West Haven resident Jim McGregor works in IT, enjoys riding his bicycle and wants everyone to pay their fair share of taxes. That’s why, after driving home behind what he called a “massive RV” with Montana license plates, he wondered what’s come of Utah’s 2025 vehicle registration law, which cracked down on people who live in Utah but register their cars elsewhere to avoid taxes.
The law, SB52, targeted the so-called Montana Loophole.
“The rest of us who didn't know about the loophole, you know, are shouldering their tax burden,” McGregor said.
Montana does not charge a general sales tax, and many non-residents create limited liability companies just to register their vehicles under a Montana address. Some businesses offer help with the process to make it easier for people to “beat the bureaucracy” and shimmy out of sales tax and registration fees.
“So they say, ‘Oh, well, the car is a resident of Montana because of that,’” said Jason Gardner, deputy executive director of the Utah State Tax Commission. “It's nonsense.”
People go through the trouble because sales tax isn’t chump change. At Utah’s average 7% tax rate, a $50,000 pickup truck comes with $3,500 in tax. A $250,000 sports car racks up $17,500.
So far, the Utah State Tax Commission has sent about 1,500 notices to people it believes have registrations in other states for illegitimate reasons. They’re focusing on states that don’t charge sales tax, because that’s where people have an incentive to register vehicles fraudulently, Gardner said.
Those who seem to be breaking the rules get a letter in the mail. It gives them 60 days to properly register their vehicles in Utah and pay sales tax based on the original price, plus a $150 fine. More fines stack up if someone doesn’t comply.
Some people are paying up, some are appealing and others aren’t responding at all, Gardner said.
Nearly 90% of the vehicles believed to be in violation are registered in Montana, according to tax commission data. Another 8.5% are registered in Oregon, which charges 0.5% sales tax on certain vehicles.
During debate over the bill, sponsor Sen. Brady Brammer told fellow lawmakers there were about 15,000 to 20,000 Utah vehicles with Utah insurance and no Utah registration. But before the law took effect in 2025, it was hard to know for sure.
While Brammer said registering cars in other states to avoid taxes was already illegal, the 2025 law made it easier to find scofflaws. It allowed the tax commission to contract with a vendor to compare insurance data with registration data and find vehicles insured in Utah but registered in other states.
“If you see a Lamborghini driving in Utah with Montana plates, it's unlikely they've done a road trip down from Montana,” Brammer said. “It's probably a little more finely-tuned vehicle than you're going to have, you know, going through the back roads of Idaho to get here.”
Exotic and luxury cars are indeed on the tax commission’s list. It includes 17 Lamborghinis registered in Montana, along with 10 Ferraris, nine McLarens, six Bentleys, five Rolls-Royces and four Aston Martins. The most common makes registered outside Utah, however, are the ones you see every day: Ford, GMC and Chevrolet are in the triple digits, followed by Toyota, Mercedes-Benz and Ram.
The rollout has been slower than Brammer had hoped, but as word spreads, he hopes people will do the right thing.
“It’s kind of like having a, you have a road where people commonly speed, and so you put a police officer there to enforce tickets, and then people start to say, ‘Oh, they're enforcing this law,’ and so that's what I anticipate happening here.”
Gardner said the initial 15,000 to 20,000 figure included any vehicle with Utah insurance but no in-state registration. Many people have legitimate reasons for this, like military members stationed in other states, so Gardner estimates there are about 3,000 to 4,000 tax evaders.
In about five months of work, the tax commission has brought in $1.6 million in sales tax and $32,540 in fines. Gardner expects revenue to double with another six months of enforcement. That would more than cover the state’s year-long registration identification contract with Insure-Rite, which cost nearly $2.4 million. Gardner doesn’t think this will be a huge moneymaker, but he believes it’s worth it to make the system more fair.
“The only thing worse than paying taxes,” he said, “is paying taxes when you know your neighbor isn't.”
Plus, Gardner said, people would be doing themselves a favor by following the rules. Registering fraudulently in another state could be grounds for insurance companies to deny a claim.
Macy Lipkin is a Report for America corps member who reports for KUER in northern Utah.
