5 Important FACTS You Need to Know About Flipping Cars
1. Flipping cars is illegal! Read details below!
2. It’s a violation of your state laws
3. It can include possible federal and state tax fraud!
4. It may have heavy fines or jail time associated with it!
5. Flipping cars could stop you from ever getting a dealer license
I hope I have your attention.
I’ll explain the facts about flipping cars!
But first, let’s define what “flipping cars” means.
The definition is to buy and sell cars without a dealer license.
Another name for it in the auto industry is curbstoning. Individuals who want to sell a car usually park it at the curb with a for sale sign in the window.
So on to the facts Jack….
Flipping cars is illegal!
To buy and sell cars, for profit, without a dealer license, is illegal in EVERY state.
States MAY allow a small number of sales without a license. This is usually 3-6 in a 12 month period.
Check your state’s requirements.
Many states set the number at absolute ZERO.
ZERO: California, Oregon, Kentucky, Minnesota, Mississippi, Montana and Georgia. Here are some states where it is TWO: Florida, Nevada and Utah.
Don’t believe what you read on the Internet blogs and forums.
Check with the licensing group in your state.
As an example here is what Georgia’s FAQ website states:
It’s a violation of your state laws!
The auto industry is one of most regulated industries.
A car is one of the most expensive buys a consumer makes.
States have passed dealer licensing regulations and rules to protect the consumer
The states have inspectors to check for curbstoners. They track by title transfers using names and addresses in the state DMV database. They check Craigslist for repeated sales by individuals.
If you’re selling cars unlicensed for profit (flipping cars) your state will take legal action against you.
Your violations may include federal and state tax fraud!
Some car flippers will slip a title or use an “open title”. This means they never register the car in their name. They leave the buyers info on the title blank so they can fill in the name of the person they buying it.
When a car flipper buys a car he is the new legal owner. EVERY state requires a new owner to register the vehicle, get a new title and pay fees and taxes. To not do this is tax evasion.
When an individual vehicles for profit they must pay state and federal income taxes. To not do this is tax evasion.
It can have heavy fines or jail time associated with it!
Here’s Georgia’s statute (O.C.G.A. § 40-2-39.1 – GEORGIA CODE)
(g) Any person who violates this Code section shall be guilty of a misdemeanor and,upon conviction thereof, shall be subject to a fine not to exceed $1,000.00 for each violation or imprisonment for a period not to exceed 12 months, or both.
South Carolina law : If you operate as a dealer, wholesaler, auto auction, or transporter without the proper license, you may be convicted of a misdemeanor and fined up to:
1. $200 and/or imprisoned for up to 30 days for first offense.
2. $1,000 and/or imprisoned for up to six (6) months for second offense.
3. $10,000 and/or imprisoned for up to two (2) years for third and subsequent offenses.
ALL states have similar statutes, fines and possible imprisonment for violating dealer licensing laws.
Follow what the YouTube videos and “flipping cars for profit” web sites say and you could be toast!
Flipping cars for profit could stop you from ever getting your dealer license!
An applicant has been found guilty of past fraudulent actions for the sale or lease of motor vehicles. Most states will deny this application for a dealer license .
As an example here is Arizona’s law.
SO, WHAT DO YOU DO?
Don’t be a flipper!
GET YOUR DEALER LICENSE……
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Hi! Welcome, I’m Don Massey – Colorado Dealer License #38936
For over 20 years, I’ve helped people get their dealer license. Let me help you.
A dealer member of National Independent Automobile Dealers Association and Colorado Independent Automobile Dealers Association.
Dealer License Consulting, Don Massey, 8201 Lighthouse Lane Ct, Windsor CO 80528
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