CA Cracks Down On Hundreds of Car Buyers Registered in MT

Welcome once again to Latoz Law. Here's Steve Latoz.

Several years ago on this channel, I talked about the idea that some people would buy very,

very expensive or valuable cars and then register them in Montana because Montana's registration

and sales tax and stuff are lower than many other states. And I have a lot of people say,

but Steve, if you're somebody avoiding paying taxes, that's not illegal. It's not illegal.

And as well, there's an issue, though, because if your home state asks why you've got that

Montana played on your car, while your other cars are played into their states, they might ask you

what you're doing other than just simply evading taxes. And so the big issue, of course, is whether

that's tax avoidance or tax evasion. And well, as a lawyer, I'm just here to tell you what the law

says and try to help you understand what might happen. And so John sent me, you know,

last night since you checked this out from San Francisco, chronicle.com. Montana Loophole

helped alleged tax evasion ring, hide 20 million dollars in luxury car purchases according to the

state. One city has had nearly 100 car sales involving buyers who claimed to use the vehicle

in Montana according to investigators. Lucy Hodgman wrote this. And by the way, I'm not,

I'm not taking sides on this. I our registration fees too high. Well, I got a couple

vehicles. And on one of them, it's outrageous. The other one, not so much. The other two. But,

but you do what you got to do. Fourteen people have been charged into tax evasion scheme ties

of the Bay Area that allegedly concealed the purchase of over 20 million dollars in luxury cars.

State authorities said recently, the charges come as part of the state's broader cracked on

a car buyers and dealers exploiting the Montana Loophole, a strategy to avoid California's high

levees on luxury cars by plating them in Montana, which has no statewide sales tax. When I said

it's sales tax is lower. Yeah, it's, it's, it's zero. That's as low as you can get, I guess.

And that's, of course, they pay you to buy things, but the defendants used the Loophole to dodge

more than 1.8 million dollars in taxes according to the Attorney General's Office in California.

Beginning in 2018, the defendants allegedly prepared submitted false records to show at the

car's repurchase for use out of state, but then drove and stored them in California. And I'm

going to let you know right now, before I started doing videos, I remember I encountered a guy

with a very, very nice car. And he was as far from Montana as you could get in the 48. And I said,

Montana, what's that all about? He goes, oh, yeah, no, he goes that you just do that to save money.

So that was that guy, but that was not California. So the Attorney General said when bad actors

abuse legal loopholes and submit fraudulent documents to evade their obligations, the California

Department of Justice will not stand idly by. Every dollar of unpaid taxes is a dollar taken

from California's roads, schools and the vital services our communities rely on. The 14 defendants

face charges of conspiracy, filing false sales tax returns, failing to file tax returns,

perjury and money laundering. They conspired to arrange tax-free sales of vehicles, including a

1.8 million dollar McLaren, 1.5 million dollar Porsche, and 1.26 million dollar Ferrari,

among others, the Attorney General's Office said the state's DMV has opened more than 80 criminal

investigations into similar vehicle registration schemes since 2023, that's according to the DMV

director. The probe so far has identified 601 fraudulently registered vehicles and recovered

more than 2.3 million dollars in registration fees and taxes. And by the way, I'll let you know,

I've heard of some states that offer bounties that say if you have a neighbor or someone you know

has a vehicle that's improperly plated, let us know. And if we recover money, we'll give you a

slicey slice. More investigations could follow the DMV in the California Department of Tax and

fee administration. Separately announced Friday they were scrutinizing all car sales made to Montana

purchasers, presumably in the state of California. They are working to close the slew poll that

erodes California's revenue base. The department director said our department is identifying

questionable transactions through state partnerships to protect the integrity of California's tax

system while ensuring the tax is paid to support our schools, roads, public safety, and essential

services that all Californians depend upon. Investigators said they had identified almost 500

California dealers involved in more than 2,500 sales to customers who claimed to use the vehicle

in Montana. California City with the most suspicious car sales with Beverly Hills with 416,

Mill Valley was 9th with 99. That was 99 customers claiming to use their cars in Montana. A

dealership in the affluent Marin County City as well as one in Walnut Creek and believe they're

referring to Mill Valley there, the first one. We're mentioned in tax messages included in the

Attorney General's complaint. So apparently it's subpoenaed some tax messaging and in those tax

defendants expressed reservations about what they're doing, one defendant allegedly asked another

if you knew of drivers who'd been ticketed because of their Montana plates. One said not yet,

but there are always paranoid LOL. Other defendants appeared more confident. 70,000 saved. I can't believe

the registration lasts for five years. That's crazy. Another defendant literally wrote a tax

referring to Montana. Stupid California paid 3,000 to own a 600,000 dollar car for five years. LOL

in Kelly. That's like 75,000 for five years. Hella dumb. End quote. And so like I said, I did talk about

this issue a long time ago. And I know people inherently emotionally react by saying, but registration

fees are out of control. They are. And the solution to that is to talk to your Congress people or

your assembly people in California. And when I was in law school once I referred to legislators as

I think I said legislators, but I may have said Congress people. And a professor goes, Mr.

Late to work California. It's an assembly. And I wanted to do an assembly. What cares? You know

what I'm talking about? There's a building in the capital where people get together and pass laws.

Okay. You knew what I was talking about. But I was speaking in general terms like around the

country, you'd go to your state legislature, your state Congress, not in California, go to the

state assembly. But don't give me going. But when I mentioned this previously, I had people say

there's nothing wrong with that. To which I would say, okay, let's suppose you are in another

state that has no, you know, you're way far away from Montana. And you buy your car not in Montana.

You never go to Montana. You never bend the Montana, but you played it in Montana.

I've had people say, but Steve, if you're allowed to do it, it's legal. Well, look up your state

laws in the state where you are and see what it says about when you buy a car while you're a resident

of that state. And I've had people say, but Steve, how do they know where I'm going to drive it?

Well, you know, common sense of dictate that if you like lived, I don't know, in Maine, in Maine.

And you've got three cars. One of them is a supercar. And your first two cars are registered in

Maine. And the supercar is registered in Montana. And you're using it in Montana in Maine. Now,

don't get me wrong. You can go to court and fight this if this is, you know, something they would

do to you. They brought you up on charges. You could go to court and fight this and explain how

it is that you use your car in Montana. And a jury might believe you might being the operative

word in that sentence. And a jury might be loaded with people who think the registration is too high.

They might, it might be. And it also might be people on the jury are going, I paid full price on my

car. And here's a guy who paid less for his $1.7 million or whatever it was, McLaren, $1.8.

And he's paying less on that for five years and then what? So again, whether the law is wrong

where you are or better where Montana is is not my point. As a lawyer, I don't make the laws.

I simply look at the law and go, Oh, you want to know what might happen to you if you deal with

that law or don't deal with that law or try to work around that law? That's what I do. That's what I

do. And so I've heard of a couple other occasions where people got in trouble for this. I believe

this actually a very high profile YouTuber right now who's fighting this exact issue. Okay. And

a lot of people asked me to weigh in on that particular case. And I did not and I have not largely

because I don't follow that YouTuber and I did not know anything about that story until I saw

it pop up on YouTube. And you might say Steve, why do you do the story then? Well, because I don't

know him and he's got an active case going. I don't want to weigh in on it because to me that's

a little too close to home because I'm on YouTube. He's on YouTube. And if I weigh in on it,

if I weigh in on his side, it might be, yeah, either Steve knows the guy or it's because he's on

YouTube or if I go against the guy and I actually don't know enough about his case to weigh in on

it at all to begin with. So I'm going to let that play out when his case resolves. I might do a

video about it. But right now, here's the issue is that California's cracking down on this. And

they say that they've got nearly 100 car sales in one city, but it's hundreds and they're going

after more people. So right now, if you are in California with a Montana plate on your car,

you might want to kind of keep an eye out. And I don't know what you could do about it if you

wanted to quote, quote, come clean, but there might be ways to do that. But just understand that

you could be next. So I'm actually giving a warning. Don't know hundreds of people in my audience.

Actually, you started doing the Venn diagrams. All my viewers, my viewers in California,

my viewers in California with super cars, my viewers in California super cars that are registered

in Montana. I don't know how big that little tiny subset is. Don't know, don't know. But

John, thank for sending that. The SF Chronicle.com. That's the website. San Francisco Chronicle. Montana

Loophole helped alleged taxi vision ring high 20 million dollars in luxury car purchases

according to the state. Question to comments. Put them below. Let's talk to you later. Bye bye.

Thank you for watching. Laytel is law. I've learned two very important lessons in my life.

I don't remember the first one. And the second one is to write everything down.