California cracks down on 'Montana Loophole' used by luxury car owners

State Sen. Jerry McNerney (D-Pleasanton), Chair of the Senate Revenue and Taxation Committee, introduced Senate Bill 1406, which would close the loophole by expanding how the state determines a "company's" residency. California Gov. Gavin Newsom signed the law into law on Sept. 30.

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“For years, wealthy tax evaders have avoided paying California sales taxes by setting up phony shell companies to buy Ferraris, Lamborghinis, and other luxury vehicles in Montana and then bringing the vehicles back to our state. Closing the Montana Loophole will help restore some fairness to our sales tax system by ensuring that everyone pays what they owe,” McNerney said in a statement. “SB 1406 also enables the state to recover up to $20 million in lost revenue each to pay for road repairs and other essential services.”

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