House proposes tougher regulation of auto dealers, dealer plates

The Missouri House has voted to make it tougher for people to illegally use dealer license plates.

Representative Kevin Engler (photo; Tim Bommel, Missouri House Communications – click for larger version)

House Bill 2122 would limit the issuance of dealer plates based on the number of vehicle sold annually.  A dealer selling six vehicles per year could have one plate.  Twelve sales per year is enough for a second, 20 per year for a third, and each additional 10 sales per year beyond that would allow a dealer another plate.

The bill’s sponsor, Representative Kevin Engler (R-Farmington), said those plates are being abused, most notably by a dealer’s family members and friends using one daily and avoiding paying taxes on the vehicles those are on.

“They’re using the system and they’re shirking the responsibility of taxes to the schools just by using that, and it needs to stop,” said Engler.  “Every time you see that … remember it’s about a $2.5- to $5-million cost to the state, to the local schools, because we don’t get sales tax and we don’t get personal property tax off those dealer plates, so we tried to make it more reasonable; that you really have to be in the business to get them.”

The bill would also double the bonding requirement for dealers from $25,000 to $50,000.  Engler said that requirement hadn’t been increased since 1984, and it needs to be changed to ensure protection for consumers.  During debate, Engler learned of a dealership in O’Fallon that folded, and cited that as an example of why dealers should have a greater bonding requirement.

“Twenty-something cars that don’t have titles, that the guys that just bought the cars that can’t get the titles are going to have to come back to them,” said Engler.

“You have to have somebody to be able to come back to, and [dealers] should be able to get at least $50-thousand bonding because $25-thousand in 1984 is worth a lot more than $50-thousand today,” said Engler.

Another provision limits sales events that happen off of a dealer’s premises to two a year, and taking place within a ten-mile radius of the dealer’s licensed location.

Opponents of HB 2122 said it would punish all dealers because of a handful of bad actors in the state.

Representative Delus Johnson (photo; Tim Bommel, Missouri House Communications – click for version)

Representative Delus Johnson (R-St. Joseph) said the bill would hurt the industry that generates the most sales tax revenue of any in the state.

“Unfortunately the only thing that’s going to happen with this bill is we are going to see multiple businesses in the State of Missouri close because of a couple of very restrictive requirements,” said Johnson.

“If many of you are like me and you promised your constituents that you were going to come to Jefferson City and you were going to support small business and then you turn around and double a business’ operating costs; when you told your constituents that you were going to create jobs and then you’re creating these small ten-mile circles around a dealership to prohibit them from operating outside those circles (or you give them a $1,000 fine, by the way); and you told your constituents that you were going to build the roads and you’re going to dramatically decrease the sales tax revenue that goes into the Missouri Highway Fund – if you made those promises to your constituents and you vote, ‘Yes,’ on this bill, then it’s my opinion that you don’t even deserve the honor to serve on this floor,” said Johnson.

The legislation also requires dealers to submit regular business hours, a phone number and an e-mail address and maintain the latter two for use by the Department of Revenue and the public; allows discretion for the suspension of dealer licenses for issues in which it is currently mandatory; and allows the use of motor vehicle inspections made within 90 days of an application for registration or transfer by new owners of a vehicle.

The House voted 119-31 to send HB 2122 to the Senate, where it has been referred to that chamber’s Committee on Transportation, Infrastructure, and Public Safety.