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2011 IADA OFFICERS
Chairman
Tim Mooney
Tim Mooney, Inc.
Tuscola
Vice Chairman
Jim Lombardi
Lombardi Chev Buick
Wilmington
Treasurer
Gary Knight
Carmack Car Capitol
Danville
Secretary
Mike Mangold
Mangold Ford
Eureka
President
Peter Sander
IADA
Springfield
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Your
IADA
Partner
Moving Vehicle Registration Into The Future
(click logo for more details)
Your
IADA
Partner
For Insurance Solutions
to Protect Your Dealership
(click logo for more details)
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May 23, 2011 Vol 2011, Issue 5
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IADA LEGISLATIVE RECEPTION BRINGS OUT A CROWD
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 The IADA Legislative Reception was held on Tuesday, May 10 and we were fortunate to have excellent weather for our annual legislative reception hosted by the IADA Board of Directors at IADA’s Office Building located adjacent to the Illinois State Capitol.
Over 250 legislators, staffs and industry friends were on hand to visit with legislators regarding economic, legislative and regulatory issues facing Illinois dealers. IADA Chairman Tim Mooney, Tuscola, encourages all dealer members to join us next year to help promote IADA’s Legislative Voice in Springfield!
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2011 SPRING SESSION WINDING DOWN
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With just a week remaining before the May 31st adjournment date, lawmakers still have many issues to tackle before going home before the summer.
The biggest issue is addressing the Illinois budget deficit crisis. Currently it is estimated that the state faces an $8 billion budget deficit. Governor Quinn is trying to persuade legislators to vote for his borrowing plan which would consist if issuing $8.75 billion in bonds which are backed by revenues from this year’s earlier income tax increase. The bonding plan would help pay bills the state owes to health-care providers, human service agencies, schools and a host of other past-due bills. To date, there is not enough support for this proposal.
Other issues that are currently being discussed is an expansion of gaming in Illinois – possibly awarding of casino licenses for the City of Chicago. Also, lawmakers are working on a worker’s compensation package, pension reform, a utility rate increase and approving a 2012 fiscal year budget. As you can see, lawmaker’s have their work cut out for them on all these major issues. We will update as the session progresses.
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NEW REDISTRICTING MAP UPDATE
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Every 10 years following the national census, Illinois is required to redraw its congressional and legislative boundaries to reflect population changes. The task before the Legislature is a serious endeavor, as the mapmaking process will help determine representation in the General Assembly for the next 10 years.
This is the first time in decades where one party (Democrats) control the entire re-districting process. The ruling Democrats are in majority of both the Illinois House and Senate Chambers and the Governor’s office.
The Democratic proposed new Senate district boundaries, places many Republicans against each other in an attempt to keep the Republican Party out of power for another decade. With this new map – Democrats will likely strengthen their control of both legislative chambers.
Democrats currently hold a 35-24 majority over Republicans in the Senate and a 64-54 upper hand in the House Chamber. The proposed map will most likely strengthen the Democratic control for the next 10 years.
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NADA EXPLAINS VALUE OF DEALER-ASSISTED FINANCING AT FTC ROUNDTABLE
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NADA representatives highlighted the importance of dealer-assisted financing at an all-day roundtable that the Federal Trade Commission (FTC) conducted in Detroit to examine consumer protection issues related to five discrete areas of vehicle sales and leasing.
The roundtable and several others that the FTC is planning are designed to assist the agency in determining how, if at all, it should exercise the authority it will soon assume under the Dodd-Frank Wall Street Reform and Consumer Protection Act to issue rules prohibiting unfair and deceptive acts or practices (UDAP) by motor vehicle dealers under the procedures contained in the Administrative Procedures Act. (The FTC currently can only issue UDAP rules under the more robust procedures contained in the Magnusson Moss Federal Warranty Act.) NADA was represented on each of the panels by dealer, ATAE, and attorney representatives that specialize in each of the subject matter areas.
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LEGAL DEFENSE FUND WORKING FOR YOU
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On March 27th, the IADA Executive Committee voted to approve financial assistance from the Legal Defense Fund for the filing of an Amicus Curiae Brief in the case of CrossroadsFord Truck Sales, Inc. v. Sterling Truck Corporation, et. al. The Chicago Automobile Trade Association has also agreed to participate in the filing of this brief. At issue in this case is the ability of dealers to bring a suit for damages resulting from a manufacturer breach of the Motor Vehicle Franchise Act in circuit court.
In October, 2009, Crossroads protested the termination of their Sterling truck franchise after Sterling discontinued the Sterling Truck line. The dealer alleged multiple violations of the Franchise Act and elected to sue for damages in Sangamon County Circuit Court rather than before the Motor Vehicle Review Board. The Circuit Court dismissed 12 of the 14 counts, ruling that it did not have subject matter jurisdiction over the claims and that they had to be brought before the Motor Vehicle Review Board. Last November, the Illinois Appellate Court upheld the Circuit Court decision, holding that all disputes alleging violations of the Motor Vehicle Franchise Act must be heard before the Motor Vehicle Review Board. The Illinois Supreme Court agreed to hear Crossroads’ appeal.
At issue in this dispute is a provision in Section 13 of the Motor Vehicle Franchise Act that states that:
[a]ny … motor vehicle dealer who suffers any loss of money or property, real or personal, as a result of the use or employment by a manufacturer … of an unfair method of competition or an unfair or deceptive act or practice declared unlawful by this Act, or any action in violation of this Act, may bring an action for damages and equitable relief, including injunctive relief, in the circuit court of the county in which the objecting franchisee has its principal place of business or, if the parties have so agreed, in arbitration.
Section 13 explicitly permits a dealer to file an action for damages arising from any violation of the Motor Vehicle Franchise Act in circuit court. If the Supreme Court upholds the Appellate Court’s decision, Section 13 of the Motor Vehicle Franchise Act will essentially be nullified and dealers will lose the ability to choose which forum will hear their disputes. Such a decision would be directly opposed to what the legislature intended when it enacted Section 13 of the Motor Vehicle Franchise Act.
The Amicus Brief was filed with the Supreme Court on May 4, 2011. The Supreme Court granted leave to file the brief and will consider it when it hears the case. IADA will keep you posted as this case progresses.
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IADA WEBSITE www.ILLINOISDEALERS.com HAS NEW LOOK
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Visit our re-designed www.IllinoisDealers.com website for all your online membership needs. Log on to the new member only area using your unique “dealer ID” – the IADA Membership ID printed on your annual membership statement. Please call the IADA office if you need assistance.
The new design provides:
• A simplified new look making navigation much easier
• New templates allowing much quicker downloads for members
• A member login feature extended to employees of dealerships
• Current legislative issues
• Member directory (dealership information may be updated online)
• Frequent dealer industry questions
• IADA member services
• Dealer members in the news
• The easiest way to contact your elected officials
• Important industry links
• Easy way to contact IADA staff
• And many more functions
www.IllinoisDealers.com is an informational community site for the automotive industry of Illinois. |
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ILLINOIS DEPARTMENT OF REVENUE - TRADE-IN CREDITS
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IADA has become aware that the Illinois Department of Revenue (IDOR) has assessed sales tax liability on dealers who have used third-party trade-in credits and advance trade-in credits in the same transaction. If a customer leases a vehicle from a dealer, the lessor (either the dealer or the manufacturer) is considered the user of the vehicle and owes Illinois sales tax on the full selling price of the vehicle. If a customer wants to trade in a vehicle that he owns and lease a vehicle from a dealer, the customer can use a third party trade in agreement (IADA Form 103) to assign his trade-in credit to the lessor, which will reduce the tax due from the lessor. If a customer wants to lease a vehicle from a dealer and the customer does not have a vehicle to trade in, the dealer can use an advance trade-in credit (IADA Form 104) that the dealer previously earned when it purchased off lease vehicles from the manufacturer to reduce the tax due on the lease transaction. However, IDOR does not allow a dealer to use a third party trade-in credit and an advance trade-in credit in the same transaction.
The administrative rule governing motor vehicle trade-ins (http://www.ilga.gov/commission/jcar/admincode/086/086001300D04550R.html) states: “A prospective lessee or third party trade-in authorization may not be used in conjunction with an advance trade transaction”. According to IDOR’s position, this statement means 2 things:
(1) A third party trade-in authorization must be applied at the same time and in the same transaction in which it is traded in; and
(2) A third party trade in authorization and an advance trade-in credit cannot be used in the same transaction.
Example #1
Customer owns a vehicle worth $4,000 and wants to lease a $50,000 Vehicle from Illinois Motors. Customer can assign his $4,000 trade in credit to Illinois Motors (lessor).
$50,000 (Price Illinois Motors paid for the vehicle)
-$4,000 (Trade in credit that Customer assigned to Illinois Motors)
$46,000 (Taxable amount)
Example #2
Customer does not own a vehicle and wants to lease a $50,000 vehicle from Illinois Motors. Illinois Motors has an advance trade-in credit worth $12,000 that it earned when Illinois Motors purchased an off-lease vehicle from its manufacturer.
$50,000 (Price Illinois Motors paid for the vehicle)
-$12,000 (Advance Trade-In Credit)
$38,000 (Taxable amount)
Example #3
Customer owns a vehicle worth $4,000 and wants to lease a $50,000 vehicle from Illinois Motors. Illinois Motors has an advance trade-in credit worth $12,000 from when Illinois Motors purchased an off-lease vehicle from its manufacturer. Customer can assign his $4,000 trade in credit to Illinois Motors (lessor) or Illinois Motors can use its $12,000 advance trade-in credit, but it cannot use them both in the same transaction.
$50,000 (Price Illinois Motors paid for the vehicle)
-$4,000 (Trade in credit that Customer assigned to Illinois Motors)
-$12,000 (Advance Trade-In Credit)
IDOR DOES NOT ALLOW YOU TO COMBINE
As leasing activity seems to be on the rise, IADA recommends that you review your usage of trade-in credits to make sure that you comply with IDOR’s interpretation of the trade-in credit rule. If you have any questions about this bulletin, please contact IADA legal at (217) 753-0220.
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DEALER TAX FORUM - JUNE 15, 2011
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IADA is finalizing plans to hold a Vehicle Dealer Tax Forum with the Illinois Department of Revenue in Springfield on June 15th. Speakers will include members of the Legal and Audit Divisions of the Department of Revenue. Topics of discussion are expected to include the use of trade-in credits, taxation of goodwill repairs, tax-exempt sales, and more. This forum should provide a valuable opportunity to get feedback from the Department of Revenue on a host of tax questions. IADA will provide more details.
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IADA MANAGEMENT LEARNING CENTER
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IADA Announces the Immediate Availability of Over 125 Discounted Online Management Learning Resources. Through our partnership with DealersEdge, IADA now has available for you and your management team, online management learning programs featuring some of the best-known and well-respected experts in the business. Through this program you have access to both Live and Recorded Webinar training that is both timely and specific to your needs. This online and on-demand system offers individual programs at a 50% IADA discount – but also offers a yearly subscription plan that opens up all these resources to your team for one low annual fee of $800 (Reg. $1,000).
The Season Ticket subscription plan also provides up to 10 Log On accounts so that the resources can be immediately shared with your entire management team. IADA is pleased to bring this high level of learning opportunity to our members and hopes that you will take immediate advantage of all that is offered.
To Browse the Programming Available log on to the www.IllinoisDealers.com website or click on these direct links:
* Programming Available
* IADA Season Ticket
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NEW ILLINOIS EPA RULE FOR SOLVENT CLEANING OPERATIONS FOR CHICAGO AND METRO EAST AREAS
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The Illinois EPA has revised its regulation covering Industrial Solvent Cleaning Operations (35 Illinois Administrative Code 218.187 and 219.187) for the Chicago and Metro East areas. The rule is intended to identify and regulate air emissions for cleaning operation sources that emit a total of 6.8 kg/day (15 lbs/day) or more of volatile organic materials (VOM). If you are located in one of the Illinois EPA identified counties or townships, then you are required to determine the status of your applicable cleaning operations and submit to the IL EPA Bureau of Air a certification of compliance or a declaration that the source is exempt from the requirements of the regulation by April 1, 2011. Please be aware that solvent parts washer and paint gun cleaning operations are covered by this rule. Click here for rest of article.
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OUR IADA PARTNER - ZURICH
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Zurich makes insuring your business easy. For more than 80 years, they’ve been specializing in providing commercial property and liability insurance for businesses that sell or service autos, trucks and motorcycles.
They offer a wide assortment of products including commercial property, general liability, garage liability, commercial and personal umbrella, workers' compensation, life insurance, finance & insurance products, and more. They're your one-stop-shop, offering you the convenience of working with one organization for your insurance needs. You can also benefit from their risk engineering consulting services tailored to your business exposures and a major loss team that can respond within 48 hours of a disaster - a team with the experience and authority to settle catastrophic claims quickly.
Click here for to view their monthly Loss Prevention Bulletin – this month, Fire Prevention: How to keep yourself in business.
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IADA HOLIDAY
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IADA will be closed Monday, May 30, 2011 in observance of Memorial Day and will return to regular business hours on Tuesday, May 31, 2011.
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