The Expert Podcast

Okay, here's another update on the infamous Montana LLC loophole scam. As we talked about before, there's a lot of enforcement action from the government about this evasion scheme, and this is the latest update. We were referred to this by a conference call with some government agents and employees from various DMVs. We’re a member of a coalition called EART, which is a coalition of vendors, companies, and DMVs trying to make electronic titles. In one of the conference calls, somebody brought up the Montana thing and said, “Yeah, our state is actively enforcing this.” They also mentioned that California is doing the same thing. The person talking wasn’t from California; they were from another state, which I won’t mention.

The Montana LLC scam involves forming an LLC or corporation in the state of Montana to avoid paying sales tax, avoid an inspection, or do something different. People do this to streamline their titling process, lower costs, and reduce paperwork. Montana’s appeal lies in its low requirements for inspections, no sales tax, and easy bonded titles. However, this practice is illegal in many cases, and other states are starting to crack down on it, just like they did with the Vermont loophole.

States are now cracking down directly on consumers. For example, a California state investigator and two sheriff's deputies once rang Trevor's doorbell, armed with a search warrant to search his garage and seize his cell phone. The garage was located exactly where they knew there would be a high-dollar sports car. States are realizing they’re losing sales tax revenue and that cars on their roads may not have been properly inspected or registered.

There are three main ways states are discovering these cases:

They access Montana DMV records, back trace the corporation, and find if any members are residents of their state.
They use Automated License Plate Readers (ALPRs), which are everywhere—on police cars, tow trucks, traffic cameras, parking lot poles, and more. If they see a Montana plate repeatedly in the same location, they will investigate further.
They examine insurance information. If a car registered in Montana is primarily used in another state, insurance companies will investigate and may deny claims or cancel policies if they find discrepancies.
This is a serious nationwide issue. Commissioners of the Department of Motor Vehicles in all 50 states, plus Guam, Puerto Rico, and Washington DC, are making this a priority. They’re using various methods, including ALPRs, AI monitoring, and manual checks, to identify suspicious vehicles.

If authorities find that a vehicle registered in Montana is being used in another state and the registration is linked to an LLC, they will investigate further. Individuals could face severe consequences, including fines, penalties, and even imprisonment for egregious cases.

Using this loophole to avoid taxes, inspections, or paperwork can lead to serious repercussions. It's crucial to be cautious and seek legal advice if considering this route. Ignorance of the law is not a valid defense. If you have questions, you can click the link below. We’re here to help. If you found this video helpful, be sure to check out other videos on our channel for more information on resolving your situation.