Montana LLC Car Registration: How It Works and What to Know

The Montana LLC car registration strategy has piqued the interest of many automotive enthusiasts, business owners, and others looking for tax strategies. Both Montana residents and non-residents may take advantage of this strategy, but it’s important that you understand the legal aspects of registering a car under a Montana LLC. 

We’ll go over the registration process, fees associated, potential tax benefits and important legal considerations. You’ll ultimately want to speak with a CPA or tax attorney before taking action. It’ll be helpful to know the basics of this strategy first, though.

Why do people buy cars with Montana LLCs?

Montana has several legal features that make it an attractive option for vehicle ownership. For those living outside the state, buying cars with a Montana LLC is the most common way to take advantage of these features:

• No sales tax: Montana is one of the five states with no general sales tax. Vehicles purchased and registered in Montana are not subject to sales tax at the point of purchase. On a high-value vehicle, the one-time savings alone can be worth multiple thousands.
• No inspection requirement: Montana doesn’t require any vehicle inspections. This makes registering some imported, custom or modified vehicles much easier, as certain ones might not pass an inspection. It also makes driving an old beater easier, but that’s primarily a benefit for state residents rather than LLC owners. 
• No emissions test: Ditto with emissions testing. Montana doesn’t have any emissions test requirement, which makes it easier to own some imported, custom, modified or older vehicles.
• Flat-rate registration: Montana’s vehicle registration fees are based on vehicle type and age, rather than value. This makes registering high-value vehicles much less expensive than in states that base registration costs on the vehicle’s value, and gives a yearly savings.
• Permanent registration: The annual registration requirement goes away after 10 years. Vehicles 11 years and older usually qualify for a permanent registration that doesn’t have to be renewed. This further reduces annual costs, and eliminates a yearly task. 

Regardless of state, an LLC offers a distinct legal ownership structure for vehicles. This, in its own right, can have useful benefits:

• Personal privacy: If your LLC uses a registered agent, anyone who looks up an address associated with the vehicle will see the registered agent’s address, not your personal address.
• Personal assets: A “corporate veil” generally shields personal assets from lawsuits that are filed against an LLC. This could help protect your personal assets if sued because of an accident, although such protection could be compromised if you’re personally at fault.
• Asset holding: Holding vehicles inside an LLC can be beneficial if the vehicles are purchased as investments, with the hope that they’ll appreciate.

The benefits of Montana LLC vehicle purchases aren’t just theoretical. Montana has one of the highest vehicle-registration rates per capita in the country, and out-of-state LLC registrations are a meaningful and growing slice of state revenue. Former Montana revenue director Dan Bucks has estimated there are likely more than 600,000 vehicles registered in Montana but used in other states.

Businesses with fleets, collectors with multiple vehicles, and investors specializing in vehicles are some of the groups taking advantage. Ultimately, though, any individual purchasing a high-value vehicle (e.g. Rolls Royce) might want to look into this Montana loophole.

How Montana LLC car registration works

Montana law permits vehicles to be owned and registered by properly formed Montana business entities, of which LLCs are the simplest to set up. Montana law doesn’t restrict who can own and register a vehicle, the state’s registration statutes (Title 61, Chapter 3) apply to any legal owner, including an LLC.

Registering a car under a Montana LLC is a two-phase process. First, you must form the Montana LLC. Second, title and register the vehicle under the LLC.

Forming the Montana LLC

Forming a Montana LLC is something you can do yourself, or you can use an LLC formation service to streamline the process. There are a few steps involved:

• File Articles of Organization: Submit Articles of Organization online through the Montana Secretary of State’s business portal. This document establishes the LLC as a recognized corporate entity under Montana law.
• Appoint a Montana LLC registered agent: Every Montana LLC is required to have a registered agent within the state. The registered agent must have a physical address within the state, meaning P.O. boxes don’t qualify. If you don’t live within the state, using a Montana registered agent service meets this requirement.
• Draft an Montana Operating Agreement: Montana doesn’t require business owners to file an Operating Agreement, but this is one document that every LLC should have regardless. 
• Get an EIN: LLCs are only required to have an Employer Identification Number (EIN) if they have employees, but you do not need employees.

The Montana LLC cost includes the initial filing fee of $35 online, and you then must pay an annual fee of $20. Approval usually takes a few days once submitted. 

You’ll need to make sure that your LLC is fully formed and recognized before purchasing any vehicles in its name. You can go through each step yourself, or use an LLC formation service for streamlined filing. Tailor Brands can quickly take you through the entire process.

(Note: Each of these steps is something that a typical LLC would do. None of them guarantee you’ll be above suspicion if your state investigates, though. Consult an attorney familiar with the Montana loophole before proceeding.)

Registering the vehicle

The entire purchasing and registering of the vehicle(s) will be in the LLC’s name. You won’t personally own or register the vehicle.

• Purchase documentation: All purchase-related documentation must be strictly in the LLC’s name. This applies to any purchase contract, bill of sale, certificate of origin, title, and financing documents (if applicable). Aside from using the LLC’s name, these are completed like normal.
• Registration paperwork: Registering the vehicle requires paperwork for both the vehicle and the LLC. You’ll need a bill of sale or purchase contract, and the manufacturer’s certificate of origin (MOO/COO) if new or title if used. For the LLC, you’ll need verified copies of its formation documents.
• County processing: Vehicle registration is administered through county treasurer offices across Montana. Most owners using this strategy route their registrations through counties that do not assess optional local motor vehicle taxes: Big Horn, Deer Lodge, Flathead, Granite, Phillips, and Richland counties. The registration fee is also paid at the county treasurer’s office.
• License plate: Once the county treasurer approves the application and the registration fee is paid, Montana license plates, registration cards, and titles are issued directly in the LLC’s name.

You will also need to purchase commercial auto insurance through the LLC.

How much does it cost to register a car in Montana through an LLC?

The cost of this strategy varies depending on the vehicle(s), and how much of the process you outsource. There are both one-time upfront and ongoing costs. A typical breakdown looks something like this:

Expense	Estimated Cost	Frequency
Montana LLC Formation Filing	$35 – $100	One-time
Montana Registered Agent Service	$50 – $200	Annually
State Vehicle Registration Fee	$28 – $1,042*	Annually (or one-time for permanent plates on old vehicle) *Includes luxury vehicle fee
Title Transfer & Administrative Fee	~$12	One-time
Montana LLC Annual Report	$20	Annually
Third-Party Formation	$500 – $1,200	One-time / variable

A good general all-in budget is around $1,000 – $2,500. You’ll probably pay one of the higher registration fees, and the convenience of a third-party formation service is often worthwhile. Most people who look at only the bare minimum aren’t in a financial position to utilize this strategy.

Montana LLC car registration for non-residents: legal considerations

Using a Montana LLC to avoid sales tax should be viewed as a loophole. Like all tax loopholes, its legitimacy and legality aren’t completely settled.

Montana state law

Montana’s own law doesn’t penalize this, it allows non-resident LLC ownership and doesn’t require you to live in-state to register a vehicle there. The state doesn’t require LLC members to be residents, and its registration framework is open to non-residents. Nothing about forming an LLC and titling a car under it violates Montana law.

Other states’ laws and requirements

Other states do have issues with this loophole. Most states require vehicles to be registered where they’re primarily used or stored, regardless of where the vehicle is titled. Owners typically have somewhere between 30 and 90 days to register, depending on the state, after which financial and legal penalties kick in.

That means a resident of another state who keeps a Montana-plated car in their own driveway year-round may be out of compliance with their home state’s law even though Montana is satisfied.

Legal actions

A number of states have taken legal action against individuals who allegedly use this strategy to avoid home-state sales tax and registration fees. California has been the most aggressive: the state’s Attorney General charged 14 people over more than $20 million in luxury vehicles registered through Montana LLCs, representing roughly $1.8 million in unpaid state taxes. Other states, like Illinois and Utah, have taken legislative actions.

In the most high-profile case of this type, Tennessee charged YouTuber WhistlinDiesel (Cody Detwiler) with tax evasion and filing a false sales tax return. These are class E felonies in Tennessee. Detwiler was arrested and released on bond.

The case against Detwiler stems from his purchase of a 2020 Ferrari F8 Tributo, which he allegedly registered through a Montana LLC in order to avoid sales tax. Detwiler shared online that he used a Montana LLC, and continues to document the process as the case moves forward. He maintains that he has paid all legally owed taxes.

These examples show that using this loophole carries risk of back taxes, fines and possibly even criminal charges. The legality of the Montana LLC vehicle registration loophole depends on the state, individual circumstances, and other details. It’s not a settled matter. Therefore, be sure to consult an attorney before deciding to start the process of filing an LLC for this purpose.

Insurance considerations

In addition to legal issues, there are two insurance matters to consider. First, some insurance companies charge higher premiums for LLC-registered vehicles. Second, an insurance claim may be jeopardized if the vehicle isn’t kept or used in the state where it’s registered.

What vehicles can be registered through a Montana LLC?

Virtually any type of vehicle can be registered through a Montana LLC. LLCs can register cars, trucks, SUVs, RVs, motorcycles, ATVs, UTVs, trailers, boats, snowmobiles, and commercial vehicles. Having said that, the strategy is usually reserved for high-value vehicles like exotic cars and RVs. 

Ongoing compliance for a Montana vehicle LLC

After the LLC is formed and vehicle registered, the LLC must be maintained. Montana requires that you:

• File a Montana annual report with the Montana Secretary of State ($20, Jan. 1-April 15)
• Maintain a registered agent with a physical address in the state
• Keep the LLC in good standing with the state
• Amend filings if there are any changes in ownership or management

Also, dissolving the LLC would affect the vehicle’s registration status. This applies to closing the LLC, or if the state dissolves it because of noncompliance (e.g. not paying the fee or keeping a registered agent).

In addition to assisting with LLC formation, Tailor Brands also helps maintain LLCs. We can take care of annual filings, submitting payment, and acting as the registered agent.

Evaluate the Montana LLC vehicle loophole

Registering a Montana LLC and registering vehicles is straightforward if you’re a Montana resident. If you’re in another state and want to take advantage of Montana’s low vehicle registration costs, though, evaluate this tax loophole carefully. There are potential benefits and potential consequences, and not all the legal aspects are settled. Consult a tax attorney or CPA for further guidance as this applies to your particular situation.

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