let the broken tax sheltering strategies land poorer people in prison and never talk about the effective ones to anyone except your lawyer

waltwalther

Interesting and somewhat related: Youtuber Cody Detwiler (whistlindiesel) was arrested last year and charged with multiple tax evasion felonies for using the Montana loophole to register his vehicles. According to Detwiler, Tennessee did not bother to notify him in advance that he was in violation. Instead, they sent heavily armed men to his place of business, handcuffed him, and took him to jail. His bond was $20000. Detwiler spoke out publicly on his Youtube channel about the arrest, claiming that he was targeted specifically because his celebrity status would bring attention to Tennessee's position on the loophole. Shortly afterward, Detwiler was arrested a second time at the airport while returning from a trip abroad, and charged with a separate Montana loophole violation. Detwiler says that Tennessee authorities visited his accountant months before he was charged, asked her specific information about his vehicles being registered in Montana, and told her not to let Detwiler know about they were investigating him.

JumpCrisscross

Huh, similar situation in Italy: “Tens of thousands of Italian drivers have purchased Polish number plates for their cars and motorbikes in an elaborate scheme to evade road taxes and pay lower insurance premiums. An estimated 60,000 motorists — mostly in and around Naples — have been enticed by the promise of 70 per cent savings on road tax and insurance fees to transfer ownership of their vehicles to shell companies in Poland and register the vehicles there, according to an industry group. Now with Italy’s general election looming, Giorgia Meloni’s rightwing coalition has announced “the elimination” of the unpopular annual road tax that helped spawn the evasion schemes. The bollo auto will be cut for an estimated 14.5mn small and midsized vehicles — a giveaway that will cost Italy’s already strained public coffers an estimated €2.4bn in lost revenue next year” [1]. [1] https://www.ft.com/content/74e70f0c-3788-4343-93d7-9c8740ee2...

hansvm

I've always found that a bit odd. CA is especially determined to make "any employee's child's dog exists in CA occasionally" a liability for the corresponding business. I'd be quite tempted as a new business owner to make spending more than 9 consecutive days in CA a fireable offense just to avoid these sorts of shenanigans. It's nice that they closed a "loophole," but they opened a bunch of other nonsense in the process.

sjtgraham

Drafting gap just moved the loophole: put the car in a Montana trust with an independent Montana trustee that the California beneficiary uses in California.

jiveturkey

the summary presented by the drive feels like an overreach. but we live in the world of can't have nice things so there you go i guess. i doubt there's all that many beneficial owners of montana businesses that live in california, but surely there are many nevadans and oregonians that straddle the border and will get unfairly caught up in this.

erickhill

Washington needs to adopt this policy as well. I have a neighbor who moved 3 houses down a few years ago who brought 4 cars with her from Montana and never registered any of them. It's... ridiculous.