Lots of state revenue collectors are mad as wet hens at the State of Montana. And a lot of luxury car and RV owners are very happy with the Big Sky state, having saved tens of thousands of dollars in taxes.

For now.

Here’s why:

In most states, vehicle sales are subject to a nasty sales tax, personal property tax, or both.

When you’re buying a high-dollar luxury car, sports car, truck, or RV, those taxes can really put a hurting on you.
For example, Louisiana slaps a 9% tax on vehicle sales. If you’re buying a $400,000 Bentley, that means you’re going to have to fork over the sales price of the car, plus $36,000 in sales taxes.

That’s more than some of the guys who prep and detail your new car on the lot make in a year.

But if you purchase your vehicle through an LLC in Montana, you wouldn’t have to pay sales tax on the vehicle at all. What’s more, you don’t even have to be a Montana resident to do it!  Anybody can form an LLC in Montana. And then title their newly-purchased vehicle in the Montana LLC’s name.

That’s $36,000 that stays in your pocket.

Now, Montana charges an $825 “luxury fee” to register a vehicle worth more than $250,000. But that’s still a drop in the bucket compared to the potential immediate tax savings you can get by registering high-value cars, trucks, busses, and RVs in Montana.

And hey, It’s not like that money is going to the kids detailing the car on the lot, anyway.


Why shouldn't you register your vehicle using a Montana LLC?

Why Shouldn’t you register your luxury vehicle under a Montana LLC?


Forming a Montana LLC and using it to purchase vehicles and other expensive pieces of personal property isn’t a new concept.Thousands of car owners across the country have successfully benefited from using this technique. The more valuable the vehicle, the greater the tax savings.

Plus, the practice is 100 percent legal.

In Montana.

But there’s a risk:

Other states with high sales taxes and ad valorem taxes on car sales and registrations have woken up to the fact that they’re losing millions in tax revenue. And they’re pissed. 

They think these taxpayers are getting over.  They want their money. And some  states are already cracking down on people caught parking cars in their state that have Montana tags.

Some states have passed laws specifically  targeting people who use out-of-state car registrations as a tax avoidance technique. In Michigan, for example, owners of RVs with out-of-state plates must owners not keep their RVs in Michigan for more than 89 consecutive days. Otherwise they must get Michigan tags, registering the car in Michigan.

In some tax-aggressive states, like California, Colorado, and Georgia, revenue officials are even sending scouts into storage facility lots and RV parks to track down and identify any RVs or other high-dollar vehicles with Montana plates. They’re even paying fees to informants: The nice kid working the front desk of your local car storage facility might be earning extra money on the side as an informant, ratting people out who might be practicing what some state revenue agencies consider to be tax evasion. Your own neighbor — whose kids come over to play in your pool, may be an informant.

California Highway Patrol is actively looking for and flagging drivers pulled over with California drivers licenses driving cars with Montana plates.

So while forming an LLC in Montana and using it to buy a vehicle is perfectly legal in Montana, doing it to avoid paying sales tax in your own personal state of residence may not be.

Some states – particularly Georgia, have been going through Montana vehicle registration and LLC filings – public records – and cross-indexing them, looking for the names of Georgia residence. Then they send people out to find the cars. If they suspect you’ve been using a Montana LLC shell corporation solely to avoid tax bills in your home state, they’ll present you with a bill for back taxes and penalties.

Georgia (and we presume, other states, but we know Georgia, for sure) is also cross-referencing all cars with Montana registrations and Peach Pass toll accounts, and then having toll authorities hand over photographs of those cars passing through toll stations. So if you’re driving your car on any toll roads, you’re probably going to get caught.

And in some cases, they’ll haul you to court, and charge you with criminal conspiracy to defraud the state.

Nevertheless, lots of higher-end car and RV owners have assessed the legal and enforcement landscape, and believe the tax savings to be worth the risk: Go to luxury or sports car shows outside of Montana, or any RV park well away from Montana, and chances are good you’ll see a lot of Montana plates. In fact, about one out of every 16  of all McLaren P1’s  ever made on the planet just happen to be registered in Montana.  

Yes, it’s dumb.


Cost of buying and registering a new Pagani Huayra

Here are the taxes alone on a new Pagani Huayra from a private seller in Arcadia, California in 2022.

Sure, Americans should pay their fair share in taxes. But full-boat sales taxes on private party sales are ridiculous. Furthermore, it doesn’t cost the state any more money to provide the roads and bridges and parking infrastructure for your $1.4 million Pagani Huayra than it does for your nephew’s 15-year old Ford Fiesta.

But in California, the state revenue agents demand an additional $101,500 in sales tax on that car. It’s exploitative and tyrannical, and they don’t deserve that money.

And that argument’s probably a loser in court.

IMPORTANT: Insure the Car Properly.

Drivers who want to use the Montana LLC technique should be very careful when insuring these cars. You really need to go with an agent and carrier who understands the luxury and high-value car market, and who knows how to write these policies up so that they’ll stick. The carriers we work with at Select Insurance Group understand this segment of the market. They know the game. We can’t say the same for all the name-brand mass market carriers do.

Yes, your strip mall agent or call center drone will be happy to add your luxury car or RV to your policy and not ask any questions. And they will be happy to collect a nice commission on the premium. But these agents may not have the training or experience to ask the right questions, and get the right information on your application.

You might save a little bit of money for now. But are you actually protected? Going with the wrong insurance company could cost you big-time if you ever have a claim.

Here’s why:

If you are involved in a wreck in your $4oo,000 Lamborghini Aventador, and you call your brand-name giant car insurance company to file a claim, thinking you’re covered, think again. Lots of carriers will take your premium, sure. They don’t pull out the green eyeshades until they receive a claim. Then they’ll look at everything. ESPECIALLY on a supercar. It’s not like totaling out a seven year old Ford Focus. A super car claim will get sent to a special underwriting desk for special scrutiny.

If your eager-beaver neighborhood agent wasn’t thinking, and just added your Lambo to your personal policy, alongside your sensible minivan (hey, we don’t judge!), you could have a big problem:

The underwriters and attorneys reviewing your claim will immediately notice there’s a disconnect between the name on the policy and the ownership of the vehicle.

Next, they’ll notice that the vehicle is registered to an LLC, not to an individual. So is this a business-use vehicle? Did you tell us this on the app? They didn’t think they were writing a commercial policy when you bought it. What business do you actually conduct in Montana? Do you even have a legitimate insurable interest in the vehicle at all?

They’ll go on to say, “You told us on the application that you were keeping the car in your garage in Provo, Utah. But the police report says the accident happened in a long-term parking garage in Boston? Where you happen to own a home and have a driver’s license? How did that happen?”

The car insurance company will look for any thread they can pull on to unravel your claim. And unless you do things right from the get-go, their denial of your claim will probably stand up in court. They’ll argue that you made false statements on your application. Which gives them the right to deny your claim, flat-out.

Unless your agent specializes in the luxury/non-standard car market, they may not even know how to properly fill out the application to ensure your vehicle is covered when it counts. See, when it comes to the specialty car market, you may not be in good hands, after all.

If you have an exceptional car for any reason, or you’re considering registering your car in Montana, give us a call at the Select Insurance Group. Unlike the mass market insurance companies, our carriers know the deal, and our agents know the right questions to ask to make sure you’re getting the insurance protection you need.


Don’t Make Yourself a Target.

Obviously, this is ‘grey hat’ stuff. Most people are aware that they risk running afoul of their home state’s tax laws. Don’t break the law in your home state. Some of you are going to try anyway. So if you’re going to do this, don’t make it obvious.

Here’s how to keep the target sign off your back.

First, be careful trying the Montana LLC technique to save taxes on an RV.

It’s tough to hide an RV. They’re big and conspicuous. They’re expensive. They make tax collectors drool.

They stay in one place for weeks, months, or years at a time. So it’s obvious the vehicle hasn’t just driven in from Montana for the holidays.

Also, be careful driving your RV with Montana tags while towing your car with California tags in California with a California driver’s license. That’s painting at target on your back. As we mentioned, the CHiPs are out in force, looking for this specific circumstance.

A luxury sedan or sports car, on the other hand, is much more easily hidden than an RV. It’s much less likely to attract the wrong kind of attention. But be aware that hat local revenue officials and law enforcement are walking through car shows with cameras, looking for cars with Montana tags.


And when they get to the office, they will call their buddies at the Montana Department of Motor Vehicles and the Department of State and have them pull your information from your Montana LLC filing.

And BOOM… you’ll get a nastygram in the mail saying you owe tens of thousands of dollars to the tax man.

So be discreet, and be judicious. Keep your Montana-registed car your garage…  the same garage you tell your insurance company you keep it in.

Don’t Do Cute  Custom License Plates!

Cute custom license plates attract attention – and can get you into trouble.

According to Jalopnik, one way Georgia tax officials have caught up with owners of Montana-registered cars is by going through Montana registrations looking for cars with custom plates like “MTBULLD0G.”

Montana LLC tax scheme

Don’t be like this Georgia guy.

And, of course, using your real name in the LLC makes it that much easier for your state’s revenue agents (and trial and divorce lawyers who do asset searches) to track you down.


Don’t Flaunt It. 

Stay off of social media. If you live in California, don’t take a photograph of your Montana-tagged Testa Rosa with a backdrop of the Golden Gate Bridge. Once law enforcement suspects you’re keeping your Montana-tagged high-value vehicle in your home state, they’ll be checking your Facebook and Instagram. And they’ll be sitting across the street from your house photographing you pulling in and out of your own driveway.

Invest in a Grizzlies or Bobcats-themed license plate frame. Get a BIGSKYGUY plate. Whatever. Make it look like you belong in Montana.

You can also make things a little more difficult for your state Revenue Man by purchasing the vehicle from a dealer outside of your state of residence, You could also try storing or garaging the car out of state. This prevents revenue inspectors in your state from finding your car and proving that you store the car in your home state. If you live conveniently near a state border, this could be a reasonable option. This works great in places like Kansas City.  (Sorry, Hawaii residents!).

Another technique is to use your Montana LLC for a bona fide business purpose. For example,  buy some investment property in Montana, and own them within your LLC. That way, your state Revenue Man can’t argue that your LLC is a shell corporation used solely as a tax dodge.

That’s what media Mogul Rupert Murdoch did. Sure, that 200-acre ranch property costs a cool $2 million. But the land is an asset offsetting the mortgage. And think of the money he can save on his tags!

See you on the road!

Steve “Mr. Insurance” Ludwig
CEO, Select Insurance Group


For Further Reading

High Net Worth Car Insurance – Auto Insurance Tips for Wealthy and HNW Drivers

Insurance for Exotic Cars, Sports Cars, High-Performance Cars, Collectibles, and Antiques

Commercial Car Insurance Tips for Business Owners

RV Insurance 101 – What You Need to Know

How To Finance a High-End Car

Don’t Commit Insurance Fraud: Tell the Truth About Where You Store Your Car

Car Insurance For College Students: What Parents and Students Need to Know

How Much Liability Insurance Do I Need?