2017 DOCUMENTARY FEE: $172.15
 
The maximum allowable documentary fee for 2017 will be $172.15. This is an approximate 1.7% increase in the 12-month Consumer Price Index for All Urban Consumers issued by the U.S. Department of Labor. The "doc fee" is subject to Retailers' Occupation Tax as part of the gross receipts from the sale of a vehicle.
 
Pursuant to Section 11.1 of the Motor Vehicle Retail Installment Sales Act (815 ILCS 375/11.1), every retail installment contract under the Act shall contain or be accompanied by a notice containing the following information:
 
"DOCUMENTARY FEE. A DOCUMENTARY FEE IS NOT AN OFFICIAL FEE. A DOCUMENTARY FEE IS NOT REQUIRED BY LAW, BUT MAY BE CHARGED TO BUYERS FOR HANDLING DOCUMENTS AND PERFORMING SERVICES RELATED TO CLOSING OF A SALE. THE BASE DOCUMENTARY FEE BEGINNING JANUARY 1, 2008, WAS $150. THE MAXIMUM AMOUNT THAT MAY BE CHARGED FOR A DOCUMENTARY FEE IS THE BASE DOCUMENTARY FEE OF $150 WHICH SHALL BE SUBJECT TO AN ANNUAL RATE ADJUSTMENT EQUAL TO THE PERCENTAGE OF CHANGE IN THE BUREAU OF LABOR STATISTICS CONSUMER PRICE INDEX. THIS NOTICE IS REQUIRED BY LAW."
 
Please note that if your dealership is operating under a Consent Decree related to documentary fees, the Consent Decree may have requirements in addition to those set forth in the above law.
 
2017 DOCUMENTARY FEE: $172.15
      
Legal Reminder: Illinois Department of Revenue Offers Relief from Failure to File Penalty  
 The Illinois Automobile Dealers Association met with the Illinois Director of Revenue, Connie Beard, and members of her senior staff to discuss the issue of motor vehicle dealers who received large penalties for failure to file tax returns for tax-exempt motor vehicle transactions, despite the lack of an informational bulletin to dealers explaining the Department's new statutory penalty.  

Pursuant to Public Act 98-425, which took effect on August 16, 2013, the Department of Revenue began imposing a penalty of $100 per return for motor vehicle sales tax returns that were not filed within the statutory 20-day period for filing the returns (Forms ST-556 and ST-556 LSE).  When enacted, this statute imposed the $100 penalty on all late motor vehicle tax returns, regardless of whether the related transaction was subject to tax.  The statute was amended, effective August 10, 2015, to provide that the $100 penalty applies only to tax-exempt transactions.  Common examples of tax-exempt transactions include, but are not limited to, dealer trades, auction sales, and sales to schools, governmental bodies, religious organizations, or charities, and sales to certain out of state customers.  

 After meeting with IADA, the Department of Revenue has agreed to offer relief from the failure to file penalty.  Specifically, the Department of Revenue has agreed to: 
  • Abate all penalties for transactions conducted on or after August 16, 2013 and before August 10, 2015.  Dealers will not be required to file returns for transactions conducted during this period.
  • Abate all penalties for transactions conducted on or after August 10, 2015 and on or before November 10, 2016, provided, that dealers must file returns for these transactions no later than January 31, 2017.
  • All tax-exempt transactions conducted on or after November 11, 2016 are subject to the $100 penalty if the corresponding returns are not filed within the statutory 20-day deadline.  
Going forward, please make sure to timely file Form ST-556 or ST-556-LSE whenever you sell or lease a vehicle to a tax exempt customer.   Furthermore, be sure to audit your files for tax-exempt sales made since August 10, 2015 to make sure that any unfiled returns get submitted to the Department of Revenue no later than January 31, 2017.

You may file Forms ST-556 and ST-556 on CVR's website, click here, or on the Department of Revenue's website, click here.

The Department of Revenue's Informational Bulletin explaining the penalty abatement can be found at here. If you have any questions about this article, please contact IADA at 217-753-0220 or ldoll@illinoisdealers.com.
 

 
 

Buyers Guide Gets a Tune-Up

By Daniel J. Laudicina

After enough fits and starts to make a 1971 Ford Pinto with a bad timing belt look like a high performance vehicle by comparison, on November 18, 2016 the Federal Trade Commission published its Final Rule amending the Used Motor Vehicle Trade Regulation Rule ("Used Car Rule").

Way back in 2008 (yes, even before Barack Obama was sworn in as the 44th President of the United States), the FTC commenced a regulatory review of the Used Car Rule to determine its effectiveness and whether it should be amended. For more than 30 years, the Used Car Rule has required dealers to display a window sticker, called a "Buyers Guide", on used vehicles offered for sale. The Buyers Guide is designed to inform the consumer about warranty coverages, or lack thereof, on vehicles offered for sale. The Buyers Guide, however, has not been updated from its original version, and many believed changes could improve consumers' awareness and understanding of warranty coverage.

During its review of the Used Car Rule, the FTC received comments from a variety of interested parties on issues such as updating the list of covered systems and defects on the back of the Buyers Guide (to reflect manufacturing developments and parts that did not exist at the time the original Buyers Guide was drafted), disclosing non-dealer warranties offered by third parties (including manufacturers), and adding a statement to the Buyers Guide advising consumers about the availability of vehicle history reports like CARFAX (no wonder that adorable fox is always smiling in those commercials).

In December 2012 (just before President Obama's second inauguration; my how time flies), after review of the Rule and consideration of comments it received, the FTC issued a notice of proposed rulemaking to amend the Used Car Rule. The FTC proposed to include a statement on the Buyers Guide advising consumers about the availability of vehicle history reports and directing consumers to an FTC website for additional information about the reports. The proposed rule also would have changed how "As Is" sales are described on the Buyers Guide, and added a Spanish language statement to the Buyers Guide advising Spanish-speaking consumers to ask for a Spanish language version of the Buyers Guide.

The FTC eventually supplemented its original proposal with a second notice of proposed rulemaking in 2014. The supplemental proposal would have required dealers who had obtained vehicle history reports to indicate that they had done so on the Buyers Guide and would require dealers to provide a copy to a consumer who requested the report. In addition, the FTC proposed further amendments to the "As Is" statement, and requested comments on adding boxes to the Buyers Guides for dealers to disclose manufacturer and other third party warranties.

The Final Rule adopts the FTC's initial proposal regarding vehicle history reports. Instead of requiring dealers who have obtained vehicle history reports to disclose that they have done so (as proposed in the 2014 supplemental notice of proposed rulemaking), the Final Rule adds a statement to the Buyers Guide encouraging consumers to seek vehicle history information and directing consumers to an FTC website for more information. In addition, the Buyers Guide now includes a statement directing consumers to check for open safety recalls by visiting safecar.gov.

The FTC also revised the "As Is" statement, adopting the following language:

AS IS - NO DEALER WARRANTY

THE DEALER DOES NOT PROVIDE ANY WARRANTY FOR ANY REPARIS AFTER SALE

This change to the "As Is" language, as well as a change to add boxes to the front of the Buyers Guide where dealers can disclosure manufacturer and other non-dealer warranties, clarifies that the, though the dealer gives no warranties and is not liable for repairs when it sells a vehicle "As Is", the vehicle still may be covered by third party warranties that provide benefits to the consumer in the event of mechanical breakdowns.

The FTC also revised the "Implied Warranties Only" disclosure for jurisdictions that prohibit "As Is" sales, and amended the Buyers Guide to include the Spanish language notice advising Spanish-speakers to ask for a Spanish version of the Buyers Guide. The Final Rule also adds air bags and catalytic converters to the list of major defects that may occur in used vehicles listed on the back of the Buyers Guide.

The FTC also provided updated versions of the Buyers Guide in the Final Rule, which reflect the changes to the Used Car Rule. The Final Rule permits dealers to use their existing stock of the "old" version of the Buyers Guide until January 27, 2018, though they can begin using the new versions before that date. As of January 27, 2018, however, dealers must use the updated versions of the Buyers Guide that the FTC published in its Final Rule.

Though the process was a lengthy one, it is clear that the FTC took great care and consideration of many divergent views in updating the Used Car Rule. The new Buyers Guide should prove to be an improvement over the existing version from the consumer's perspective, as it more clearly identifies warranty coverage and provides additional resources (such as websites to check for recalls and learn about vehicle history reports) that will assist in shopping for used vehicles. And, in the long run (sorry about the pun), that serves both consumers and dealers.

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GRAMM-LEACH-BLILEY ACT  (Privacy and Safeguards Rule)

WHAT DEALERS NEED TO KNOW…..

This act has been created to ensure that automobile dealers protect the confidentiality of customer information. According to this act, dealers must adhere to the following policies.

             Insure the security and confidentiality of customer records and information.

             Protect against anticipated threats or hazards to the security or integrity of such records.

             Protect against unauthorized access or use of such records or information that could result in substantial harm or inconvenience to any customer.

What dealers need to do…….

According to the regulations that this act outlines, a dealer cannot disclose any nonpublic personal information regarding its customers unless the dealer has notified in writing that this information may be disclosed to a third party. The customer must also be informed by the dealership as to how to opt out of their information being disclosed.

Federal Trade Commission (FTC) Safeguard Rule requires that Dealerships:

             Designate a compliance officer

             Assess the risks in your dealership, both electronic and paper

             Develop a written procedure

             Conduct ongoing employee training regarding customer confidentiality

             Conduct independent audits (quarterly) to test confidentiality programs in place

The FTC can impose fines up to $16,000.00 per day and $11,000.00 per violation for failure to comply with required regulations. Legal costs associated with defending against such actions can be significant.

For help with complying with FTC regulations, please contact ComplyNet. www.complynet.com EJ Shelby 847-325-0504

 

FTC RED FLAGS RULE-

 

What dealers need to know………

The Red Flags Rule was adopted into law January 1, 2008 with enforcement to begin January 1st 2011.  The rule requires Financial Institutions, including automobile dealers, to create an Identity Theft Prevention Plan (ITPP) that carries reasonable policies and procedures to identify, detect and respond to Red Flags and the Plan must have features that require periodic updating.  The Rule applies to consumer and business installment loan accounts.  According to the regulations, a dealership must also identify sources of Red Flags. Examples of these would be alerts, notifications, suspicious activities on an account, and suspicious identifying documents to name a few.

 

What dealers need to do………

 

Federal Trade Commission (FTC) Red Flags Rule requires that Dealerships:

Designate a board of directors, including owners and senior management.

Perform Risk Assessments

Develop a written procedure (ITPP)

Conduct ongoing employee training

Meet annually to review effectiveness of program

Have a compliant Privacy and Safeguards program

Fines will range around $3,500 per incident and can include an additional $16,000 if Consumer Privacy and Safeguards were violated!!

Where dealers should seek help…….

For help with complying with the Red Flags Rule please contact ComplyNet. www.complynet.com EJ Shelby 847-325-0504


THE DODD-FRANK ACT-What dealers should know

“Dodd-Frank” amended the Fair Credit Reporting Act to require car dealers to provide the actual credit score used to help make the credit decision to consumers in an adverse action notice. Congress gave the Federal Trade Commission (FTC) more authority and a mandate to regulate dealers for unfair and deceptive acts and practices. This allows far closer scrutiny of menu sales as well as how the “deal” is penciled from sales to the tower!

The FTC will undoubtedly increase its regulation and enforcement of laws already in place. The biggest impact may be State Attorney Generals playing a larger role enforcing  federal consumer financial laws and rules issued by the Bureau of Consumer Financial Protection. Most Attorneys Generals have been aggressive in their pursuit of dealers. With these new enforcement laws, dealers have far more to be concerned with today, than they did yesterday!!

What dealers need to do

·         Implement an Adverse Action process

·         Write a paper flow plan on how this process will work

·         Audit to your plan at least four times per year

·         Make sure you dead deal procedures, written in your Privacy and Safeguard plan, are compliant with the new Dodd-Frank Act 

For help with complying with the Red Flags Rule please contact ComplyNet. www.complynet.com EJ Shelby 847-325-0504