Nearly 100 Marin County car sales linked to 'Montana Loophole' scheme

"The California Department of Tax and Fee Administration and Department of Motor Vehicles said in a news release Friday that since 2023, they've found hundreds of California-based dealerships involved in more than 2,500 sales to customers claiming they're Montana drivers. Many of the sales involve luxury or exotic cars, and regulators said it cost the state more than $10 million in lost revenue."

"The tax loophole takes advantage of states like Montana that don't have statewide sales tax. Visitors from other states purchase and register a car there to save money, sometimes by setting up a limited liability company. The pricer the purchase, the more the loophole can save the tax dodger. In California, the base rate sales tax is 7.25%, which for a 2022 Lamborghini Urus that costs over $250,000, amounts to more than $18,000."

"On Friday, the California Department of Justice announced charges against 14 people it alleges were using the loophole to cheat the state out of $20 million in luxury vehicles purchases. SFGATE reviewed the complaint filed last month alleging one Bay Area resident purchased multiple sports cars that retail for over $200,000 - including a 2022 Lamborghini Urus and a 2022 Lamborghini Huracan - outside the state using the loophole."

California authorities are investigating hundreds of dealerships involved in a tax-evasion scheme called the 'Montana Loophole,' where buyers purchase vehicles in Montana—a state without statewide sales tax—to avoid California's 7.25% sales tax. Since 2023, regulators identified over 2,500 suspicious sales, predominantly involving luxury and exotic vehicles. Beverly Hills dealerships led with 416 suspicious sales, while Mill Valley's Ferrari and Porsche dealerships accounted for 99 cases. The scheme has cost California more than $10 million in lost revenue. In response, the California Department of Justice charged 14 individuals allegedly involved in $20 million worth of fraudulent luxury vehicle purchases using this loophole.

Read at SFGATE