
TL;DR
California has officially closed the loophole that allowed residents to avoid vehicle taxes by registering cars through out-of-state shell companies, particularly in Montana. The new law, effective September 30, 2026, holds California residents personally liable for unpaid taxes on vehicles registered under these companies.
✦ Why It Matters
Review your vehicle registration and business structure to ensure compliance with California tax laws.
Key Takeaways
How It Works
The new law redefines what constitutes a California resident for tax purposes, stating that if any partner or owner of a business is a California resident, the entire business is considered a California resident. This change means that all vehicles owned by such businesses are subject to California's sales and use tax, regardless of where the business is registered.
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