Californians Exploit 'Montana Loophole' to Dodge Supercar Sales Tax

The scam costs California over $10 million a year in lost revenue, with Beverly Hills as the worst offender.

Published on Mar. 8, 2026

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California has launched a major crackdown on a scheme where residents are buying and registering high-end supercars in Montana to avoid the state's steep sales tax. Fourteen people have been charged after $20 million worth of vehicles were sourced to Montana 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 DMV has launched nearly 100 criminal investigations into similar schemes across California since 2023, recovering $2.3 million, but estimates the total cost to the state at over $10 million per year.

Why it matters

This crackdown highlights how some wealthy Californians are exploiting legal loopholes to avoid paying their fair share of taxes, depriving the state of critical funding for roads, schools, and public services. The high concentration of suspicious car sales in Beverly Hills, a luxury enclave, suggests this is a problem disproportionately impacting the state's wealthiest residents.

The details

The alleged scheme involves Californians filing false records showing they bought the supercars in Montana, where there is no sales tax, and then driving and keeping the vehicles in California. Authorities have charged 14 people from Alameda, Marin, Santa Clara, and Sacramento counties with dodging over $1.8 million in taxes since 2018. The DMV has reviewed all car sales made in Montana and is investigating 601 fraudulently registered vehicles across the state.

  • Since 2023, the California DMV has launched nearly 100 criminal investigations into similar tax evasion schemes.
  • Since 2018, the 14 charged individuals are accused of dodging over $1.8 million in taxes.

The players

Rob Bonta

The Attorney General of California who stated the state will not tolerate the abuse of legal loopholes and fraudulent documents to evade tax obligations.

Steve Gordon

The Director of the California DMV who encouraged all Californians to properly register their vehicles in the state if they are operating them there.

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What they’re saying

“When bad actors abuse legal loopholes and submit fraudulent documents to evade their obligations, the California Department of Justice will not stand idly by.”

— Rob Bonta, Attorney General of California

“We encourage all Californians to do the right thing and register their vehicle here if they are operating it in California.”

— Steve Gordon, Director of the California DMV

What’s next

The California DMV and Department of Tax and Fee Administration will continue reviewing all car sales made in Montana to identify additional cases of fraudulent vehicle registrations.

The takeaway

This crackdown on the 'Montana Loophole' highlights how some of California's wealthiest residents are exploiting legal gray areas to avoid paying their fair share of taxes, depriving the state of critical funding. It underscores the need for stronger enforcement and closing of such loopholes to ensure all Californians contribute equitably.