Licensing, sales tax among concerns for auction professionals

Government regulations could exacerbate economic problems and continue to place strain on auction businesses in the coming years, according to “Give Me Five, Now Ten … Years Into the Future,” a white paper produced by the National Auctioneers Association’s Council on Future Practices.

Government policies and procedures, in some cases, tend to work against the principles of the auction method because they can be slow and arduous, the paper says. Auction professionals, on the other hand, bring liquidity to the marketplace, and auction transactions can lead to a chain reaction of additional sales that ultimately help the economy.

More specifically, the paper’s authors point out that auction businesses might encounter these regulatory roadblocks:

•    Smaller firms could continue to lose out on contracts, as governmental organizations have in the past favored only big auction companies or those with high amounts of capital
•    Some government agencies have stopped using auction companies because of lawsuits
•    There will likely continue to be no licensing requirements for online-only auctions occurring in most states
•    Auction licensing fees will probably continue to increase, and government agencies might more diligently pursue rule violations as a source of additional income in certain states
•    Certification programs now make it more difficult to earn educational designations
•    Tax laws, particularly when it comes to sales tax, and health care policies could have significant negative effects on small businesses, a category under which most auction businesses fall
•    State governments will begin to view auction professionals as retailers and therefore require auction firms to follow more thorough accounting practices

Present and former leaders of state Auctioneer associations say government regulations are a concern; however, most agree new laws, policies and mandates are to be expected as part of doing business.

Last year’s President of the Alabama Auctioneers Association, John Stewart, says the group is working with the Alabama State Board of Auctioneers to get a new licensing law pushed through the legislature.

Their first attempt at passing a new law, which addresses Internet auctions, was not successful, Stewart says, but the association and board plan to make another attempt in February.

California State Auctioneers Association President Todd Good says the Internet allows business owners to sidestep myriad regulations because transactions take place online.

Good, though, says arms of the government do not exist, are not going after violators or do not have the manpower to enforce certain laws or future legislation.

In addition, he says most auction licensing laws don’t “have any teeth.” Some fines or penalties might amount only to a slap on the wrist, especially when a small fine is levied against an auction firm conducting a multi-million dollar sale.

Federal, state and local governments also strive to bring in tax revenues, and in agreement with the white paper, that has some NAA members concerned about what additional expenses legislators could impose on their small businesses.

New sales taxes could play a significant role in helping municipalities rein in budget deficits.

Stewart says the rumor in Alabama is sales taxes could be on the horizon for estate sales.

“If they start taxing what you’ve already paid taxes on … that’s double dipping,” he says.

Good says Internet sales are likely to be taxed in California. Those who deal in e-commerce should expect to start charging sales tax, he says.

Read the complete story in Auctioneer magazine to find out how other government regulations are affecting and might affect the auction industry in the near future.

Read the Council on Future Practices’ white paper here.

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Filed under Auction Industry, Auction marketing, Auctioneer magazine, NAA Members, State Auctioneer Associations

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