People register cars in Montana all the time. So, is it legal?

This article is part of a series of articles focusing on the Montana LLC registration process. Check out the whole series here!

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There is a lot of talk about using an LLC in the Montana process and the legality of the process. Well, here at Dirt Legal, we always strive to stay on top of this information and get the best information out to y’all. The Montana LLC process is a perfectly legal and legitimate way to register your vehicles under the banner of a business entity in Montana and ultimately not pay state sales tax. We will set up your LLC and get your vehicles in it, but first, let’s talk about the backstory of using LLCs as legitimate proof of residency in Montana and why that matters. 

We have tried to include all relevant details, but something we did not cover might apply to your situation. We are enthusiasts, not attorneys. This is not legal advice.

A Brief History of LLCs in Montana for Car Registration

All information regarding the formation, legality, and uses of an LLC in Montana are in Title 35, Chapter 8 of the Montana State Code. I won’t pretend to be able to decipher it; I know that you are allowed to create an LLC for just about any legal venture you wish to pursue. People form LLCs in states where they do not reside all the time for many reasons. 

For example, it is common in the aviation community to find privately-owned general aviation aircraft incorporated under a Delaware LLC. It is common practice with no bearing on the owner's domicile; it only provides a business residency. 

The Montana LLC program has the same effect on your assets. In addition, Montana has proven to be a friendly state to allow out-of-state individuals to register their vehicles there. 

Unlike other states with no restrictions on who can title or register a vehicle in them (Vermont openly states that anyone from any state can title and register a car there; they have no residency requirements at all), Montana expects people registering vehicles there to be a resident.

Why Did Owners Start Using Montana LLCs for Registration?

This is a well-known feature of the state; owners of exotic cars have long used it to save money on tagging and registering their expensive whips. And who can blame them? Several states possess sales tax rates exceeding ten percent when local taxes are factored in. 

But here’s the deal: we have all watched in horror as new car prices have continued their meteoric rise. New car prices have blown past $47,000; frankly, this train wreck from hell has no end in sight if the median price is almost fifty grand, which includes a heaping helping of compacts and sub-compacts. 

In my neck of the woods, sales tax on vehicles run around ten percent. You’d think I’d live somewhere a little cooler than the midwest, but houses are cheap. If I scoop a new Jeep off the showroom floor at ninety Gs, it becomes a six-figure car after sales tax. You’re welcome, Kansas. 

What Kind of LLC Is Used for Car Registration? 

An LLC is LLC is an LLC, right? Not really, no. 

There are a bunch of different types of LLCs, each doing something a little different for the owner of the LLC. There are sole proprietorships, general partnerships, restricted LLCs, and several other types. You don’t need to have a clue about what any of those do, which is good because we aren’t exactly experts, either. 

To hold assets, you can employ an asset holding company. The purpose is as the name suggests: it is there to park your assets in, differentiating those assets as owned by the company away from your personal assets. As I understand it, this is to keep the individual and their personal assets legally separated from business assets; claimants cannot take personal assets in a civil suit against the company; it shelters the individual from losing their house, their cars, and individual savings. Pretty slick in this sue-happy land of the free. 

An asset holding company is not used to generate any revenue. Instead, generally speaking, holding companies use the revenue-generating LLC, whichever the proprietor uses, to shelter valuable business assets away from the business itself. 

Think about it this way: you run an excavation company with a few million dollars worth of heavy equipment. One of your employees strikes a gas line that ends up blowing up a house—the homeowners file suit against your company. If your assets are in the same LLC as the business, they are fair game in the civil suit. However, if they are held in a holding company, they are legally their entity and will not be liable. 

The same concept is true here. You may have your domicile in California, where your main home and real property are located, but the holding company is establishing a residence in Montana. That is, of course, the key to proving you are a resident of Montana. But, again, being a state resident is all required to register vehicles there. The State of Montana doesn’t care what the purpose of the holding company is; individuals open LLCs in states other than their primary domicile constantly. Besides, truthfully, most states are aware of this little program by now anyway. 

So, Is It Legal? 

Time for a little mea culpa. 

Here’s the deal: there have been a bunch of smear campaigns on the Montana LLC registration program by a few highly noteworthy publications. They have called it a scam. 

It is not a scam. It is a legal mechanism employed in a completely legal fashion per Montana. They don’t care; you are a resident and therefore may register any of your vehicles in the holding company. Again, this is not a scam. A scam means you get nothing from your investment and have been cheated. There is no cheating here. You pay for a service to establish a Montana LLC, which allows you to register in the state. It is legal; there are no questions about it. 

Here is the part we cannot guarantee: reciprocity in your state. 

They may not care one little bit since you are technically a resident of Montana and have the paperwork to back it up. 

Or they might threaten to impound your ride. 

Most of the problems we have seen come with registering UTVs as street legal machines with a Montana LLC and Montana plates in another state. This is perfectly legal in Montana, but that does not mean it will be reciprocated. Several states are taking hard lines against these, they don’t care about reciprocity, and they don’t care about your explanation. 

Truthfully, driving a UTV in a state that does not allow provisions to register and legally drive them on roads is a roll of the dice; it is wearing a target on your back. And front. If the local authorities are unsure or unfriendly to UTVs on the public roadways, they will light you up. 

Cars, trucks, RVs, and trailers are different. Chances are that Johnny Law won’t have a clue that you aren’t from Montana when you roll by and won’t care either unless you give them a reason to pull you over. 

We aren’t giving you legal advice because that’s not what we do. Instead, we provide the tools necessary to do things like saving an insane amount of cash on your car registration. You’re welcome. 

When Would It Not Be Legal to Use a Montana LLC?

Simple answer: Using a Montana LLC to register your vehicle is always legal. 

Another matter is how your home state interprets an in-state resident using the Montana LLC process for car registration. 

But as far as the actual legal nature of using a holding company in Montana to prove residency in Montana to register your vehicles? Again, completely legal, no questions asked. Pundits can call it a scam or say it skirts the law all they want, but they cannot say it is illegal because it is not illegal. 

Look, every state has its laws regarding sales taxes. Montana has none, at least not at the state level. They do it at the county level.

They also require you to be a resident to register a vehicle in the state. However, legal residency does not require you to live there. So if you set up an LLC and use that to register anything you want, that is perfectly legal because the State of Montana allows it to be legal. 

In stark contrast, Vermont openly states on their DMV website that you do not need to be a resident to register in Vermont. One of the perks of Vermont is that their taxes are pretty low (six percent), but they aren’t all that picky about titling cars. So if you struggle to register your car, you can do it there quickly. They don’t even issue titles for vehicles over fifteen years of age; they issue a transferable registration. So does that make it illegal or unlawful to register your vehicle in Vermont to avoid the runaround from your local DMV? No, it does not. Your DMV may frown on it (if they ever found out), but that does not constitute illegality. But again, you need to understand that these actions can bring about scrutiny from your local DMV and/or police, so prepare to defend your legal rights. 

Are There Any States That Are Opposed to the Montana LLC Registration Process?

In our extensive ongoing research, we have found a few states unfriendly to the Montana LLC vehicle registration process. 

This is primarily due to drivers tagging their UTVs using the Montana LLC process and driving them around on public roads. 

Let’s face it: this is rolling the dice. Some cops don’t care and look the other way. Others will pull you over and are cool with it when you show them the paperwork. Others don’t know yet, so they issue a ticket to fight it out in court. Of course, we can’t vouch for any particular state and how they will react, so you must understand that you may be inviting trouble by doing this. 

Again, no part of this is illegal; using a holding LLC to establish residence is perfectly legal and commonplace, and one of the perks is that you may register your vehicles in it. 

The states we ound particularly unfriendly to the UTVs using the Montana LLC program in no particular order are Pennsylvania, Illinois, and Colorado, to name a few. The best resource to determine what all of the different takes on UTVs are operating on public roads is our utterly comprehensive Nationwide Street Legal UTV Guide. 

But UTVs will be viewed skeptically than your F-150 and travel trailer. UTVs are designed as off-highway vehicles and are largely still viewed accordingly. Your F-150 isn’t. Drive the speed limit and follow traffic laws, and it’s pretty remote. 

A Montana LLC registration program is the best way to combat inflation in the car market right now. As prices continue to skyrocket, states are loving it! Since their cut is percentage-based, the higher the sales price, the more they get in return. When a car that costs $45,000 now costs only $30,000 three years ago, the government charges ten percent from getting three grand to getting $4,500. Believe me when I say that the state tax assessors are in no rush to see car prices drop, or real estate for that matter (for the same reason). 

We can’t help with housing costs, but we can help you save some cold hard cash with your cars, trucks, and toys. Also, even if you have no intention of making your UTVs or quads street legal machines, you can still put them in the LLC to avoid getting taxed when you purchase them. A $20,000 SXS could be two grand back in your pocket. Whatever you have in your inventory, chances are good they can be placed in a Montana LLC. Look, prices on vehicles show no signs of slowing their meteoric rise, so don’t sit on your haunches thinking you can wait this thing out; get your Montana LLC started today, and if you are already using this service, make sure to add your other vehicles and machinery to it today.