CALIFORNIA — California authorities have launched a massive crackdown on a luxury car tax evasion scheme known as the “Montana Loophole,” after discovering many supercar owners registered their vehicles in Montana to avoid California's high sales tax. The California Attorney General’s Office announced that 14 people have been indicted in a case involving approximately $20 million worth of luxury vehicles. These vehicles include a $1.8 million McLaren Elva, a Porsche 918 Spyder, and a $1.26 million Ferrari F12TDF. According to the allegations, the group falsified vehicle purchase records in Montana—a state that does not impose sales tax on vehicles—and then brought the cars back to be used and stored in California. California's base sales tax is approximately 7.25%, meaning the purchase of a Lamborghini or Ferrari can result in tax bills of tens of thousands of dollars, or even exceeding $250,000 for ultra-expensive models. This comes amid intensifying debates over billionaire taxes in California. In contrast, Montana's sales tax rate is zero. Investigators believe the suspects have avoided more than $1.8 million in taxes since 2018. The California Department of Motor Vehicles (DMV) stated that since 2023, it has opened nearly 100 criminal investigations into similar schemes, recovering about $2.3 million in taxes. The DMV estimates that crackdown operations like this help prevent fraud causing over $10 million in lost revenue annually. According to DMV data, 601 vehicles are suspected of being fraudulently registered through this method. Authorities, along with the California Department of Tax and Fee Administration, are reviewing all Montana vehicle purchases linked to California residents. California Attorney General Rob Bonta declared that the justice department will not overlook cases where individuals exploit legal loopholes and file fraudulent records to evade tax obligations. “Unpaid taxes mean resources are taken away from our roads, schools, and essential community services,” Bonta said, as the state pushes for tax policies on billionaires to supplement the budget. During the investigation, authorities identified Beverly Hills as the area with the highest number of suspicious vehicle transactions, with 416 cases placed under monitoring. Text messages collected from investigation files show some suspects discussing how to avoid authorities' attention, including requests to remove dealer plates before delivery or asking if Montana-plated cars would face trouble when used in California. California DMV Director Steve Gordon urged residents to register vehicles where they are actually used to avoid breaking the law.

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