What is the 25-Year Import Exemption Rule?This is a rule that allows vehicles that are 25 years old or older to be imported without all of the same import requirements typically required by the EPA, DOT, and other customs requirements.
Customs Requirements ExemptionThe 25-year requirement only excludes and exempts vehicles from US customs requirements. It does not require states to exempt vehicles from their titling and registration requirements.
New Opportunities in 2025Now that it is 2025, there are some additional vehicles—tremendously interesting vehicles—that can now be imported into the US without having to go through the stringent import requirements. This is a great article in Motor Trend about some of these new additions to the approved list.
Featured VehiclesToyota Caldina GT: An all-wheel-drive rally-type wagon, similar to a Subaru WRX but in wagon form, available for around $10,000 to $12,000. Subaru WRX Type STI: An upgraded version with 276 horsepower.Mitsubishi Lancer: A very interesting vehicle, typically priced in the $30,000 to $40,000 range. Honda Accord SiR Wagon: A cool car from the late 90s/early 2000s, now importable.
Final ThoughtsOnce you take a look at the new allowances for these Japanese imports, you can see which ones might be of interest. Just make sure that you’re going to be able to get it through the titling process in your state before you start shelling out a whole bunch of money to get one of these cars through customs, because customs is only the first step before it goes into a situation where you can put it on the road and be driving it.
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Thinking About Titling Your Car in Another StateSo, you’re thinking about trying to title your car in another state to try to evade requirements like inspections or certain insurance requirements or maybe even sales taxes. Maybe you have the wrong kind of paperwork and you’re thinking, “If I go to another state, I can get my paperwork passed.” Well, whether it’s Vermont, Montana, or other states that you think are going to be easier, keep in mind that if you use another state’s process to evade rules in your state, you’re probably going to get caught. Here’s why. Here’s a good example of what’s called ALPR.
What Is ALPR?ALPR stands for automated license plate readers. And that means that there are cameras all over the place that are monitoring license plates that are driving by. So, here’s what happens. Let’s say you live in California and you have a vehicle that is not going to pass smog or not going to pass inspection or maybe you don’t want to pay sales tax. So you say, “Hey, I’ll just title this vehicle in Montana so that way I don’t have to pass smog. I don’t have to pay the tax. I don’t have to get it inspected and I’ll just drive it around with Montana license plates.” Well, that’s great.
Forming a Montana CorporationNow, first of all, you have to put it in the name of a corporation because states don’t give out titles if you’re not a resident. But what the loophole is, what people do is they form a corporation in that state in Montana. They put the car in that corporation and then they just drive it around in your state and you think you’re legal because it’s a legal plate. However, every state has a law that says if you are a vehicle operator in your state, you have to title and register the car in the state where you primarily use the vehicle.
ALPR and EnforcementAnd you might say, well, if it’s a company car, I can use it anywhere I want. Yeah, you can. But what they’re going to do is they’re going to use ALPR data, automated license plate readers, that’s going to see these license plates all over the place. Now, first of all, in most states, because Montana is such a notorious loophole, if a police officer sees a Montana plate far away from Montana, they’re going to run the plate manually on their computer.
Getting Stopped and InvestigatedAnd if they see that it’s a corporation, they can stop you, check your ID, if you have a California license, why are you driving a Montana car? And if your answer’s no good, they’ll submit a report to the franchise tax board and they’re going to investigate and they’re going to find out that that corporation is in your name or in the name of somebody that is in California. But even if they don’t catch you manually, automated license plate readers are monitoring these plates.
Pattern Detection and InvestigationsIf they see the Montana license plate driving by the same intersection every day for a month, they’re going to figure this is not just somebody vacationing in Santa Monica. This is not somebody just visiting Disneyland in Anaheim. This is somebody who has titled and registered a vehicle out of state to evade something and they’re going to open an investigation. All they have to do is request the records from Montana Secretary of State. It’ll give them a printout. It’ll see the name of a person that’s the registered agent or the name of a person that’s an officer and they will track it back to you.
Legal ConsequencesAnd then they know when you go by an intersection because you go there every day. They’ll pull you over. They may be allowed to seize and impound your vehicle.
Seizure of Vehicle and Government AwarenessThey may also not have to give it back. If they can prove tax fraud, if you did not pay sales tax, if you did not register the vehicle properly, if you did not do smog, they can seize your vehicle and you’re out of luck. You lose the car for good and you can’t get it back. So, these loopholes, you’re not the only one that’s heard of it. The governments know about it. All the different DMV commissioners know this inside and out. The tax departments of every state have very clear understanding of how these work and this is how they undo it.
Task Forces and ALPR TechnologyThey have task force groups committees that are looking to try to catch people that are doing it. What does ALPR look like? Well, here’s a picture. Flock, if you notice on this picture, it says Flock. That stands for Flock Safety. It’s a company that sells these cameras not just to police departments, but if you’re an HOA, if you’re an apartment complex, a parking lot, you can get Flock cameras for your private sector location and it’ll track the license plates there.
Tracking in Private LocationsThe governments can buy that data even from a parking lot, even from, you know, if you pull into, you know, Vons grocery store, they can track your license plate. Police cars, tow trucks, taxis, all kinds of cars have these ALPR readers all over the place and they’re taking pictures just like this and they can automatically read the license plate and track it back.
Triggering InvestigationsIf they see Montana plates on a regular basis, they’re going to flag you and investigate to see why you have a Montana plate. Look, if you’re just visiting on vacation, no harm, no foul. But if they see that it’s in a corporation name, an LLC name, Montana LLC, they’re going to investigate further and undo you because they’re going to figure that you did it for a reason.
Reasons for Loopholes and Their ConsequencesEither your car is not eligible because it’s not going to pass inspection. Maybe it’s not allowed in California. Maybe you did tax evasion because Montana has no sales tax. Maybe it’s something that won’t pass smog. Either way, they’re going to get to the bottom of it and eventually it’ll cost more than what it would have to properly register in the first place.
Insurance IssuesSo, you may get away with it to begin with, but at some point, it’s going to come back to haunt you. Plus, the other problem is insurance. When you tell your insurance agent where you garage the car, where you park the car, you’re going to have to tell them either Montana or California.
Conflicts in Insurance CoverageIf you tell them Montana, you’re going to have a Montana insurance card. And if you use the car in California, if the car gets stolen, it gets damaged, or you cause a wreck, your Montana insurance agent insurance might not cover you because you said that it’s a Montana use vehicle. If they can see that you’ve been using it in California most of the time, they can deny your claim, which means if you total your car, you’re out the money.
Franchise Tax Board InvolvementNow, if you tell them it’s a California address with Montana plates, they may now turn that in to the California Franchise Tax Board. Or even if they don’t, if the franchise tax board looks up your insurance and they see that you put California as an address, that just proves that you’re evading California laws for a California used vehicle.
Final WarningSo, it’s a catch-22. No matter what state you declare that you’re using it in for your insurance, it’s going to create some problems for you. So, think twice about these out-of-state loopholes. Even though it might save you some money or, you know, do something that makes it easier, in the long run, it could create a lot more liability for you than you signed on for.
Many vehicle owners in high-tax states have heard about a seemingly clever strategy: forming a Montana LLC to register their vehicles and avoid paying hefty sales and registration taxes in their home states. This practice is especially popular among owners of luxury cars, exotic sports cars, RVs, and boats. But make no mistake—despite its popularity and the many businesses facilitating it, this tax avoidance scheme is illegal in most circumstances and carries serious consequences.
The strategy is straightforward: A resident of a high-tax state forms a limited liability company (LLC) in Montana, makes that LLC the official owner of their vehicle, and registers the vehicle in Montana with that LLC’s address. The appeal is obvious—Montana charges no sales tax on vehicle purchases and has relatively low registration fees.
“Under Montana law, a business entity formed in Montana can title and register vehicles it owns in Montana no matter where the vehicles are located.” (Draneas, 2024)
Companies specializing in this service advertise widely, with some charging as little as $1,049 for a package that includes LLC formation, registered agent service, and vehicle registration assistance.
Despite what service providers might claim, this isn’t a legal “loophole”—it’s tax evasion when the vehicle is primarily used in another state. Most states have clear laws requiring residents to register vehicles in their state of residence if the vehicles are primarily kept or operated there.
In California:
“California law also provides that an LLC formed in another state but owned at least 50% by California residents is treated as a California resident for vehicle-registration purposes.” (Draneas, 2024)
In Utah:
“The law specifically says that if a business entity has a vehicle and operates that vehicle primarily within Utah, the same standard applies. That business entity is deemed to be a domicile area of Utah or resident of Utah for purposes of registration as well.” (Gephardt, 2023)
Similar laws exist in Georgia and most other states. The legal reality is simple: if you live in a state and your vehicle is primarily operated there, you are required to register it there and pay applicable taxes—regardless of any Montana LLC ownership structure.
The penalties for this form of tax evasion can be substantial, involving far more than just paying the evaded taxes:
In Utah, if caught, vehicle owners face “all the back sales tax and 100% penalty of the sales tax amount that wasn’t paid. So basically, double sales tax” (Gephardt, 2023). On a $100,000 vehicle with an 8% tax rate, that means $16,000 instead of the original $8,000 tax.
In California, owners must pay:
Beyond financial penalties, there can be criminal consequences. In California, a resident named “Trevor” faced potential criminal charges after authorities executed a search warrant on his home and seized his Montana-registered sports car (Draneas, 2024).
In Georgia, authorities conducted what they called the “largest criminal investigation ever into the Montana tax scheme,” executing search warrants on homes and properties belonging to exotic car collectors. The investigation targeted two wealthy Georgians who had purchased approximately 50 exotic cars between them over a four-year period, allegedly depriving Georgia of more than $1 million in tax revenue (WSB-TV, 2019).
Authorities can and do seize improperly registered vehicles. In California, vehicles were seized during the execution of search warrants (Draneas, 2024). In Utah, officials warn that boats with improper registrations “might get impounded and won’t be released until state taxes are paid and settled in court” (KSL, 2024).
States are becoming increasingly sophisticated in their methods to detect improperly registered vehicles:
In California, investigators have visited repair shops to identify vehicles with Montana plates being serviced locally (Draneas, 2024).
In Georgia, authorities have:
Utah recently considered legislation (SB52) that would allow insurance records to be compared with DMV databases to identify vehicles registered out-of-state but insured in Utah (KSL, 2025).
Enforcement actions and public awareness campaigns can quickly change behavior. After Georgia’s WSB-TV aired an investigation into Montana registrations, officials reported that within 24 hours, owners had changed the registration on about 20 cars from Montana to Georgia, resulting in more than $100,000 in tax revenue (WSB-TV, 2019).
In the California case, authorities seized the vehicle owner’s cell phone during their investigation. Why? Cell phones contain a wealth of evidence:
Beyond legal issues with state authorities, this scheme creates potential insurance problems. Many insurers might refuse to pay claims if they discover a vehicle resides somewhere other than what is listed in the policy (Gephardt, 2023). This leaves owners vulnerable to significant financial loss in case of an accident.
While the Montana LLC vehicle registration scheme might seem like a clever way to save money on taxes, the financial risks, legal consequences, and increasing sophistication of enforcement make it a dangerous gamble. With states actively cracking down on this practice and penalties often doubling the original tax obligation (not to mention potential criminal charges), the short-term savings simply aren’t worth the long-term risks.
If a Montana LLC vehicle registration service claims this strategy is perfectly legal, remember that few things in life are certain except death and taxes—and trying to avoid the latter can lead to serious consequences.
Sources:Draneas, J. (2024, June 17). California Cracks Down on Montana LLCs. Sports Car Market. https://www.sportscarmarket.com/columns/legal-files/california-cracks-down-on-montana-llcs
Gephardt, M. (2023, February 21). Utahns save thousands in sales tax by registering new cars in Montana. But is it legal? KSL. https://ksltv.com/526269/utahns-save-thousands-in-sales-tax-by-registering-new-cars-in-montana-but-is-it-legal/
KSL. (2024, November 12). Registering your boat or OHV out of state to save on tax money is illegal warns Utah officials. KSL. https://ksltv.com/ksl-investigates/registering-your-boat-or-ohv-out-of-state-to-save-on-tax-money-is-illegal-warns-utah-officials/705364/
KSL. (2025, January 23). Lawmakers seek crackdown on Utahns illegally registering their vehicles out of state to avoid sales taxes. KSL. https://ksltv.com/politics-elections/utah-legislature/lawmakers-seek-crackdown-on-utahns-illegally-registering-their-vehicles-out-of-state-to-avoid-sales-taxes/730140/
Winne, M. (2019, November 23). Wealthy Georgians with exotic cars accused of cheating local taxpayers. WSB-TV. https://www.wsbtv.com/news/local/wealthy-georgians-with-exotic-cars-accused-of-cheating-local-taxpayers/858532353/
WSB-TV. (2019, November 23). $100K in taxes paid after Channel 2 investigation into exotic cars. WSB-TV. https://www.wsbtv.com/news/2-investigates/more-than-100k-in-taxes-come-in-after-channel-2-investigation-into-exotic-cars/860469930/
Jalopnik. (2018, November 4). Georgia Is Cracking Down On Instagram Bros Registering Supercars In Montana To Avoid Taxes. Jalopnik. https://www.jalopnik.com/georgia-is-cracking-down-on-instagram-bros-registering-1830035589/
Atlanta Journal-Constitution. (2018, October 25). Luxury car owners dodge Georgia tax with Montana scheme. Atlanta Journal-Constitution. https://www.ajc.com/news/luxury-car-owners-dodge-tax-with-montana-scheme/eF1HopLGbDX8EuvYzgNo6J/
Missoulian. (2023). ‘The Montana scheme’: How the wealthy avoid taxes on luxury vehicles, RVs. Missoulian. https://missoulian.com/news/local/business/montana-luxury-car-tax-avoidance-non-residents/article_1f46105e-4c36-11ee-86ad-5bb0a78abd77.html
Bozeman Daily Chronicle. (2017, January 22). Out-of-state car buyers use Montana LLC’s to evade taxes. Bozeman Daily Chronicle. https://www.bozemandailychronicle.com/news/out-of-state-car-buyers-use-montana-llcs-to-evade-taxes/article_b4b37d29-e894-523e-b0ed-be7c0bf7e398.html
How Can a Clean Title Go to Salvage?So how can a clean title go to salvage if you have no accident? Here’s a great example of how a title record may not be 100% accurate. This is a person who purchased a Tesla with a clean title, and then, after they purchased it, they found out that it’s a salvage and it’s going to cost $12,000 to fix it. Here’s how this happened.
The way that a salvage title can be created isn’t just one method. It can be created either by the insurance company, who pays a claim on a vehicle that says, “We paid out this much money to have this vehicle fixed, so now it’s a salvage.”
Other Ways a Salvage Title HappensAnother way to do it is if the owner of the vehicle fixes the car themselves and says, “I fixed this damage, and I want to make it a salvage to protect my liability if I sell it.” Another way is if the damage is detected by the factory or the manufacturer, and then they put it on the record. That’s what happened with this Tesla.
What happened was this Tesla was damaged in an accident. The owner of the vehicle at the time fixed it themselves. They didn’t want to go through their insurance. They didn’t want to put it on the title. They fixed it, and then they sold it to a third party.
What Happens When a Dealership Finds the DamageOnce that third party purchased the vehicle, they brought it to the Tesla dealership to have some repairs done. The manufacturer was able to determine that the car had been previously damaged both from the diagnostics on the vehicle. The computer said there was an impact; there was deceleration, and then also they did an inspection, and they found that the frame had been dented and the battery had been damaged. So the Tesla dealership put a salvage designation on it. This is completely legal. The salvage designation does not have to come from an insurance company. It can come from any method.
Why Buyers Must Be Extra CarefulSo this is why it’s very important when you’re purchasing a vehicle not only to check the title record. In this case, the buyer checked Carfax. Now keep in mind, even if the car had been filed through an insurance company, Carfax doesn’t catch everything. Carfax is not 100% accurate. It’ll even say in their disclaimer that the records aren’t 100%. So you may have Carfax records that are not complete. But the only way they do get it at all is if it goes through an insurance company. They’re not going to pick it up if the owner did it or if the manufacturer did it.
What to Check Before Buying an EVSo be very diligent, especially on these electric vehicles, to check out the frame. Check out the underneath. Check out the battery. Do a battery test. But also make sure that the physical examination doesn’t indicate there was damage, even if the title doesn’t show salvage on it.
Court-Ordered Title Process Gaining PopularityMore and more states are advising their department of motor vehicles offices to go directly to a court-ordered title process when there’s some type of complication on the title. Many states for years did not have knowledge at the DMV level that you could get a court-ordered title when you didn’t have the right paperwork for the DMV. We’re seeing more local DMV branches directing their customers and their clients to go right to the court process. In fact, some courts even now have this as part of their paperwork. Here’s an example from a Florida county.
Example from a Florida CountyA county in Florida says in their court’s instructions for vehicle ownership application: “It is sometimes possible to obtain an order to assist you in obtaining a title for a vehicle you own, but which you did not receive a title for at the time of purchase.” Does that sound like you? That’s 99% of the people who have title problems. Either they didn’t get a title when they bought it, or they did get a title and they lost it. The court may issue an order directing the Department of Highway Safety and Motor Vehicles.
What Is a Court-Ordered Title?That’s what the DMV is called in Florida, to issue a certificate of title for your vehicle. This is exactly what a court-ordered title is. It’s a court order that tells the DMV, “You must issue this person a title.” And many times people think, “I don’t want to deal with the court or go to court.” It’s not a big Law and Order Jack McCoy court case. It’s all administrative. It gives you all the series of steps you have to go through to do the process. In this case, there’s a bunch of different steps.
Follow the InstructionsYou have to go through, but it’s all paperwork. It’s all documentation. And if you follow the instructions carefully, you can have the court become your friend, your ally in dealing with the DMV. Remember, the DMV or whatever it’s called in your state. Some states call it Department of Transportation. In Illinois, it’s Secretary of State. In Pennsylvania, it’s called PennDOT. Every state has an agency that issues titles. They have certain rules they have to follow. They cannot give you a title.
Why Courts Can Override the DMVNo matter how much they want to, no matter how much they like you, no matter how much you think you have the right paperwork, unless you have the prior title signed over to you, they’re not allowed to give you a title. However, their get-out-of-jail-free card is the court. The court can override the DMV by looking at your bill of sale, looking at your cancelled check, looking at letters you have, or something proving that you bought the vehicle, and they can say, “Okay, this person has the right stuff.”
They sign a document, you bring it to the DMV, you slap it on the counter, and they have to give you a title. So, a court-ordered title is actually preferred by the DMV when you have title problems because it gives them an out. They don’t have to fight with you about what you have or don’t have. The courts like to do it because they like to help you. In fact, this memorandum you’re looking at on the screen came from official court documents.
Challenges in Form PreparationThe problem is – I shouldn’t say the problem, but the hard part is – in order to prepare the forms for the court, it’s not like a blank fill-in-the-blank type document you’ve seen before. It’s not like name , address . You have to create these sheets of paper from scratch and figure out a way to put the wording on it. Our website will give you some more information on doing that. Every county’s a little bit different, and sometimes you’ll still have to navigate the court. One very important thing to keep in mind is: don’t go into the court in person and start asking them how to do it. They can’t tell you. Sometimes they’ll tell you, “We don’t know how to do it,” or they might even tell you, “We don’t do it.” They may not know.
Mailing the PaperworkEven if you have all the paperwork put together, ready to go, don’t bring it into court in person. Always do it by mail because you want to have it filed in their system without having to talk to somebody that maybe has the wrong information. So, in our experience, if you send it by mail, you’ll have way better success than if you bring it in person. I know it’s tempting. You want to bring it in and talk to somebody and try to control it, but a lot of times that’ll be your undoing and they won’t accept your paperwork. But if you mail it, you’ll be in better shape.
Why Courts Are HelpfulSo, the court-ordered title process is – you know, it’s been used for decades. We’ve been doing it for decades, but more and more courts are actually having forms like you see on the screen. More and more DMV locations are telling their clients, their customers to use this instead of trying to go with the DMV because their hands are tied. They can only do so much. So, use it to your advantage.
The Power of the CourtGo over the head of the DMV. Go to the authority that can tell the DMV what to do. Look what it says right here: The court may issue an order directing the department to issue you a title. That’s what you want. You want somebody to direct the DMV to give you a title. Think about how much of a runaround you’ve gotten from the DMV. Think about how frustrating it’s been. How would it be to have somebody with power to be on your side to tell the DMV, “No ifs, ands, or buts, give this person a title”? That’s what the court can do for you.
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