In Colorado, how many used cars can I buy, fix up, and resell before the law considers me an (illegally) unlicensed car dealer?
A friend of mine seems to think that as long as I’m not turning a significant net profit that I can buy and resell cars as often as I like. However, I’ve seen Peoples Court/Judge Judy type teevee shows where the judge goes completely off on someone who pretends they aren’t a car dealer (and so the consumer protection laws don’t apply to them) when caught selling a “lemon”.
I was able to find laws about obtaining a license, but not about who is required to have one.
Seems like there would be a lot of gray area to your question, as well as the answer. My first thought is, soon as you start putting prices on the windshield. Otherwise it would be unlimited. Or until the IRS starts taxing your profits.
The state of Washington nailed me for this back in the mid 80’s. I would buy cars at auction, fix them a bit and sell them. I had sold 9 in about a 6 month period when I got a cease and desist letter from the state. Found out the limit was 6 in a year.
Depending on how your state handles registrations and title transfers, often registering as a dealer becomes necessary simply because the fees associated with buying and selling and registering a bunch of cars as a private party become prohibitive. During one particularly wheeling and dealing heavy year of mine, I realized in hindsight that I would have saved a bunch of money had I registered as a dealer that year.
The IRS doesn’t tax profits; they merely collect the tax due on profits, and that tax is imposed starting with $1.
In any event, why would Colorado’s department in charge of business licensing know whether the IRS collected a tax on profits? People are way too eager to assume that the various governments and government agencies talk to each. Trust me when I say that the different departments within the IRS don’t even talk to each other.
