California Cracks Down on Luxury Car Registration Loopholes

What can convince an otherwise law-abiding citizen to get creative (and potentially bending the law) with the way that they handle auto registration? When considering the motive in a case like this, it can useful to get a sense of what auto insurance rates and taxes are like in a given state. In New York, for instance, there’s been plenty of talk of insurance reform, with the goal of lowering bills, on both the local and state level. Whether it will have the desired effect remains unclear.

On the other side of the country, California’s state government has recently embarked on a change in policy of its own: figuring out whether the Californian owners of luxury cars are registering their cars in states with lower taxes. In a recent article for the Los Angeles Times, Suhauna Hussain explored the amount of money that the state says that it is losing to ethically dubious registration practices.

You may note that I used “ethically dubious” above and not “illegal.” That’s something that California lawmakers are looking to change; a bill currently being considered by the state Senate would regulate Californians registering luxury vehicles in other states to avoid paying California state taxes on them.

As the Los Angeles Times reports, this is often called the “Montana loophole” for a simple reason: Montana does not charge sales tax. Shannon Robinson of California’s California Department of Tax and Fee Administration told the Times that the potential tax revenue could give the state government a significant boost. “[U]ncovering even a handful of them makes a large, large impact on our revenue for our state that provides vital services for Californians,” Robinson explained.

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California is not the only state looking askance at the Montana loophole. Last month, The Autopian reported a number of other state governments taking steps to make sure that the owners of rare luxury cars register those cars in the state where they will actually be driven. Utah recently took steps to that effect; the article also notes that Illinois, Iowa and Massachusetts have done the same.

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Tobias Carroll

Tobias Carroll lives and writes in New York City, and has been covering a wide variety of subjects — including (but not limited to) books, soccer and drinks — for many years. His writing has been published by the likes of the Los Angeles Times, Pitchfork, Literary Hub, Vulture, Punch, the New York Times and Men’s Journal. At InsideHook, he has…