California Cracks Down 'Montana Loophole'

Californians cruising around in high-end cars with Montana plates may be in for an unwanted surprise. The state is cracking down on what's known as the "Montana Loophole," reports the New York Times. Fourteen people have been charged so far in the investigation, which revolves around what Auto Blog describes as Montana's "unusually relaxed approach to sales and registration tax." The state, which charges no sales tax, allows out-of-state residents to buy and title vehicles there. The California charges include conspiracy to commit tax evasion, filing false returns, money laundering, and perjury, with text messages cited in court documents showing participants boasting about tax-free deals.

Investigators say hundreds of California dealerships were involved in more than 2,500 sales to supposed Montana residents, even though the cars—including a $1.8 million McLaren Elva and a $1.5 million Porsche 918 Spyder—were delivered, driven, and housed in California. The state is now scrutinizing all Montana-linked sales and using license plate readers to spot potential violators, part of a broader effort that also targets cars registered in other no-sales-tax states like Oregon and New Hampshire. California authorities accuse the newly charged drivers with dodging about $2 million in state taxes.