California Closed the Montana License Plate Loophole
3 hours ago
- California passed SB 1406 on Sept. 30, 2026, closing the Montana license plate loophole used by wealthy residents to avoid vehicle taxes.
- The law expands the definition of a resident business to include partnerships and shell companies, making it harder to register vehicles out-of-state.
- If any owner, partner, or beneficial owner of a shell company is a California resident, the entire business is considered a resident and its vehicles are subject to California use tax.
- Officers, managers, partners, and members of shell companies are now personally liable for unpaid taxes, interest, and penalties on vehicle purchases.
- The old '50% business outside California' rule is eliminated; the new law targets fake LLCs registered in states like Montana that charge no sales tax.