Sometimes searching exotic car classifieds can offer more questions than answers. A number of times we’ve seen supercar descriptions saying, “…a clean Montana title in the name of the seller’s LLC.” But the contact is in New Jersey, Atlanta, or Los Angeles. There are plenty of scenarios why this can be the case, but the reason is probably none of those. Two of the predominant reasons are to avoid taxes and also avoid emissions issues.
Wherever you live, go to a Cars and Coffee or supercar gathering, and you’ll see Montana license plates. Many assume dual residences, especially since someone driving up in a Pagani Huayra can clearly afford numerous residences. But many of them actually don’t. What they have is a Montana LLC.
Why are there so many Montana license plates on supercars?
Starting a limited liability corporation in Montana gets you a mailbox address that some claim as their residence. So almost instantly, they have residency status and a residence. So that’s all good, and legal, but why do they need them?
First, there are no personal property sales taxes in Montana. In California, the sales tax is 7.25 percent. If you paid $1 million for a car, the tax you would owe is just shy of $140,000. Even for the rich, that’s a significant amount. For obvious reasons, even tax accountants recommend doing it.
The other is emissions regulations. Wyoming has no cities that fit the Clean Air Act’s “non-attainment” area definition. So the Clean Air Act doesn’t apply. Only 1975 emissions standards apply in the Treasure State. It won’t help to clean up the environment, but it will help to clean up any emissions irregularities.
Are there really that many supercars with Wyoming plates?
According to Bloomberg, 10 percent of the 350+ McLaren P1s ever made display Montana license plates. Of the 100 Pagani Huayras made, four are registered there, according to Montana DMV records.
There is also a convenience factor to this register your car in the Montana frenzy. Looking it up online, there are scores of Google search results. Everything can be handled remotely so that you never have to leave your house. You never need to actually go to Montana. Many offer the service for well under $1,000.
Montana wants some of that cha-cha too
Now Montana wants its cut. It has been aware of this practice for years, so now the legislature is looking at its options. But not to stymie the practice but to profit from it. Called the “Ferrari tax”, House Bill 650 proposes charging out-of-state registrations one percent if purchased for more than $150,000.
With that we wonder is if enterprising businesses would like to take a stab at faking sales invoices capped at under $150,000. After all, if it’s about getting around taxes and emissions regulations, this is just another layer toward that end. So clearer heads prevailed.
Instead of the special tax, a general $850 Luxury Tax was imposed for cars registered by LLCs with a value of $150,000 or more. According to the Bozeman Daily Chronicle, this will add an additional $2.5 million per year to the state coffers.