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The 1987 Porsche 911 that sold on Bring a Trailer on July 26 was a coupe so dreamy that late founder Ferdinand Porsche would be sorry to have missed it. Its diamond blue metallic paint—a hue so subtle that at some angles, it looked lavender—and throaty 3.3-liter flat-six engine were enough to bring $141,000 and more than 120 comments on its listing.
Close observers would also have noticed a detail far more polarizing than the semi-lavender paint job: The Turbo came with “a clean Montana title in the name of the seller’s LLC,” the listing said.
In certain circles, Montana registration is a touchy subject. The practice of registering a collectible car there, regardless of where it is located in reality, is done in order to avoid paying taxes and shirk emissions standards. And it has attracted plenty of detractors.
“The people who have Montana license plates are like the people who put the fake handicap badges in their car,” says Paul Zuckerman, an attorney in Los Angeles and avid car collector. “They’re scum.”
“I can’t believe so many customers have gotten away with this grift,” says Alex Ross, who owns Sharkwerks, a high-performance automotive tuning shop in Fremont, Calif. “No matter where in California, at every cars and coffee [gathering], look for the Montana plates. It’s comical.”
Randy Nonnenberg, the founder of BAT, is more circumspect, although he’s quick to say he has no personal vehicles bearing Montana plates. “It’s not a red flag; it’s something to note,” he says. “We don’t believe that it’s for us to lecture that person to do that or not. It’s a strategy that you can agree with or not.”
But with tighter emissions standards enacted in Connecticut on July 22, Colorado legislators slated next month to discuss requirements to significantly lower toxic air pollution by 2027, and a handful of automakers including BMW, Volkswagen, and Ford recently backing the US Environmental Protection Agency’s decision to restore California’s ability to set its own strict tailpipe and zero-emission vehicle standards, debate is heating up over how far to go to avoid restrictions.
The Montana scheme
The debate about registering a car in Montana can seem like a lot of fuss over a piece of metal. But real money—and ethical considerations—are at stake.
Car owners from Mendocino, Calif., to Miami are titling collectible cars in Montana, even—especially, in fact—if they don’t live there. Some start an LLC in the state, which gets them a mailing address and residency status of sorts. Others acquire a mailbox address or property at which they can claim Montana residency.
“We see, obviously, a lot of sellers—many do it, and buyers are interested in doing it,” Nonnenberg says. “We run BAT shipping, so we see where people are moving all the cars around. And, yeah, there’s meaningful movement.”
In 2021, fully 10% of all McLaren P1s ever made—cars worth well over $1 million apiece—were registered in Montana, according to the Montana DMV. Four of the 100 Pagani Huayras ever made were registered in Montana. They were listed at $2.5 million each.
Montana offers two significant benefits. First, it does not charge sales tax on personal property. (Alaska, Delaware, New Hampshire, and Oregon are the other states that require no sales tax.) This means that someone who spends $500,000 on a new Lamborghini need not pay an additional $36,000 or so in taxes to acquire. (California’s sales tax, for instance, is 7.25%.) This is not chump change, even for those who can afford it. Many see it as a smart move.
“It is such a well-known tax dodge, even my own accountant has suggested I use it to shield my vehicle from California taxes,” says Jeff Wright, an LA-based car enthusiast who owns a ranch in Montana.
Second, Montana does not require vehicle emissions tests or annual inspections. This is because, with less than half the population of the borough of Queens, N.Y., it has no populated areas federally classified as having “non-attainment” status to meet the Clean Air Act’s regulations. In California, by contrast, owners must ensure that all vehicles made after 1975 meet emissions standards and can pass safety inspections.
Where 10 years ago the sight of a Ford GT sporting a blue Montana plate would be rare, a drive to the popular Friday morning car gatherings at Newcomb’s Ranch outside LA reveals that even relatively pedestrian 911s carry Montana plates.
“It has gotten so out of hand, even people in Florida do the Montana tax grift,” Ross says. “And as a bonus, you evade smog [regulations].”
A legal loophole
Technically, the practice is legal. Companies help facilitate it. Search for “how to register my car in Montana” and you’ll see a dozen sites offering services to help clients form LLCs. You needn’t even set foot in the state. They’ll remotely handle the registration titling and fees.
“Don’t buy a motor home, luxury car, boat or plane! Let your Montana LLC buy it!” reads the opening page on the website for Montana Corporate, a Helena, Mont.-based company that offers LLC formation for $625, “title handling” for $150, foreign registration and title acquisition for $840, and other amenities including “mail service” and “document retrieval.”
Law enforcement authorities and legislators are familiar with the scheme. (California State Police have started cracking down on the residential discrepancies of drivers pulled over for other infractions with California licenses and out-of-state plates.) In 2017, Montana legislators proposed a sales tax of up to 1% on cars and recreational vehicles worth more than $150,000; aimed at out-of-state enthusiasts, House Bill 650 was nicknamed the “Ferrari tax.”
At the time, the Bozeman Daily Chronicle estimated that the proposed tax could raise $2.5 million annually for the state. But car and RV dealers objected—strongly. Ultimately, an $825 “luxury” fee was added to ordinary registration costs for vehicles worth more than $150,000.
In addition to normal registration fees, individual counties in Montana may also impose a so-called local option tax of up to 0.7% of a vehicle’s retail value, providing direct revenue. As of August 2021, Big Horn, Deer Lodge, Flathead, Granite, Phillips, and Richland counties lacked that local option tax. Not surprisingly, Flathead, Granite, and Deer Lodge counties have the largest amount of luxury vehicle registrations, according to data in a vehicle registration primer for the Montana DMV. All told, light vehicle registrations contribute roughly 4% of total revenue collections for the state, according to the primer.
Personal ethics and risk
Unless and until it becomes outright illegal, the decision to title something like a $2.4 million Ferrari F40 in Montana falls to the individual car owner making personal ethical choices. Many collectable cars are denoted as “gross polluters” in the state of California and do not pass emissions tests. To register them elsewhere is to effectively cheat the system that California officials set in place to help reduce air pollution for all.
Then there are the tax issues. If you can’t afford the taxes to register your supercar in the state where you live, perhaps you can’t afford the car, says Barry Ritholtz, a proud vintage Corvette and Defender owner and chairman of Ritholtz Wealth Management LLC. (Ritholtz also hosts the “Masters in Business” show on Bloomberg Radio.)
“I like paved roads and functional infrastructure,” tweeted Ritholz. “Gotta pay for it somehow.”
Ultimately, it comes down to each car owner’s personal appetite for risk, because such loopholes tend to be closed eventually. There’s no guarantee that the relative leeway car enthusiasts have regarding Montana titles will last.
“I advise my clients to establish a Montana LLC only when the odds for a sales tax audit are minimal,” says Doug Trotter, the owner of Trotter, LLC, a firm that specializes in automotive consulting, acquisition, and financing. “It’s borderline tax evasion.”
“It’s a risk—a cheap thrill,” echoes Zuckerman, the LA lawyer. “I always feel better having my cars registered in California.”