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California law targets unpaid tax on cars registered through Montana entities

California has enacted SB 1406, giving state authorities additional tools to pursue unpaid taxes linked to vehicles registered through out-of-state shell entities, including structures associated with Montana.
3 min read · Lithuania Auto Editorial
California is tightening enforcement against vehicle tax avoidance through out-of-state registration entities
California is tightening enforcement against vehicle tax avoidance through out-of-state registration entities

California Gov. Gavin Newsom has signed SB 1406, a measure aimed at improving the state’s ability to collect unpaid taxes on vehicles registered through out-of-state shell entities.

The law responds to a long-running practice in which some vehicle owners establish companies outside California and register cars under those entities rather than in the state where the vehicles are used. Montana has been a prominent destination for such arrangements.

According to Carscoops, SB 1406 gives California new enforcement tools in cases involving potentially unpaid vehicle taxes. The measure does not change the basic principle that registration and tax obligations can depend on where a vehicle is principally kept and used.

For drivers in Lithuania, the case is a reminder that cross-border registration schemes can carry tax and compliance risks. Before registering a vehicle through a foreign company or in another jurisdiction, owners should check the rules that apply where the car will actually be driven and garaged.

Source: Carscoops