Auctioneers often inquire about requirements necessary for selling vehicles at auction. Bo Benton, GAA Board Member, past president, prior bid calling champion and third generation auctioneer has graciously written the following response. Bo owns and operates L.W. Benton Company, Inc in Macon, GA and regularly conducts automobile auctions. In a nutshell an auctioneer must have a used vehicle dealer license to sell vehicles. There are a few exceptions to this law. For example, if you are selling vehicles which are being disposed of under administration of an estate or when auctioning used motor vehicles and real property at the same sale when such vehicles and property are owned by a common owner.
Although laws are up to interpretation and many times hard to understand, below are some frequently asked questions posted on the Secretary of State’s website. The purpose of these questions were to clarify how the Secretary of State’s office interpret the law.
How many vehicles can I sell in a year before I have to be licensed?
You may not sell any vehicles with the intent to make a profit before becoming a licensed dealer. O.C.G.A. 43-47-2 (17)(A) defines a used motor vehicle dealer as “any person who, for commission or with intent to make a profit or gain of money or other thing of value, sells, exchanges, rents with option to purchase, offers, or attempts to negotiate a sale or exchange of an interest in used motor vehicles or who is engaged wholly or in part in the business of selling used motor vehicles, whether or not such motor vehicles are owned by such person. A motor vehicle broker shall be deemed to be a used motor vehicle dealer or a used car dealer for the purposes of this chapter.”
I thought I could sell up to five vehicles in a year before I had to be licensed?
The “five cars per year” statement has been misinterpreted by many people. The origin of the “five car” phrase is the Used Motor Vehicle Dealers’ and Used Motor Vehicle Parts Dealers’ Registration Act. O.C.G.A. 43-47-2 (17)(A) states that “…the sale of five or more used motor vehicles in any one calendar year shall be prima-facie evidence that a person is engaged in the business of selling used motor vehicles.” This means that evidence indicating that a person has sold five or more used motor vehicles in any one calendar year can be used to show that the person is engaged in the unlicensed practice of used motor vehicle sales. This statement should be read in its context, and should not be misinterpreted to mean that a person may sell up to five vehicles in a year before becoming licensed.
Do I need a license to sell on the Internet?
You need a used motor vehicle dealer license to sell a vehicle, whether on an open lot, as a broker in an office suite, or on the Internet (O.C.G.A. 43-47-7). Even though you sell through a site on the Internet, you must still meet the requirements for an “established place of business”, as stated in O.C.G.A 43-47-2 (3) and Board Rule 681-6-.01. You must also meet the same requirements for bond and insurance as a dealer with an open lot. Refer to the Information Sheet for Used Motor Vehicle Dealers.
What type of license do I need to sell motorcycles or pull-behind trailers?
Motorcycles and non-motorized trailers do not meet the definition of “motor vehicle” or “car”, as defined in the Used Motor Vehicle Dealers’ and Used Motor Vehicle Parts Dealers’ Registration Act. O.C.G.A. 43-47-2 (7) defines “motor vehicle” or “car” as “…every vehicle which is self-propelled and required to be registered under the laws of this state, except trackless trolleys (which are classified as streetcars), airplanes, motorboats, motorcycles, motor driven cycles, or go-carts.” According to this code section, motorcycles and pull-behind trailers are exempted from the category of “motor vehicle” or “car”, and, consequently, the sales of motorcycles and pull-behind trailers are not regulated by the Used Motor Vehicle Dealer Board. The only requirement to buy and sell motorcycles or pull-behind trailers is to obtain a local business license and a dealer registration number from the Department of Motor Vehicle Safety.
Above information from http://sos.georgia.gov/plb/faqs/35%20faqs.htm
Hopefully these FAQ’s help clear up how the state interprets the laws in regards to an auctioneer selling vehicles at auction.
Other things to keep in mind with selling vehicles include State emissions requirements and the new TAVT tax.
For those of us that don’t live in counties requiring emission inspections, its easy for us to think that it does not affect us. However, the law states different. Information from the Georgia’s Clean Air Force states that according to Georgia law, the sellers of gasoline powered vehicles, regardless if they are a private party, dealership or auctioneer, must sell a vehicle with a current, valid passing Georgia Vehicle Emission Inspection Report if the buyer is going to register the vehicles in one of the 13 metro Atlanta counties: Cherokee, Clayton, Cobb, Coweta, Dekalb, Douglas, Fayette, Forsyth, Fulton, Gwinette, Henry, Paulding or Rockdale. It is important to note that this rule applies even if the vehicle is sold outside of these counties. I have never had to have an emissions inspection done and don’t really know where I would go to get one. If part of your business includes selling vehicles and you do not live within the 13 metro counties that require it, this is something you might want to address. Like other laws there are exceptions including:
- Vehicles that run exclusively on an alternate fuel or diesel;
- Vehicles with a GVWR over 8,500 pounds;
- The three most recent model year vehicles (2011, 2012, 2013);
- Vehicles that are 25 model years old or older; or
- Vehicles that have a salvaged title and are towed off the property at the time of sale.
If a used vehicle does not pass the inspection test at the time of the sale, the buyer may submit a complaint against the seller and request an investigation by Georgia’s Clean Air Force. This may result in penalties and fines against the seller by the EPD.
The law also states that Vehicles sold “as is” are not exempt from the requirements and must also be sold with a current, valid inspection report. I guess “as is” doesn’t necessarily protect auctioneers in every situation. The idea arises that we can simply have the buyer sign an emissions waiver stating that he or she understands that the vehicle does not have a current emission sticker and that it is the buyer’s responsibility to conform to the emissions laws in their county. However, if the vehicle does not pass the inspection, we don’t really know whether this would hold up in court or not. The other alternative is to not sell to buyers who will be registering the vehicle in one of these 13 counties. Hopefully someone reading this may have a better solution and share with us in an upcoming article.
Lastly, as of March 1, 2013, vehicles sold in this state are exempt from sales and use tax and annual ad valorem tax, also known as the “birthday tax”. These taxes are replaced by a one-time tax that is imposed on the fair market value of the vehicle called the title ad valorem tax fee (“TAVT”). The fair market value is the taxable base of the motor vehicle. The manner in which fair market value is determined depends on whether the motor vehicle is new or used. For used vehicles, the value of the vehicle is calculated by the state and dealers have to go to the states manual or website to find the value. The tax is then calculated as 6.5% of the state’s value.
Per the Department of Revenues FAQ’s regarding new Ad Valorem Title Tax (“TAVT”): The application for title and TAVT payment must be submitted to the county in which the purchaser registers the vehicle (i.e. county of residence). The TAVT must be paid at the time application for title and registration are made.
If the vehicle is purchased from a licensed dealer, the dealer must accept the application for title and TAVT payment on the buyer’s behalf and deliver the title application and TAVT payment to the county tag agent in the county where the vehicle will be registered.
Prior to the march 1st change, auctioneers who had a used motor vehicle license were required to process titles, collect sales tax and deliver to a county tag office. The difference now is how the tax is calculated and the dealer having to send in the information to the county the buyer resides in.
Below is a link to more FAQ’s regarding the TAVT tax