Newsom has signed SB 1406 into law, giving California additional tools to collect unpaid taxes connected to vehicles registered through out-of-state shell entities. The measure takes aim at arrangements associated with Montana registrations, according to a report by Carscoops.
The new law focuses on cases in which a vehicle used or kept in California is registered through an entity outside the state. Montana has drawn particular attention because vehicle owners have used Montana-based entities in registration structures that can complicate California tax collection.
For buyers of high-value performance cars, luxury models and electric vehicles, the legislation raises the stakes around how a vehicle is titled and registered. Fleet operators and companies with vehicles moving between states will also need to ensure that their registration arrangements align with California tax obligations.
SB 1406 does not change the appeal of Montana registration for vehicles legitimately based outside California. Its significance lies in California's stronger ability to examine out-of-state shell structures when authorities believe taxes remain unpaid.
