4.2 Auction Firm License

Auction Firm License

An Illinois auctioneer who forms Prairie Hammer LLC and starts advertising as the LLC is no longer practicing only as a natural person. 225 ILCS 407/10-20 is the live statute titled Requirements for auction firm license; application. Section 10-15 and Section 10-15a are repealed (10-15 by P.A. 96-730, effective August 25, 2009; 10-15a by P.A. 101-345, effective August 9, 2019). If a commercial outline or an old flashcard still cites 10-15 as the firm-license section, discard it. The exam tests the current citation.

68 Ill. Adm. Code 1440.10 defines an auction firm as any corporation, partnership, or limited liability company that acts as an auctioneer and provides an auction service. That definition matches the 10-20 universe: corporation, limited liability company, or partnership. A sole proprietor operating in the individual's own licensed name is under 10-5, not 10-20. The moment the business is a corp, LLC, or partnership that acts as an auctioneer and provides an auction service, 10-20 fires.

The three 10-20 requirements

Any corporation, limited liability company, or partnership that desires an auction firm license shall:

1. Apply to the Department on forms provided by the Department, accompanied by the required fee.
2. Provide evidence to the Department that the auction firm has a properly licensed managing auctioneer.
3. Any requirement as defined by rule.

Item (3) is the statutory hook for Rule 1440.120(b). The General Assembly did not try to list every corporate paper in the Act; it sent those details to IDFPR's rules.

The current initial firm fee is $100 under 1440.170(b)(1). That is half the individual initial fee ($200 under 1440.170(a)(1)), which is an easy mix-up. Firm renewal is calculated at $125 per year (1440.170(b)(2)). A managing auctioneer change is $25 (1440.170(b)(5)). Fees under 10-50(a) are nonrefundable.

15-25: no firm license without a licensed managing auctioneer

225 ILCS 407/15-25 is titled Auction firm and does two things the exam will separate:

1. No corporation, limited liability company, or partnership shall be licensed without being managed by a licensed auctioneer.
2. The managing auctioneer of any auction firm shall be responsible for the actions of all licensed and unlicensed employees, agents, and representatives of said auction firm while the firm is conducting an auction or providing an auction service.

The first sentence is a licensing condition. IDFPR cannot issue, and the firm cannot hold, a firm credential with an empty managing-auctioneer chair. The second sentence is vicarious responsibility with a scope limiter: while the firm is conducting an auction or providing an auction service. It covers licensed and unlicensed people. A cashier who converts clerk-sheet cash, a ring assistant who misrepresents a lot, and a sponsored licensee who skips the written contract are all on the managing auctioneer's 15-25 ledger for that sale.

Section 15-15 (supervisory duties) is the companion business-practices rule: the auction firm and managing auctioneer shall supervise, manage, and control any sponsored licensee, agent, or employee while conducting an auction or providing an auction service, and a violation by that person is deemed a violation by the firm or managing auctioneer as well. Chapter 6 develops 15-15. For this section, remember that 15-25 is the firm-license management statute, not a repealed 10-15 leftover.

Rule 1440.10 defines managing auctioneer as any person licensed as an auctioneer who manages and supervises an auction firm and licensees sponsored by an auction firm or auctioneer. The managing auctioneer must therefore hold an individual auctioneer license. An unlicensed owner cannot occupy the chair by affidavit.

An individual license is not a firm license

This is the highest-yield operational trap in the chapter. 10-5 authorizes a person to be licensed as an auctioneer. It does not authorize that person to wrap the practice in a corporation, LLC, or partnership and skip 10-20. If you cry sales as "Jordan Lee, Auctioneer," 10-5 is the credential. If the ads, contracts, and checks say "Lee Auction Company, LLC," Illinois requires:

• the firm license under 10-20 / 1440.120(b); and
• a properly licensed managing auctioneer under 10-20(2) and 15-25; and
• whatever individual licenses the people who are actually auctioneering hold.

The LLC does not inherit Jordan's 10-5 license. Jordan's 10-5 license does not become a firm license because Jordan owns the LLC.

Rule 1440.120(b): the firm file

A person who desires to conduct auctions, provide an auction service, or practice auctioneering in the form of a partnership, corporation, or limited liability company shall apply for an auction firm license and shall include:

1. The applicant's name, address, and telephone number.
2. The applicant's Federal Employer Identification Number (FEIN) or tax identification number. The Division shall make the FEIN or tax ID available only to the Illinois Department of Revenue to determine a tax delinquency, or by subpoena. (Compare the individual SSN list in 1440.120(a)(2), which also includes HFS and ISAC. The firm FEIN list is narrower.)
3. A list of all officers, directors, and owners with percentage of ownership of the auction firm.
4. Articles of Incorporation or Organization, or other evidence of legal formation or authority to conduct business as approved by the Division.
5. Proof of a properly licensed managing auctioneer.
6. The fee under 1440.170.
7. All unlicensed officers shall submit affidavits of non-participation with the application.
8. Other fitness information the Division requires (personal history, criminal record, Illinois tax / student-loan / child-support delinquency, and similar facts).

The affidavit of non-participation is the item commercial outlines skip. An unlicensed officer — the CPA spouse who owns 40 percent, the silent investor on the board — must swear they will not participate in the licensed activity. If that officer then clerk-supervises the sale, takes buyer-premium checks, or holds out as the house auctioneer, two problems fire at once: the affidavit is false, and the officer is engaging in unlicensed practice under 10-1(a) / 20-5 / 20-100. The managing auctioneer does not wash that out by being licensed.

Audit window, three-year completion, and managing-auctioneer changes

1440.120(c) and (d) apply to all applicants, firm and individual. Information provided is subject to Division audit within 5 years from the date the Division received the application. Applicants have 3 years after the date of application to complete the process. If they do not, the application is denied, the fee is forfeited, and the applicant must reapply and meet the requirements in effect at the time of reapplication.

When the managing auctioneer leaves, 15-25 does not allow the firm to "run on the old license until renewal." The firm needs a licensed managing auctioneer as a condition of being licensed. The change application fee is $25 under 1440.170(b)(5). Operating the firm through an unlicensed interval is unlicensed firm activity, and 15-25 / 15-15 still attach responsibility for what the staff does at sales during that interval.

Illinois still does not impose a firm surety bond in 10-20. Do not invent one because other states bond auction companies. Do not treat the 1440.170(c) auction-school fee schedule as a firm-bond substitute.

Worked firm scenarios

Sole proprietor versus LLC. Riley holds an individual 10-5 license and cries sales as "Riley Ortiz, Auctioneer." That is an individual practice. Riley then files articles for Ortiz Auction Group, LLC, puts the LLC on the sale bills, and deposits hammer proceeds to the LLC. Illinois now requires a 10-20 firm license, a licensed managing auctioneer (Riley can occupy that chair if properly identified), the $100 initial firm fee, formation papers, ownership percentages, and affidavits from any unlicensed officers.

Unlicensed president. Midwest Barn Sales, Inc. names a licensed auctioneer as managing auctioneer but the unlicensed president runs clerking, advertising, and bidder registration. Rule 1440.120(b)(7) required that president's affidavit of non-participation. Running the sale is participation. The corporation is not "covered" because someone else holds the managing-auctioneer seat.

Stale citation. A study outline says "firm licenses are 225 ILCS 407/10-15." 10-15 is repealed. The live section is 10-20, with 15-25 as the management statute and 1440.120(b) as the application rule.

Change fee. The managing auctioneer of an already-licensed firm retires. The firm files the change and pays $25, not another $100 initial firm fee and not the $200 individual fee, unless a new individual license is also in play.