The state Motor Vehicle Commission has sent a warning letter to Bradley County Sheriff Eric Watson over his used-car sales and has asked the Department of Revenue to investigate whether he is in compliance with sales tax law.
But Watson didn't have an auto dealer's license, which is required for anyone who sells more than five cars a year.
He did have a salesman's license, obtained Sept. 16, which entitled him to sell cars for a licensed dealer on the dealer's property.
Watson's licensed dealer was Best Buy Auto & Leasing, owned by Everett Pierce. But Watson was offering his own cars for sale on the side of the road in various spots in Bradley and Polk counties, the Times Free Press reported.
Tennessee law calls that "curbstoning," and it's banned as a way of protecting consumers and making sure tax is collected on vehicle sales.
Based on the Times Free Press report, the Motor Vehicle Commission in December opened what it calls a complaint against Watson on suspicion of selling cars without a license, and on Best Buy for allowing off-site sales.
On Monday, commission attorney Matthew Reddish wrote to Watson that the panel had voted to close the complaint with a warning regarding "potential violations" of state law and commission regulations regarding unlicensed sales.
Reddish wrote that the Letter of Warning would be placed in his file "and may be considered should any future action arise." Had commissioners found a violation, Watson could have been fined up to $5,000 per day, he wrote.
Reddish wrote a similar letter to Best Buy on the issue of unlicensed sales.
In addition, Kevin Walters, spokesman for the Tennessee Department of Commerce and Insurance, said in an email the commission "also authorized a referral of the case to [the state Department of] Revenue to investigate questions of sales tax compliance."
Watson did not return requests for comment Tuesday.
Kelly Cortesi, spokeswoman for the Department of Revenue, said the department is "expressly prohibited from providing information about individual taxpayers per state law (see Tenn. Code Ann. Section 67-1-1702). Therefore, I cannot confirm nor deny the presence of an investigation, nor comment for your story."
Auto dealers don't have to register and pay sales tax on their inventories, but the buyers must do so in the county where they live. If they buy in another state, tax paid there would offset Tennessee sales tax so owners aren't double-taxed.
For the December report, the Times Free Press asked Watson if he had registered the GovDeals vehicles in Tennessee and paid sales tax. Watson didn't respond to that question, but he told the Motor Vehicle Commission he had paid tax on the vehicles when he bought them. The Florida titles show tax paid, but the D.C. titles don't.
In addition, the first in-state registration for seven of the 11 vehicles Watson sold in Tennessee between September and November were outside Bradley County, in Polk, Hamilton, Monroe, Blount and Shelby counties.
It's not known whether — or why — Watson might have registered and paid tax on the vehicles in those counties, as opposed to selling the cars to residents there. The revenue department confirmed the dates and counties of registration but said personal information, such as owners' names, is confidential.
Contact staff writer Judy Walton at walton @timesfreepress.com or 423-757-6416.
TENNESSEE MOTOR VEHICLE COMMISSION RULE
0960-01-.20: SALES OF USED MOTOR VEHICLES BY UNLICENSED INDIVIDUALS.
(1) Unless otherwise provided by T.C.A. Title 55, Chapter 17 et seq., and these regulations, an individual may sell or offer to sell up to five (5) used motor vehicles or recreational vehicles registered and titled in his/her name within a twelve (12) month period without a motor vehicle or recreational vehicle dealer’s license.
(2) Selling for or contracting with other unlicensed third parties for the sale of used vehicles titled in a third party’s name is strictly prohibited.
(3) If an individual sells or offers to sell more than five (5) vehicles within a twelve (12) month period, he/she shall be found in violation of this rule for engaging in the unlicensed sale of motor vehicles or recreational vehicles.
(4) “Individual,” as used in this section, includes, but is not limited to, any person or persons living together in a single household.
Authority: T.C.A. § 55-17-107, 55-17-109, 55-17-110
This story was updated April 24 at 11:10 p.m. with more information.