5 Compliance Checks for Out-of-State Auto Sales
Out-of-state sales can represent a significant revenue stream for dealers in good economic times and bad. But they also come with a lot of complexities that can turn into pitfalls, particularly in terms of compliance. Here are 5 things every dealership making OOS sales needs to consider.
- State-specific regulations: Every state has its own laws, regulations, and requirements for auto sales, tax, titling, and registration. When a customer from out of state purchases from you, you must follow their state’s documentation, titling, registration, and sales tax regulations to the letter. Failure to comply with these regulations can lead to hefty fines and penalties, negative customer experiences, and even criminal charges.
- Licensing requirements: Although you are licensed to sell vehicles in your state, you might need to abide by different or additional licensing requirements in the out-of-state customer’s state as well. This is another area where a seemingly small oversight could lead to fines, penalties, and a terrible experience for your customer.
- Advertising compliance: Multiple federal and state laws regulate advertising requirements. Broadly, they require you to accurately represent vehicle prices, clearly disclose any additional fees or conditions, and avoid deceptive marketing practices. Since the finer details can vary from state to state, if you advertise outside of your own state, you must ensure you comply with both your state’s laws and those of the states where you are expanding your advertising and marketing.
- Sales tax considerations: Sales tax requirements can vary significantly from state to state, so you need to clearly understand the sales tax obligations associated with selling to out-of-state customers. This includes determining whether the dealership is responsible for collecting and remitting sales tax to the customer’s state, or whether the customer is responsible for paying the tax directly. It’s a smart idea to hire a tax specialist or a lawyer well versed in interstate commerce law.
- Title and registration process: Each state has its own procedures and documentation requirements for titling and registering vehicles. Dealerships need to provide accurate and complete documentation to facilitate the transfer of titles and registration to out-of-state customers, and it’s a big process that involves coordinating with the customer, providing necessary paperwork, and guiding them through the steps required by their state’s motor vehicle department.
The bottom line? Out-of-state sales and the associated tax, title and registration process are incredibly complex and time consuming. The process subjects you to regulatory, legal, and financial risk and most importantly takes your focus away from selling more cars and providing great customer service. That’s why using ATC is always a smart move. We can handle all of your out-of-state titling and registration, with unmatched speed and guaranteed accuracy. With in-house expertise covering all 50 states, you can trust us to ensure that every OOS sale you make is 100 percent compliant, and our processing speed improves your cash flow by getting money from OOS sales in your hand faster. Ready to see how we can help? Sign up for a demo, and someone will get in touch with you right away.
