Registering Vehicles in Montana
In this episode of Coffee with Carl, attorney Carl Zoellner explains why some people register their cars in Montana even if they don’t live there.
Updated April 6, 2021
When I was in southern California this weekend, I was watching the news where a big F350 was stolen. It had Montana plates, and the news made a special note of this. They said that lots of expensive cars have Montana plates, and it’s all part of a tax scheme. “Oh, that’s interesting,” I thought.
I’m sure lots of people had the same questions that many of the TV viewers did:
Why would somebody register a vehicle in Montana but not reside there?
I will quickly answer why.
If you’re going to use this strategy of buying your vehicle in Montana but residing somewhere else, most online law firms will tell you to set up a Montana LLC and then register your vehicle in the state of Montana.
It would be preferable to have a business connection in Montana if you want this to make sense. You would then buy the vehicle in the name of that LLC.
However, as we will see, this may not be the wisest decision.
The best part about purchasing your vehicle in Montana is that they don’t have sales tax. This will allow you to save a ton of money in sales tax, especially if you purchase a very expensive vehicle.
If you’ve ever driven around town, and said, “You know, that’s a nice Ferrari. Why does it have a Montana plate?”
I found myself in Salt Lake City and saw the same thing.
I was thinking, “Huh, Montana. That’s weird.” But after seeing more of them, I said, “I know what’s going on here. No sales tax.”
Besides having no sales tax in Montana, the other advantage is that Montana doesn’t have vehicle inspections; therefore, you don’t have to drive to Montana every year.
Now, the question is: Should you do this?
The answer is: NO!
There’s a couple of reason why you shouldn’t do this:
The IRS knows about this scheme and will say, “Nice try, but no.”
It’s very difficult to get insurance. If the insurance company finds out what you are up to, they can deny your claim because you have a Montana-registered vehicle while driving 100% in California.
Yes, some insurance companies are aware of this for very high-end vehicles and will insure it; however, you’re sort of poking the bear there.
And you’re sort of poking the bear there with your local state government, as well as the IRS.
So, my suggestion would be: Don’t do it. Don’t poke the bear!
There are states (i.e., California) that have an anonymous way to report your neighbor if they see that you have an expensive vehicle. Most states would like that information.
I read an article recently that Massachusetts conducted police patrols in RV parks flagging folks with Montana plates.
In the end, I don’t recommend anyone doing this. So, that’s my final word on this. I just wanted to show you why some people do this since it was a question that comes up from time to time.
The Takeaway
If you have any questions about the best tax decisions for YOUR unique situation, I encourage you to take advantage of a complimentary Strategy Session as a blog reader now. It’s a $750 value, and you’ll walk away with a custom tax reduction plan designed specifically for you. You can schedule online or by calling 888.871.8535.
Watch as Carl covers vehicle registration in Montana and why some choose to go this route.
Resources mentioned in this video:
- Catch more great investing & business tips on our YouTube channel
- Build your customized strategy with a complimentary Strategy Session today
Got an idea for a future Coffee with Carl? Send it to Carl at cwc@andersonadvisors.com.
BONUS VIDEO
Free Strategy Session with an Anderson Tax Advisor
Tax Attorneys, CPAs & EAs who specialize in working with businesses and investors. Speak with an Anderson Professional Advisor to get your FREE Tax Plan Strategy Session. Limited-Time offer: FREE (a $750 value.)
