MISSOULA, Mont. — In addition to its wide-open skies, roaming grizzlies and world-class fly fishing, Montana has another lure for Californians: the prospect of a tax dodge.
Much to the displeasure of California law enforcement officials, Montana has become a haven for motor home owners who prefer not to pay the Golden State's sales tax when they buy their costly coaches. Montana has no sales tax, and recreational-vehicle aficionados are taking a break from their road maps and AAA Trip-Tiks to set up shell corporations in the state.
Doing so allows them to take advantage of loose registration laws -- without having to set foot in Montana -- and shave perhaps $20,000 off the cost of a luxury motor home. Enough Californians are doing it to support a cottage industry in Missoula, where a dozen or so people make a living creating tax avoidance plans for RV owners.
Officials at the California attorney general's office say they believe as many as 10,000 Californians have put Montana plates on their motor homes over the last few years, most of them illegally. They base their estimate on comparisons of Montana vehicle records with California addresses.
"We estimate that California has lost over $160 million to this particular type of fraud," said Deputy Attorney General Robert Morgester.
And a new law signed by Gov. Arnold Schwarzenegger on Wednesday, Morgester said, may make it harder to catch the cheaters.
Most states make it difficult for nonresidents to get license plates. But Montana lets out-of-staters register vehicles if they own a local limited liability corporation. Setting one up merely requires some simple paperwork and about $1,300 to cover incorporation costs, registration fees and attorney hours.
In the riverside university town of Missoula, lawyer John Bennett is a pioneer in the field of helping Californians avoid their home state's sales tax -- as high as 8.75%, depending on where the buyer lives. A gregarious Montana native who often brings his Shetland sheepdog to a storefront office on Main Street, he is the nemesis of the California Highway Patrol.
"Every time we get one of these Montana RVs, he was always the one who set it up," said CHP Officer David Constantini, who runs the California government's CHEATERS website. The acronym stands for Californians Help Eliminate All The Evasive Registration Scofflaws. Anyone can use the site to report people they believe are driving any vehicle in California illegally.
