ST. PAUL, Minn. (WCCO) — The state of Minnesota is cracking down on a high-end motor vehicle scheme that originates in Montana, and has cheated the state out of at least $1 million in taxes.
The Minnesota State Patrol says a growing number of Minnesotans are buying their vehicles in Minnesota, where the sales tax is 6.5 percent, but illegally registering them in Montana, where the vehicle sales tax is $0.
“This is illegal. It’s tax evasion,” said Lt. Tiffani Scheigert of the Minnesota State Patrol. “These individuals are evading taxes because by registering in Montana, they are avoiding sales tax there, and yet they are operating the vehicles here in Minnesota as a Minnesota resident.”
The Ramsey County Attorney’s Office charged a St. Paul man in 2014 with tax evasion for buying two cars — a $48,249 Land Rover and a $67,995 Porsche 9911 Carrera 4.
The court complaint said he registered both vehicles under a fake business name in Montana to avoid $7,490 in taxes.
The Revenue Department says it has so far collected $1.1 million in unpaid motor vehicle taxes from 82 people, who used the Montana scheme to illegally register a total of more than 200 vehicles.
The State Patrol says almost all of them would be considered high-end luxury vehicles.
“We are not seeing the drivers who are driving a $3,000 vehicle, trying to circumvent the tax,” Schweigert said. “We are seeing the high-end vehicle operators and owners trying to evade taxes.”
The State Patrol Vehicle Crimes Unit says the penalty for owning a Minnesota car registered in Montana is a misdemeanor, with a penalty of paying the back taxes and a fine.
But if you ignore it, there are criminal charges and possible jail time.