Michael Bologna (Bloomberg Law): Utah Takes Montana License Plate Fight to 80,000 Vehicle Owners
At least 10 states — including Illinois, Maryland, and Minnesota — have adopted laws or enforcement initiatives in the past year targeting residents who register their cars, trucks, boats, and aircraft through Montana limited liability companies. California has leveled criminal tax evasion charges against 14 vehicle dealers and owners using the strategy, and opened 490 civil tax cases linked to 300 dealerships. Tennessee made headlines with two separate criminal tax evasion indictments against the online personality “WhistlinDiesel,” who posted a video of himself destroying a Montana-plated Ferrari on his YouTube channel.
Only Utah, however, has developed a comprehensive list of “suspicious registrations” in its jurisdiction, overcoming a fundamental enforcement hurdle. By cross-referencing registrations against insurance rolls, the state Tax Commission identified 80,000 cars, trucks, recreational vehicles, and motorcycles that fit the bill across its database of 3 million vehicles. Following a notification process that started with 1,608 vehicle owners earlier this year, the commission collected $1.6 million in taxes and $32,540 in penalties from 558 residents with Montana plates, state tax commissioner John Valentine said.
That’s just the first tranche of notifications; the tax commission plans to send a few thousand demand letters to suspected violators each quarter until it combs through all 80,000. Lawmakers estimated the sweep would collect $50 million to $100 million in taxes, fees, interest, and penalties. A tandem effort aimed at 4,800 out-of-state boat registrations could snag as much as $68 million, according to Utah’s Division of Outdoor Recreation.
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