Registering a Car in Montana: Pros and Cons

Montana is famous for being among the least populous states across the US, with just 1.1 million residents in 2023. You may be surprised to discover that over 2.3 million motor vehicles were registered in the state in 2023, more than 2 cars for every man, woman, and child who lives in the state. 

The explanation for this seemingly bizarre car registration rate is simple: the Montana vehicle registration loophole. Using a legal loophole, people across the US are registering cars in Montana without ever setting foot in the state, allowing them to take advantage of a litany of tax and regulatory benefits exclusive to Montana. 

Read on to learn all about Montana vehicle registration, including why people register cars in Montana, how it works, and whether you should take advantage of this legal gray area. 

Why Do People Register Cars in Montana?

People are registering cars in Montana to take advantage of tax and regulation benefits that exist in the state. Montana doesn’t apply a number of taxes and regulations that most other states do, including: 

• Sales tax: The average sales tax in the US is 7.52%, but Montana applies no sales tax. For a several-hundred-thousand-dollar car, this could mean savings of tens of thousands. 

• Excise tax: These state taxes are applied to the sale of a luxury good. While the seller is responsible for the excise tax, they often pass that cost to the consumer by increasing the price of the vehicle. 

• Vehicle safety or emissions inspections: Montana doesn’t require regular inspections of the car, which can save several hundred dollars each year in costs associated with owning an exotic car. 

• Registration renewals: For cars 11 years old and older, Montana offers permanent car registration. No need to renew car registration yearly. 

All of these benefits of vehicle registration in Montana add up, resulting in significant savings for exotic car owners, as well as less hassle surrounding registration, inspections, emissions, and more. 

How Registering a Car in Montana Works

In order to register your car in Montana in your name, you’d need to be a resident. But Montana offers a unique loophole known as Montana LLC car registration. If you have a limited liability company (LLC) that’s based in Montana, you can register your car in Montana under the LLC as a company vehicle. All you’ll need to do is form the LLC in Montana, which doesn’t require any actual physical presence in Montana. Thanks to this loophole, you can get Montana state license plates without ever setting foot in the state. 

Because of the popularity of the tax loophole, a number of businesses have cropped up with the sole purpose of assisting with the process. These companies collect the necessary information and file all the paperwork on your behalf for around $1,000, a fraction of the cost of registering your car in another state. 

Is Montana Car Registration Legal for Non-Residents?

In short, it depends. Vehicle registration in Montana for non-residents using the Montana LLC car registration loophole is a legal gray area. While registering your car in Montana this way is legal, it’s illegal if it’s used to evade taxes in your home state. Depending on your state of residence, having a Montana state license plate may also violate a number of state laws. 

In recent years, a number of states have started cracking down on this practice. These states argue that this practice is tax evasion and that all people need to fulfill their home state’s tax law obligations, especially when their vehicles have never entered the State of Montana. State responses to the Montana car registration loophole include: 

• Utah: Utah investigates residents with cars or boats registered in Montana and pursues back taxes and penalties. 
• California: California’s DMV flags and tracks Montana state license plates to identify tax evasion. 
• Wyoming: Wyoming created a law that presumes that, if a car is registered to an out-of-state LLC, the owner owes registration and sales tax unless proven otherwise. 

In response to these crackdowns, other individuals taking advantage of the Montana loophole have had to resort to more complex methods to avoid penalties. For example, they might send their exotic cars to be stored in Montana for a duration of time. Only after this period passes can they legally transfer the vehicle to another state without violating any tax laws.

Pros and Cons of the Montana Car Registration Loophole

If you’re considering registering your car in Montana to take advantage of this loophole, it’s important to carefully consider the pros and cons before doing so. Read on to make an informed choice about Montana car registration. 

Advantages of Vehicle Registration in Montana

There are a number of immediate payoffs to vehicle registration in Montana. There’s a reason so many exotic car owners take advantage of this loophole. They include: 

• Lower fees: Montana doesn’t have a state sales tax, and it has relatively low vehicle registration fees compared to many other states. These laws and regulations can therefore result in significant savings when purchasing and registering an expensive supercar in the state.
• No inspections required: There are no inspections required to register a car in Montana, which means an exotic car owner doesn’t need to regularly bring the car there for vehicle inspections or emissions tests.
• In-state facilitation: Specialized companies in Montana can facilitate the process of registering an exotic car in Montana by handling the setup and management of Montana LLCs.
• Anonymity: Montana allows for greater privacy since LLC ownership information is not publicly disclosed. This fact can be attractive to individuals who prefer to keep their ownership of high-value assets confidential.
• Asset protection: An LLC can offer some degree of asset protection. If a person is involved in an accident or faces legal issues related to the car, for example, their personal assets may be shielded from certain liabilities.
• Flexible ownership: An LLC can have multiple members or owners, making it possible for family members or business partners to share ownership of the luxury vehicle more easily.

Ramifications of Registering a Car in Montana 

With so many benefits, you may be left wondering why all exotic car owners don’t register their car in Montana. Unfortunately, the practice comes with a significant number of risks, both legally and financially. Cons of registering your car in Montana as a resident of another state include: 

• Fines and penalties: Several states impose penalties on Montana LLC vehicle registration. If caught, you may be liable for penalties that cost more than you attempted to save using this loophole. 
• Legal consequences: If a person registers a new car in a state where they don’t primarily reside, their home state may consider it fraudulent. Tax evasion may be prosecuted as either a misdemeanor or a felony and could result in probation or jail time. 
• Higher insurance premiums: Insurance providers may have specific requirements or restrictions for motor vehicles registered under an LLC, potentially resulting in higher insurance premiums.
• Insurance claim denials: An insurance company generally writes policies in the state where the policy owner’s car is registered, not the state where the car is operated. A car accident that occurs in California involving a car registered in Montana may not be covered with that insurance policy. Therefore, the insurance company may have grounds to deny the claim altogether.
• Changing regulations: States have caught on to the Montana registration loophole and many are actively pursuing laws and regulations to discourage its use. What is permissible today may not be in the future.
• Exposure, scrutiny, and audits: Using an out-of-state LLC for permanent registration may attract attention from tax authorities and lead to audits or investigations. A Montana license plate may draw unwanted attention. 

Many people choose to consult with legal and financial professionals who are well-versed in the laws of both Montana and their home state before considering this strategy. They can provide guidance tailored to your specific situation to help you make an informed decision about registering an exotic car under a Montana LLC.

How to Sell Your Montana-Registered Car 

Worried your Montana car registration has left you vulnerable to penalties, audits, and even criminal charges? The best tactic may be to sell your exotic car and reduce your exposure. At We Buy Exotics, we buy exotic cars in every state, including those registered under an LLC. We’re committed to providing you a competitive cash offer and will pick up your car anywhere across the US at no additional cost. Submit your information today to get your instant cash offer.

Disclaimer – This article is for informational purposes only and does not constitute legal or financial advice.