Montana Car Registration
Have you ever wondered why you see so many expensive cars with Montana license plates on them? Turns out, you don’t have to pay the sales tax on your vehicle if you’re a resident.
This article explains why you should register your car in Montana and how you can do it if you’re a non-resident.
Note: When we say “car”, we’re referring to all the vehicles Montana DMV defines as “light-vehicle”. These include passenger cars, sports cars, SUVs, pickups (one tonne or less), and vans.
Why Register Your Car in Montana?
Montana residents do not have to pay the sales tax on their vehicles. This saves them A LOT of money on the initial purchase of a vehicle, be it a car, a motorbike, a boat, or even an RV.
Imagine you’ve bought a 2022 Corvette Stingray for $70,000 in Florida, where the sales tax rate is 6%. So, you would be legally obliged to pay a tax equivalent to $4,200, which is quite a lot.
Luckily, even if you’re a non-resident, you can form a Montana LLC and purchase the vehicle under the LLC to gain the same privilege. This is because Montana considers local LLCs as residents.
How Legal is Registration through an LLC?
This is perfectly legal. A strong reference would be the case of Thomas v. Bridges, 2013-C-1855 (Sup. Ct. LA May 7, 2014).
Robert L. Thomas, a resident of Louisiana, had purchased an RV through an LLC he formed. Naturally, he was exempt from paying the sales tax. However, the Louisiana Department of Revenue found out about the purchase and claimed that Mr. Thomas owed the state money in terms of unpaid taxes.
Ultimately, Mr. Thomas was victorious. The court ruled that even though the LLC was formed solely to avoid the sales tax, it was formed legally. Under Montana law, the owner DID NOT owe any sales tax to the state.
However, the court has expressed concern with the law. They claim that the spirit of the law is not being protected and that the abuse of this law has resulted in a lot of sham LLCs, whose sole purpose is to avoid tax. The court has requested the legislature’s attention to this law.
The Montana LLC scheme has been around for a long time, and Montana-based lawyers continue to promote this. This can work with LLCs formed in Montana as the state does not impose sales tax when residents purchase a vehicle.
Which Cars Need to be Registered?
Montana requires every driver to register their personal vehicle for it to be driven legally. Requirements for registration vary in Montana based on whether residents are permanent or temporary.
Registration rates can differ based on the age of the vehicle, which is found by subtracting the model year from the calendar year. For example, a 2006 Porsche 911 in 2022 would be 16 years.
Owners can opt for:
- 12-month registration
- 24-month registration
- Permanent registration (if all criteria are met)
The first two refer to the duration before which the registration needs to be renewed. Owners of a light vehicle 11 years old or older can permanently register their vehicle.
Unlike the first two, this registration does not need to be renewed as long as the ownership remains the same.
How to Register Your Car
New residents of Montana have 60 days to register their vehicle with the County Treasurer’s Office.
Requirements
The registration must be done through the County Treasurer’s Office. Individuals must present the following:
- Vehicle’s registration application
- Proof of insurance
- Vehicle’s title
- Registration certificate from the former state for temporary residents (if applicable)
- Vehicle registration fees (depends on the age of the vehicle)
- County option tax (based on the Manufacturer’s Suggested Retail Price (MSRP))
- Titling fees if required
- License plate fees if custom plates are ordered
Montana Residents
If you’re a resident, your car dealership will send the paperwork for a newly-purchased vehicle to the County Treasurer’s office. The titling and the registration of a vehicle take place simultaneously.
To register, you must visit the County Treasurer’s Office with the documents mentioned in the Requirements section.
Non-residents
Non-residents are those who do not live in Montana but want to register here. Individuals employed in Montana can be considered temporary residents, and they are required to register their vehicle with the state.
If you’re not a resident of Montana, your vehicle must display your new license plate alongside the license plate of your home state.
You can register directly from the County Treasurer’s Office. However, if you want to be exempt from the sales tax, you must register your vehicle under your Montana LLC. The next section discusses how you can form it.
Registration using a Montana LLC
Forming the LLC
Non-residents have to first set up an LLC and purchase the vehicle under the LLC to be exempt from paying the sales tax.
A Montana LLC (Limited Liability Company) combines aspects from other business entities: corporations, partnerships, and sole-proprietorships.
Starting a Montana LLC is quite inexpensive. The initial filing fees are around $70, and annual maintenance costs are around $20.
To start an LLC, you must first come up with a unique business name. You can check your desired name with Montana Business Database to avoid repetitions.
Next, you are required to have a Montana Registered Agent. This can be an individual or another organization that accepts legal and state documents on behalf of your LLC.
You would then be required to file the Articles of Organization. This can be submitted online through the Montana Secretary of State website.
Here you’ll need to include relevant information such as the LLC’s name, duration, mailing address, information of the registered agent and members/managers, the structure of management, and lastly, the signature and title of the person filing the Articles.
Using the LLC to Register Your Car
After your LLC has been formed, your agent will provide you with all the required documents to start the registration process.
You can then purchase your vehicle under the LLC. The car dealer or the owner can send the vehicle’s title work to your registered agent, who will then file the registration.
Montana License Plates
Montana residents will receive their license plates upon registration, where the expiration date and registration period are displayed. Usually, vehicle plates are issued for 5 years, after which they must be replaced.
Residents can get brand new plates with a new plate number or have an existing license plate number transferred over to the new license plate. Depending on which option residents choose, they have to pay the following fees:
- $10 new issue fee
- $10.30 replacement fee (new plate number)
- $15.45 duplicate plate fee (transferring existing number and plate type to a new one)
- $10.30 for duplicate permanent tab fee
- $25 for personally plates initially, and $10 at renewal
Non-residents/temporary residents of Montana will also be issued license plates for their vehicles. Your vehicle must display the Montana license plate with the license plate of the home state.
Fees
The registration rate can vary depending on the age of the vehicle. The fees below include the 3% Administrative Fee during the transactions:
| Age of Vehicle | Registration Rate |
| 0 to 4 years | $217 |
| 5 to 10 years | $87 |
| 11 years or more | $28 |
If you’re registering permanently, you’d be required to pay the following fees:
- $87.50 registration rate
- $10 Salary of Montana Highway Patrol and Retention Fee
- county tax
- $9 optional state parks support
- certain special plate fees
- the gross vehicle weight (GVW) fees for light vehicles
- $5 insurance verification fee if existing plates are kept on the vehicle.
Based on the manufacturer’s suggested retail price, counties may impose a county option tax.
Benefits of Registering Your Car in Montana
The primary benefit is obviously the amount you’ll be saving up on sales tax. Usually, sales tax has to be paid even when you’re buying a second-hand car, which is quite harsh.
Successful registration means that the state has identified you as the owner of the vehicle. It can also be tracked if your car is lost. It is also required if you plan to sell your vehicle in the future.
Your vehicle’s registration certificate is absolutely essential. It must be with you at all times of driving. If law enforcement stops you, they’ll demand to see it.
Risks of Registering Your Car in Montana
As illustrated in the case of Thomas v. Bridges, 2013-C-1855 (Sup. Ct. LA May 7, 2014), other states are quite aware of the Montana LLC scheme, and they frown upon this practice. Many states are actively looking for people who use this loophole to avoid paying taxes.
The California Highway Patrol, for example, uses a special website that people can use to report vehicles with Montana plates or other plates that are out of state. In 2018, the Georgia Department of Revenue had also been cracking down on owners who used Montana LLCs to register their supercars and avoid sales taxes.
How Long it Takes
Your registration can take up to several weeks. Your agent might be able to speed this process up at some extra cost.
When your registration is complete, you can get a temporary license that you need to attach to your old license plates before the new ones arrive.
Otherwise, you might receive a new proof of registration that you must keep with your vehicle until you get your new plates. If you need a new title with your name printed in it, it will most likely show up by mail within two to three weeks.
You may also receive a registration sticker on the spot. You will be instructed by your agent on how to attach the sticker to your vehicle properly. Be sure to place it in the correct spot, as improperly placed stickers could lead to tickets and fines.
Wrapping Up
To wrap up, you must register your vehicle to own it and drive it legally. Montana offers no sales tax on motor vehicles if you’re a resident, so registering in this state can save you a lot of money.
If you’re not a resident, you can still enjoy this option by forming an LLC and purchasing your vehicle under the LLC’s name.
The registration rate varies depending on the age of the vehicle, and you need to renew the registration once your selected time period is up. Once your vehicle is 11 years old, you can file for permanent registration
FAQs
- Are there other states like Montana with no sales tax?
There are, in fact, other states that do not require a sales tax. These states are Alaska, Delaware, New Hampshire, and Oregon. These states, however, might have adjusted rates for other types of taxes. You can find more information here.
- Do I need to get my car registered? Is an agent absolutely necessary?
Yes, and yes.
Driving an unregistered vehicle is a crime. You can be fined up to $500. In the worst-case scenario, the state can impound your car, and you can face prison time for a maximum of 90 days.
If you form an LLC, you’ll need to do so by an agent registered with the state of Montana (or whichever state you’re forming the LLC in).
