California has launched a huge crackdown on criminals buying and registering supercars outside of the state to avoid eye-popping sales tax.
Fourteen people have been charged after $20 million worth of vehicles were sourced to the Big Sky State in what authorities are calling the “Montana Loophole.”
The cars include a $1.8 million McLaren Elva, a Porsche 918 Spyder and a $1.26 million Ferrari F12TDF, the attorney general’s office said.
In the Golden State base rate sales tax is 7.25%. For a Lamborghini or Ferrari that can reach up to $250,000 or higher, that can mean a tax bill over $18,000. In Montana it is zero.
The gang, from Alameda, Marin, Santa Clara and Sacramento, allegedly dodged more than $1.8 million in taxes since 2018.
They are accused of filing false records showing the supercars were bought in Montana but then drove and kept them in California.
The DMV has launched nearly 100 criminal investigations into similar schemes across California since 2023 and recovered $2.3 million. It says the schemes are costing over $10 million per year.
It says there are 601 fraudulently registered cars involved and the DMV and California Department of Tax and Fee Administration have reviewing all car sales made in Montana.
California AG Rob Bonta said: “When bad actors abuse legal loopholes and submit fraudulent documents to evade their obligations, the California Department of Justice will not stand idly by.
“Every dollar of unpaid taxes is a dollar taken from California’s roads, schools and the vital services our communities rely on.”
The AG’s office said Beverly Hills was the state with the most suspicious car sales, with 416 cases on its radar from the luxury enclave.
It also released a series of text messages from defendants in Marin County and Walnut Creek, which said: “Don’t want the state of California to know anything about this car.”
Another asked: “Before you deliver it to him can you please remove the dealer plate.” One more asked if those with Montana plates had issues, the reply was: “Not yet.”
Another defendant added: “70k saved — I can’t believe the registration lasts for five years — that’s crazy. Stupid California. Paid 3k to own a 600k car for 5 years — lol in Cali that’s like 75k for 5 years. Hella dumb.”
California DMV Director Steve Gordon said: “We encourage all Californians to do the right thing and register their vehicle here if they are operating it in California.”
