Outsmart Identity Thieves Page 10
Are Dealers Excluded from the CFPB? Page 6
DALLAS, TEXAS Permit No. 2079
PAID
PRSRT Standard U.S. Postage
Regulations
AND MORE REGULATIONS When Congress passes a bill and the president signs it into law, that is just part of the story, and the devil is almost always in the details. The de-
tails come in the rules and regulations that federal agencies are required to develop to implement the laws. In other words, the federal agencies take the legislation, interpret it and write rules designed to blend the requirements of the new law into existing rules and to advise the affected entities of the actions they are to take to comply with the new law. In some instances, they have a good deal of latitude in interpreting a law, so required implementation action may not always agree with an entity’s early understandings of the law and what is to be expected of them. Be that as it may, the rules are written and the affected entities attempt to comply. There is always a time lapse between when a law is written and when the rules become effective. Attempts are generally made to develop the rules and make them available for public input in a timely fashion. Given a time frame for pubic input and consideration of the comments received and possible rules revisions based upon those comments, it sometimes takes months or even years after a bill becomes law before compliance is required. Generally, the more complicated the law, the longer the time before compliance is required. For instance, compliance with the rules written for the “Financial Services Regulatory Relief Act of 2006” has been set as Jan. 1, 2011. That’s when several new forms, including the privacy notice (from the Gramm-Leach-Bliley Act) and the risk-based pricing disclosure notices (from the Fair and Accurate Credit Transactions Act) are set to become mandatory. Model forms have been developed and adopted by the agencies the use of which is not mandatory, but when used in their businesses, provide a “safe harbor” for dealerships. These new forms are in a tabular format (rather than paragraphs of text) divided into questions on the left-hand side of the page followed by answers on the righthand side, and use supposedly consumerfriendly terminology. These changes reflect a conscious decision on the part of the financial services regulatory agencies to adopt a disclosure style intended to simplify consumer disclosures. Unfortunately for dealerships, this sim-
ADR STAFF
plification means the disclosures are being made for the benefit of the consumer receiving them, not the dealership that has to use and explain them to customers. Dealerships will face significant operational challenges in implementing the new forms. These challenges include adapting to the new style of disclosures, customizing them to their needs, timing the switchover to the new forms, and maintaining their regulatory safe harbor. The use of this new form style will also involve the risk-based pricing disclosure that comes from the Fair and Accurate Credit Transactions (FACT) Act and is also effective Jan. 1, 2011. This disclosure must be given when lenders use consumer reports in connection with extensions of credit where the interest rate is materially less favorable. Automotive Dealer Resource (ADR) staff is working to develop the model privacy form for use by dealerships that will preserve the safe harbor format. We will keep you posted on our progress. CONSUMER FINANCE PROTECTION BUREAU
Now comes the recently enacted 2,000plus-page law to further regulate financial institutions and, although most dealerships are excluded from regulation by the new Consumer Finance Protection Bureau (Buy Here-Pay Here dealers are not excluded), the Federal Trade Commission (FTC) which writes rules for all dealers has been given extended powers under this law. Bearing in mind the president specifically identified dealerships as significant contributors to consumer misery in the financing of motor vehicles, it will be interesting to see what comes out of the FTC offices. Financial transactions falling under the agency's jurisdiction would include mortgages, credit cards, student loans, auto loans, payday loans and more. The devil will be in the details on this law, too, as the various agencies attempt to write the thousands of pages of rules required before the law can be implemented. Although Congress established specific time frames for implementation, and authorized an additional 800 employees to get the job done, it’s difficult to believe rules and regulations will be developed to require compliance in less than three years; it’s likely to take much longer. We shall see.
INSIDE
MAGAZINECONTENTS 3 4 6 8 10 12 15 16 17
Regulations and More Regulations Calendar of Events Are Dealers Excluded from the CFPB? Scholarship Recipients Outsmart Identity Thieves IRS Taxpayer Advocate Service Updates Employee Tax Credit - Form W-11 New & Renewing Members Membership Application
CERTIFIED MASTER DEALERM PROGRAM: Dealers who demonstrate commitment and support the principles and ethical business standards of the CMDG designation complete a fourday seminar that addresses Business Management, Merchandising, Financial Management, Human Resources, and Business Planning. Northwood University provides the instructor and awards 4 Continuing Education units for this course.
NEXT CLASS OCTOBER 28-30, 2010 VISIT NIADA.COM FOR MORE INFOMATION
ADVERTISERSINDEX ADESA ........................................................................7 AutoTrader.com .......................................... Back Cover Cars.com ............................................Inside Front Cover Friendly Finance ........................................................13 Greater Kalamazoo Auto Auction ................................9 Lakeside Insurance Agency ..........................................6 Manheim Advantage ............................................10,11 SmartAuction................................................................5 Western General / Protective ............ Inside Back Cover NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION WWW.NIADA.COM • WWW.NIADA.TV NIADA HEADQUARTERS: 2521 BROWN BLVD. • ARLINGTON, TX 76006-5203 PHONE (817) 640-3838 FOR ADVERTISING INFORMATION CONTACT: TROY GRAFF (800) 682-3837 OR TROY@NIADA.COM. THE DRIVELINE IS A PUBLICATION OF THE MICHIGAN INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION INC., BUT IS ALSO MAILED TO NON-MEMBER DEALERS IN MICHIGAN IN AN EFFORT TO ENCOURAGE THEM TO JOIN AND SUPPORT OUR EFFORTS TO IMPROVE THE PROFIT POTENTIAL FOR THE INDUSTRY. THE DRIVELINE IS PUBLISHED QUARTERLY BY AUTOMOTIVE DEALERS RESOURCE OF MICHIGAN, 55 E LONG LAKE RD. PMB 233, TROY, MI AND THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION SERVICES CORPORATION, 2521 BROWN BLVD., ARLINGTON, TX 76006. PERIODICAL POSTAGE IS PAID AT ARLINGTON TX, AND AT ADDITIONAL OFFICES. THE STATEMENTS AND OPINIONS EXPRESSED HEREIN ARE THOSE OF THE INDIVIDUAL AUTHORS AND DO NOT NECESSARILY REPRESENT THE VIEWS OF THE MICHIGAN INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION INC., AUTOMOTIVE DEALERS RESOURCE OF MICHIGAN, OR THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION. LIKEWISE, THE APPEARANCE OF ADVERTISERS, OR THEIR IDENTIFICATION AS MEMBERS OF THE MICHIGAN OR NATIONAL ASSOCIATIONS DOES NOT CONSTITUTE AN ENDORSEMENT OF THE PRODUCTS OR SERVICES FEATURED. FOR 28 YEARS, WE HAVE WORKED TO REPRESENT THE INDEPENDENT AUTOMOBILE DEALERS IN MICHIGAN. WE NEED YOUR SUPPORT.
Publisher/Editor At Large: Nancy R. Chapman FRONT COVER BY Mike Morgan MGR./SALES: Troy Graff • troy@niada.com NIADA EDITOR: Mike Harbour • mharbour@niada.com ART/PRODUCTION MGR.: Christy Haynes • christy@niada.com PRINTING: Nieman Printing
For information on how to become a member please contact Nancy Chapman at nchapman@miada.org 55 E. Long Lake Road • PMB 233 Troy, Michigan 48085 Phone: 248-828-7010 Web Site: www.miada.org
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DRIVELINE
BOARD OF DIRECTORS PRESIDENT Ed Ophoff Ophoff Motor Sales 2921 S. Division Wyoming, MI 49548 ph: 616-452-7761 fax: 616-452-3530 edwoph@aol.com
CHAIRMAN OF THE BOARD Art Douglas Jim Douglas Auto Sales 1153 Baldwin Rd. Pontiac, MI 48340 ph: 248-332-8326 fax: 248-332-1323 art@jimdouglasautosales.com
VICE PRESIDENT
Nigel Fox Sovereign Auto Purchasing 730 N Main Flushing, MI 48433 ph: 810-487-2020 fax: 810-487-2022 nkfox@aol.com
Dennis Craig Instant Car Credit P.O. Box 146 Acme, MI 49610 ph: 231-938-2627 fax: 231-938-0399 iccinc@charter.net
Tony LoBretto Alamo Valley Auto Sales 6100 West D Avenue Kalamazoo, MI 49009; ph: 269-344-8250 fax: 269-344-8231 alamovalley@earthlink.net
Leon Fransisco Fransisco Automotive Enterprises 1835 E. Jolly Road Lansing, MI 48910 ph: 517-272-5000 fax: 517-887-7268 leon@frognet.net
Rick Rynberg Rynberg’s Car Company 3880 Holton Rd. Muskegon, MI 49445 ph: 231-744-1441 fax: 231-744-6813
Chris Connelly Connelly Car Company 7556 North US-27 St Johns, MI 48879, ph: 989-224-0068 fax: 989-224-1898 hubcapsccc@voyager.net
Debbie Richards Ellis Richards Motors 24900 Gratiot Eastpointe, MI 48021 ph: 586-778-0606 fax: 586-778-0215 lilellis@ameritech.net.
Jerry Drouillard Autohaus 4411 Delemere, Royal Oak, MI 48073 48-549-3636 fax: 248-549-7805, gdro999@hotmail.com
TREASURER Mike Kirila ADESA Lansing 6956 Lansing Rd. Dimondale, MI 48821 ph: 517-322-2444 fax: 517-646-9160 Michael.Kirila@adesa.com
SECRETARY Fred Wagner Centerline Auto Financing 25637 Van Dyke, Centerline MI 48015 ph: 586-755-3755 wagnerfw48@yahoo.com
DIRECTORS: Ray Campise Certified Motors 23509 Little Mack Ave. St. Clair Shores, MI 48080 ph: 586.775.7000 fax: 586.775.7003 sales.cmotors@gmail.com
Mike Tokie Jack’s Auto Service PO Box 52 Grawn, MI 49637 ph: 231-218-1978 fax: 231-947-7438, jacksautoservice@gmail.com
Tom Wright Greater Kalamazoo Auto Auction P.O. Box 697 Schoolcraft, MI 49087 ph: 800-536-2047 fax: 269-679-4542 twright@kalamazooaa.com
Robert VanCoillie Van’s Motor Sales, Inc. 1507 Garfield Rd. Traverse City, MI 49686, ph: 231-995-0614 fax: 231-995-0613 vansmotors@bignetnorth.net
Jetre Ormsbee Ormsbee Implement Co. Inc. 241 M-68 Hwy East, Afton, MI 49705, ph: 231-238-9928 fax: 231-238-9938
Dennis Ptak D & W Distribution 3240 Palm Aire Rochester Hills, MI 48309 ph: 248-840-7617 email: daptak@comcast.com
Jeffrey Braatz Paradise Motors Inc. 8212 W. Saginaw Hwy. Lansing, MI 48917 ph: 517-627-3900 fax:517-887-3920 jeffbraatz@yahoo.com
EXECUTIVE DIRECTOR: Nancy R. Chapman ADR of Michigan 55 E. Long Lake Rd. PMB 233 Troy, MI 48085 ph: 248-828-7011 fax: 248-828-7012 nancy.chapman@buyadr.com
MIADA
CALENDAR OF EVENTS
METRO IADA MEETING: TUESDAY, OCTOBER 12, 7 PM, AMERICAN POLISH CULTURAL CENTER, 2975 E. MAPLE RD., TROY (WWW.AMERICANPOLISHCENTER.COM)
MID MICHIGAN IADA MEETING: CALL LEON FRANSISCO AT 517-272-5000 FOR TIME AND LOCATION.
NORTHERN MICHIGAN IADA MEETING: CALL DENNIS CRAIG AT 231-938-2627 FOR TIME AND LOCATION.
WEST MICHIGAN IADA MEETING: MONDAY, OCTOBER 18, 6:30 PM, BRANN’S STEAKHOUSE, GRAND RAPIDS. **ALL EVENTS ARE LISTED ONLINE AT: WWW.MIADA.ORG
CHECK WITH BOND SOURCE INSURANCE AGENCY
FO R
YO U R
BO N DS
• QUICK TURNAROUND SERVICE WITHIN MICHIGAN • EASY ONE PAGE APPLICATION • NO FINANCIAL STATEMENTS REQUIRED IN MOST CASES • CHECKS AND CREDIT CARDS ACCEPTED • LOST TITLE BOND SERVICE • HIGH RISK BONDING SOURCES AVAILABLE
D E A L E R B O N D R AT E S
MI MVD $ 10 , 0 0 0 B O N D : M I A DA M E M B E R : $ 10 0 / 1 Y R ; $250/3 YR (FOR QUALIFYING DEALERS)
FOR INFORMATION ON THESE AND OTHER BONDS:
MISSION STATEMENT The Michigan Independent Automobile Dealers Association is committed to promoting growth and preserving the vitality and integrity of the independent motor vehicleindustry through education and legislation as advocates for consumers and dealers.
Apply over the phone at: 888-855-0100 * fax: 888-855-7111 or email: nchapman@aec-mgmt.com
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ARE DEALERS EXCLUDED FROM CONSUMER FINANCE PROTECTION BUREAU REGULATION? Enactment of the 2000-plus-page Dodd-Frank Act created the Consumer Finance Protection Bureau (CFPB), a new federal bureau charged with regulating financial institutions, including some car dealers. The bill includes a section (Section 1029) entitled “Exclusion for Auto Dealers.” This exclusion came about as a result of hard fought campaigning on the part of dealer association lobbyists and individual dealers all across the country. Just which dealers are excluded from CFPB regulation, at this point, is not quiet clear, and that clarification likely won’t be known until we see the new regulations from both the Federal Trade Commission (FTC) and the CFPB. The FTC, which writes rules for all dealers, has been given extended powers under this law. Bearing in mind the president specifically identified dealerships as significant contributors to consumer misery in the financing of motor vehicles, and at one point insisted dealers be included in the CFPB’s extensive regulations that will apply to most financial institutions, it will be interesting to see what comes out of the FTC offices. The exclusion part of Section 1029 reads:
SEC. 1029. EXCLUSION FOR AUTO DEALERS. (a) SALE, SERVICING, AND LEASING OF MOTOR VEHICLES EXCLUDED.—Except as permitted in subsection (b), the Bureau may not exercise any rulemaking, supervisory, enforcement or any other authority, including any authority to order assessments, over a motor vehicle dealer that is predominantly engaged in the sale and servicing of motor vehicles, the leasing and servicing of motor vehicles, or both. (b) CERTAIN FUNCTIONS EXCEPTED.—Subsection (a) shall not apply to any person, to the extent that such person— (1) provides consumers with any services related to residential or commercial mortgages or self-financing transactions involving real property; (2) operates a line of business— (A) that involves the extension of retail credit or retail leases involving motor vehicles; and (B) in which— (i) the extension of retail credit or retail leases are provided directly to consumers; and
ADR Staff (ii) the contract governing such extension of retail credit or retail leases is not routinely assigned to an unaffiliated third party finance or leasing source; or (3) offers or provides a consumer financial product or service not involving or related to the sale, financing, leasing, rental, repair, refurbishment, maintenance, or other servicing of motor vehicles, motor vehicle parts, or any related or ancillary product or service. (c) PRESERVATION OF AUTHORITIES OF OTHER AGENCIES.—Except as provided in subsections (b) and (d), nothing in this title, including subtitle F, shall be construed as modifying, limiting, or superseding the operation of any provision of Federal law, or otherwise affecting the authority of the Board of Governors, the Federal Trade Commission, or any other Federal agency, with respect to a person described in subsection (a). (d) FEDERAL TRADE COMMISSION AUTHORITY.— Notwithstanding section 18 of the Federal Trade Commission Act, the Federal Trade Commission is authorized to prescribe rules under sections 5 and 18(a)(1)(B) of the Federal Trade Commission Act. in accordance with section 553 of title 5, United States Code, with respect to a person described in subsection (a). (e) COORDINATION WITH OFFICE OF SERVICE MEMBER AFFAIRS.— The Board of Governors and the Federal Trade Commission shall coordinate with the Office of Service Member Affairs, to ensure that— (1) service members and their families are educated and empowered to make better informed decisions regarding consumer financial products and services offered by motor vehicle dealers, with a focus on motor vehicle dealers in the proximity of military installations; and (2) complaints by service members and their families concerning such motor vehicle dealers are effectively monitored and responded to, and where appropriate, enforcement action is pursued by the authorized agencies. (f) DEFINITIONS.— For purposes of this section, the following definitions shall apply: (1) MOTOR VEHICLE.—The term “motor vehicle” means— (A) any self-propelled vehicle designed for transporting persons or property on a street, highway, or other road; C O N T I N U E D O N PA G E 9
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MIADA SCHOLARSHIP AWARD RECIPIENTS 2010 RAY KETELHUT MEMORIAL MIADA SCHOLARSHIP AWARD
2010 MIADA/GREATER KALAMAZOO AUTO AUCTION SCHOLARSHIP AWARD
Nicholas James Castanos is the recipient of this year’s Ray Ketelhut Memorial MIADA Scholarship award of $500. Nicholas graduated from Grand Blanc High School with a 3.92 GPA. During his junior year, he maintained a perfect attendance record. Nicholas was a 20082010 member of the National Honor Society. He also earned the Academic Excellence Award (GPA of 3.75 or higher) in eight consecutive semesters between 2007 and 2010.
The 2010 MIADA/Greater Kalamazoo Auto Auction Scholarship of $500 is awarded to Kristie Koppinger. Kristie graduated from Port Huron Northern High School with a 3.86 GPA and ranked 40th in her class of 359. She received awards for a cumulative GPA of above 3.5 for three consecutive years, during which her curriculum included five semesters of French and several A.P. classes. Kristie also was a member of the Peer Listening Program. Volleyball was Kristie’s sport of choice throughout high school. She attended Central Michigan University’s Volleyball Team Camp and volunteered at summer volleyball camp. Throughout high school, Kristie volunteered in various church activities. She helped raise awareness for the Child Abuse and Neglect Council and for World Vision (an organization that helps feed starving children around the world). Kristie will attend Spring Arbor University in the fall and plans on majoring in either pre-med or biology. She hopes to become an orthopedic surgeon.
Nicholas participated in varsity baseball and soccer. In 2009, he was awarded the Big 9 Athletic Conference All Academic Award for baseball and in 2010, he won the KLAA Outstanding Academic Achievement Award for baseball. Nicholas received the KLAA West District Champion, All-District and AllState Academic Awards for his efforts in soccer. Northwood University will welcome Nicholas in the fall where he’ll work toward a major in accounting and minor in finance.
s n o i t a l u t a r Cong
TO OUR 2010 SCHOLARSHIP RECIPIENTS. WE WISH THEM CONTINUED SUCCESS.
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C O N T I N U E D F R O M PA G E 6 (B) recreational boats and marine equipment; (C) motorcycles; (D) motor homes, recreational vehicle trailers, and slide-in campers, as those terms are defined in sections 571.3 and 575.103 (d) of title 49, Code of Federal Regulations, or any successor thereto; and (E) other vehicles that are titled and sold through dealers. (2) MOTOR VEHICLE DEALER.— The term “motor vehicle dealer” means any person or resident in the United States, or any territory of the United States, who— (A) is licensed by a State, a territory of the United States, or the District of Columbia to engage in the sale of motor vehicles; and (B) takes title to, holds an ownership in, or takes physical custody of motor vehicles.
SEC. 1029A. EFFECTIVE DATE. This subtitle shall become effective on the designated transfer date, except that sections 1022, 1024, and 1025(e) shall become effective on the date of enactment of this Act. The really important part of this exclusion is written in a negative connotation and references sections of other laws, which makes it difficult to fully understand and gives the agencies’ attorneys a lot of wiggle room for interpretation as rules are developed. Of course, it’s the rules implementing this law that will have the greatest impact, as the various agencies attempt to write the thousands of pages of the 250 rules required for implementation. Although Congress established specific time frames for implementation, and authorized an additional 800 employees to get the job done, it’s difficult to believe the bureau can be established, employees transferred from other agencies as re-
quired, 800 new employees hired, rules and regulations developed for compliance, businesses advised of their responsibilities, and their employees trained to follow the rules, in less than three years. It’s likely to take much longer, but we shall see. The powers under these consumer laws will be transferred to the bureau within six to 18 months after enactment, as determined by the Secretary of the Treasury in consultation with other federal agency heads. The act refers to this date as the “designated transfer date.” The phrase “sale and servicing of motor vehicles, the leasing and servicing of motor vehicles” in paragraph (a) gives some dealers a bit of heartburn. Depending upon how the regulations are written and how the words “sale and servicing” are interpreted, could mean dealers who don’t have a “service” department would still be entirely under the more strict rules of the new bureau.
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Outsmart Identity Thieves (THEFOLLOWINGTIPSONPREVENTING IDENTITYTHEFTARESUPPLIEDCOURTESY OFU.S.BANK) The numbers are startling when it comes to identity theft. The Federal Trade Commission (FTC) says identity theft is its number one source of consumer complaints. It's also the fastest growing crime in America, affecting up to nine million Americans each year
and costing consumers billions of dollars. What's more, it takes the average identity theft victim about 175 hours and $1,000 to repair the damage caused by the crime.
Identity thieves access personal information and use it to commit fraud. They open illicit accounts, obtain credit, steal funds, make purchases, rent apartments or even charge medical procedures to someone's insurance plan. While awareness of
TO PROTECT YOURSELF AND YOUR FAMILY, IT HELPS TO BE AWARE OF
THESE MOST COMMON SCAMS:
this crime is growing, identity thieves are unfortunately very crafty when it comes to figuring out new ways to trick unsuspecting victims. Some now even steal children's Social Security numbers, ruining their credit long before they've opened a single account. To protect yourself and your family, it helps to be aware of these most common scams: Phishing: When you receive an email, supposedly from a trusted source like a government agency or your bank asking to supply or confirm account information, log in or user IDs and/or passwords, do not respond. Legitimate companies or organizations never ask you to verify sensitive information by e-mail (or over the phone). When in doubt, contact the organization yourself. And never click on the link provided within the e-mail – it could take you to a copycat website capable of infecting your computer. Smishing (for "Short Message Service"): Like phishing, swishing asks for confidential account information, but it uses text messages sent to your cell phone. Vishing (voice phishing): Beware of automated voice messages that direct you to call your bank or credit card company. Under the pretext of clearing up a problem (like theft), you'll be asked to share personal or account information. Keep a list of company toll-free numbers handy so you can call them directly without fearing you've been given bogus information. You may also want to program your banks' and credit card issuers' phone numbers – but not account numbers – into your cell phone so you have them on record. Pharming: Computer hackers use pharming to redirect you from a legitimate 10 DRIVELINE
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WHITE HOUSE REFORM REQUEST website to an impostor site to harvest (or farm) personal data you've been asked to provide. Social networking sites such as Facebook and Twitter are increasingly being targeted. Skimming: Identity thieves use an altered ATM slot and cameras to record account information with skimming. This also refers to dishonest store or restaurant employees use a portable card reader to skim credit or debit card information. Illicit: software you unknowingly download when you open an e-mail attachment, click on a pop-up window or download a corrupted song or game is called spyware. This software can record your keystrokes to obtain account information or ferret out confidential information on your computer. Traditional Theft: Don't forget goodold-fashioned pick-pocketing, mail theft and rooting through your trash.
In June, NIADA sent a letter (Federal Advocates assisted in its drafting) to President Obama requesting “the opportunity to work with you to reform our industry in common-sense ways that achieve real safeguards for consumers, that promote accountability and transparency, and that work.” The
initial response from the White House was to “not meet at this time.” Our sense is the administration did not want to meet while the auto dealer issue was pending in the Consumer Finance Reform bill. Federal Advocates is NIADA’s governmental advocacy partner. To see it’s latest report visit www.niada.com/Information/legislative.html.
Take Steps to Protect Your Identity To reduce your risk of identity theft, take steps at home and away from home to protect your personal financial and account information. Always shield keypads from the eyes of "shoulder surfers" at stores and ATMs. Change your passwords regularly, using a mix of numbers and characters for email accounts and online shopping accounts. Be sure to shred paperwork and receipts containing personal or account information. That includes junk mail addressed to you or your family members, particularly if it's a credit card application or another order form that an identity thief could retrieve and complete in your name. Store your Social Security card and unneeded credit cards in a safe place, preferably a locked home safe. Be sure to carefully scan your monthly credit card and bank statements for erroneous charges. Many identity theft victims don't realize their identity has been stolen until they see extra charges on statements. Monitor your credit reports for errors or fraudulent activity, and be careful whenever you shop online. Never make online purchases from unfamiliar websites. Look for sites with addresses that begin with "https://" to indicate they're secure. It's also good to check for a closed padlock or unbroken key displayed at the bottom of your screen to indicate that the site uses encryption technology to transfer information. If you suspect identity theft, be sure to contact the FTC's Identity Theft Hotline, the three main credit bureaus and local law enforcement. 11 w w w. m i a d a . o r g
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UPDATES FROM THE IRS TAXPAYER ADVOCATE SERVICE National Taxpayer Advocate Nina E. Olson recently released a report to Congress that identifies the priority issues the Taxpayer Advocate Service (TAS) will address during the coming fiscal year. The report expresses concern about new information reporting burdens facing small businesses and others, and about certain IRS collection practices.
New Business and TaxExempt Organization Reporting Requirements The report expresses concern a new reporting requirement contained in the Patient Protection and Affordable Care Act may impose significant compliance burdens on businesses, charities, and government agencies. Beginning in 2012, all businesses, tax-exempt organizations and federal, state and local government entities will be required to issue Forms 1099 to vendors from whom they purchase goods totaling $600 or more during a calendar year. To meet this requirement, these businesses and entities will have to keep track of
THE NATIONAL TAXPAYER ADVOCATE IS REQUIRED BY STATUTE TO SUBMIT TWO ANNUAL
REPORTS TO THE HOUSE COMMITTEE ON WAYS AND MEANS AND THE SENATE COMMITTEE ON FINANCE
all purchases they make by vendor. For example, if a self-employed individual makes numerous small purchases from an office supply store during a calendar year that total at least $600, the individual must issue a Form 1099 to the vendor and the IRS showing the exact amount of total purchases. The provision will have broad reach. According to a TAS analysis of 2009 IRS data, about 40 million businesses and other entities will be subject to the new requirement, including roughly 26 million non-farm sole proprietorships, four million S corporations, two million C corporations, three million partnerships, two million farming businesses, one million charities and other tax-exempt organizations, and more than 100,000 government entities. All of these nearly 40 million businesses and other entities are subject to the new reporting requirement. TAS has not yet reached any conclusions regarding the benefits and burdens of the requirement, but the report expresses concern the burdens “may turn out to be disproportionate as compared with any resulting improvement in tax compliance.” During FY 2011, TAS will study the impact of the new reporting requirement more closely and, depending on what its study finds, may propose administrative or legislative recommendations to modify the provision or suggest Congress consider less burdensome tax gap proposals, including a TAS proposal to require reporting of non-interest bearing bank accounts, to replace it.
IRS Collection Practices The report expresses continuing concern IRS collection practices emphasize collection of past-due liabilities even where doing so inflicts unnecessary or disproportionate harm on taxpayers and jeopardizes future tax collection. “The conventional wisdom seems to be that more hard-core enforcement actions like liens and levies mean more revenue,” Olson said. “But the data don’t bear that out. Since FY 1999, the IRS has increased lien filings by about 475 percent and levies by about 600 percent, yet inflation-adjusted revenue raised by the IRS Collection function has actually declined by about seven percent over that period.” Lien filings can badly damage a taxpayer’s financial viability because lien
filings appear on credit reports, causing the taxpayer’s credit score to drop an average of about 100 points immediately and causing lasting harm because they typically remain on the taxpayer’s credit record for at least seven years. Many employers, mortgage companies, landlords, car dealerships, and credit card issuers check credit reports, so the filing of a tax lien can adversely affect the taxpayer’s ability to obtain and retain a job, purchase a home, rent an apartment, or obtain credit generally. Accordingly, a lien filing may reduce the taxpayer’s income or increase his expenses, thereby impairing his ability to pay tax in the future. Last year, the IRS filed nearly one million liens against taxpayers. The report also notes the IRS has issued at least four public statements over the past year-and-a-half pledging to assist financially struggling taxpayers who are having difficulty paying their tax bills. Yet the number of liens and levies has continued to rise, the number of offers-in-compromise the IRS is accepting is near an all-time low, and there is little evidence the IRS is changing its collection practices. After publication of her 2009 Annual Report to Congress, Olson issued several Taxpayer Advocate Directives to the IRS on lien issues, including directives (i) to discontinue its policy of automatically filing tax liens in cases where the IRS has determined the taxpayer’s account should be placed into “currently not collectible” status based on financial hardship and (ii) to require managerial approval for the filing of liens in cases where the taxpayer owns no assets. She has also urged the IRS to expand the availability of the offer-incompromise program for financially struggling taxpayers who cannot reasonably pay their tax debts in full. In response to these concerns, the IRS has convened a senior-level task force to conduct a comprehensive reC O N T I N U E D O N N E X T PA G E
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view of collection practices. Olson appreciates the IRS’s willingness to examine the issue, she said, but remains concerned it will take years to conduct the comprehensive review, and in the interim, the IRS will continue both to damage taxpayers’ credit ratings and to undermine long-term tax compliance without any significant revenue gains to show for their actions. Accordingly, IRS collection practices will remain a key area of focus for TAS in FY 2011. The National Taxpayer Advocate is required by statute to submit two annual reports to the House Committee on Ways and Means and the Senate Committee on Finance. The statute requires these reports to be submitted directly to the Committees without any prior review or comment from the Commissioner of Internal Revenue, the Secretary of the Treasury, the IRS Oversight Board, any other officer or employee of the Department of the Treasury, or the Office of Management and Budget. The first report is submitted mid-year and must identify the objectives of the Office of the Taxpayer Advocate for the fiscal year beginning in that calendar year. The second report, due on each December 31, must identify at least 20
of the most serious problems encountered by taxpayers, discuss the ten tax issues most frequently litigated in the courts, and make administrative and legislative recommendations to resolve taxpayer problems. About the Taxpayer Advocate Service
The Taxpayer Advocate Service (TAS) is an independent organization within the IRS whose employees assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that haven’t been resolved through normal channels, or who believe an IRS system or procedure is not working as it should. If you believe you are eligible for TAS assistance, you can reach TAS by calling the TAS toll-free number at 877–777–4778 or TTY/TDD at 800-829-4059. For more information, go to www.irs.gov/advocate. You can learn about your rights and responsibilities as a taxpayer by visiting the tax toolkit at www.taxtoolkit.irs.gov. You can get updates on hot tax topics by visiting the YouTube channel at www.youtube.com/tasnta and the Facebook page at http://www.facebook.com/YourVoiceAtIRS, or by following the tweets at http://twitter.com/YourVoiceatIRS.
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SCAMMERS
TAKING VEHICLE DEPOSITS WITH FRAUDULENT DEALER WEBSITES
The Better Business Bureau (BBB) is warning car shoppers to beware of websites offering toogood-to-be-true deals on repossessed cars. BBB
has heard from people across the country who thought they were buying from a reputable dealer online but were actually sending money to scammers posing as legitimate, already-established community dealerships. “Because scammers essentially steal the identity and good name of real auto dealers, car shoppers will think that they’re buying a car from a reputable business,” said Stephen A. Cox, president and CEO of the Council of Better Business Bureaus. “The truth is, they’re being sold a bill of goods by a coordinated, agile and in all likelihood overseas outfit of scammers.” Most recently, one Memphis auto dealer, America Auto Sales (www.memphisautoworld.com), received more than 1,000 calls from consumers across the country who had
After paying the deposit, victims called the real dealership to arrange delivery of their car. shopped for a new car on www.americautosales.com thinking that it was the website of the Memphis dealership. The phony website used the name, address and contact information of the real dealer. The fraudulent site claimed to sell repossessed cars at prices well below market. Buyers were instructed to wire a deposit — as much as $5,000 — to an individual rather than the company, which, according to the phony website, “helps us avoid taxes legally.” The balance was to be paid upon delivery at the consumer’s address within five days. After paying the deposit, victims called the real dealership to arrange delivery of their car. Some customers even showed up at the lot to pick up the cars they had “bought” on the bogus site. Similar websites have posed as many different dealers in Colorado, Florida, Georgia, Michigan, New Mexico and Texas. The websites are often taken down after a few days only to crop up shortly thereafter under a different URL address and under the auspices of another legitimate dealer. 14 DRIVELINE
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NEW MEMBERS AUTOZONE BOB FOX AUTO SALES LLC CAESARS AUTO SALES CAR ZONE INC FINISH LINE AUTO SALES, INC. GREAT LAKES COMPANIES JOHNSON AUTO SALES LLC KOSS KARS LLC
WASHINGTON PORT HURON THREE OAKS OTSEGO LAPEER KALAMAZOO FRUITPORT ROCHESTER
LAKESHORE RESCUE MISSION M & M CAR SALES, INC. PERFORMANCE UNLIMITED SALES, INC. PREFERRED AUTO GROUP ROUTE ONE LLC SENTRY INSURANCE TWO O'S MOTOR SALES, INC. VARSITY LINCOLN MERCURY
HOLLAND MADISON HEIGHTS PETOSKEY FRASER FARMINGTON HILLS NEWARK FARMINGTON NOVI
RENEWING MEMBERS A & C AUTO EXPO, INC. A & M AUTOMOTIVE LLC A K AUTO PLACE LLC ABC AUTO CENTER ACCURATE AUTOMOTIVE SERVICES, INC. AL HANSON MOTORS, INC. ALAMO VALLEY AUTO SALES ALBION AUTO MART LLC ALL SEASONS AUTO LLC ALLIED TRANSPORT AND RECOVERY SERVICES AMC AUTO, INC. APPLE-MILL MOTORS AUTO CITY AUTO CORRAL AUTO GROUP LEASING LLC AUTO PRO, INC. AUTO ROUND UP, INC. AUTOMAX FINANCE CENTER B & D AUTO SALES BARTZ ENTERPRISES, INC. BLAIRMOOR MOTORS LLC BLAKE HOLLENBECK AUTO SALES, INC. BOB WOLFE'S AUTO SALES BOB'S AUTO SALES BONTRAGER AUTO SALES BOOMERS USED CARS, INC. BOULEVARD USED CARS BOWEN-FISCHER MOTORS, INC. BRIAN'S AUTO SALES BRIGHTS USED CARS C B R AUTO SALES CAR COUNTRY CAR SPA, INC. CERTIFIED MOTORS CHARLEVOIX MOTORS, INC. CHERRY MOTORS CLASSIC AUTOS, LTD. CLINTON CAR COLE'S AUTO, INC. COLLINS MOTOR SALES COLONIAL MOTOR SALES CONIGLIARO MOTORS CONNELLY CAR CO. CRANDALL AUTO SALES CYCLEVILLE USA LLC D & R AUTO SALES DALTON AUTO SALES DARRYL'S MOTOR SALES, INC. DEALS UNLIMITED, INC. DK NUTTING SALES/SERVICE DON KOSTER AUTO SALES DON'S ADOPT-A-CAR ELITE AUTO RENTAL AND LEASE LLC ELITE MOTOR SALES
TROY ROSEVILLE BERRIEN SPRINGS HAZEL PARK WHITE LAKE BAD AXE KALAMAZOO ALBION WYOMING KALKASKA ROCHESTER MUSKEGON HOWELL COLOMA MT PLEASANT NUNICA DETROIT MADISON HEIGHTS GRAND RAPIDS WAYLAND CHESTERFIELD GREENVILLE PONTIAC MIDDLEVILLE WHITE PIGEON CLARKSTON GRAND HAVEN MUSKEGON ONAWAY ST. CLAIR COLDWATER CHESTERFIELD COMMERCE ST CLAIR SHORES CHARLEVOIX NORTHVILLE INDIAN RIVER CLINTON TWP BUCHANAN DETROIT MILFORD CHESTERFIELD ST JOHNS CLARKSTON WARREN FARWELL MUSKEGON GROSSE ILE PORTAGE BANGOR GRAND RAPIDS CADILLAC CLAWSON WARREN
ENTERPRISE LEASING COMPANY OF DETROIT ERWINE'S AUTO SALES, INC. F & S AUTO SALES FAIR AUTO SALES, INC. FELICE AUTO SALES, INC. FODROCY U/CAR/AUTO PARTS GARYS REPAIR & SALES GEORGES USED CARS GERRY CARS GETTEL AUTOMOTIVE GOODTIME MOTORS, INC. GRAND EXCEL LLC GREATER KALAMAZOO AUTO AUCTION GRIMALDI AUTO SALES, INC. HARVEY CAR CO, INC. HAYLETT AUTO COMPANY HOLT AUTO SALES I DEAL AUTO, INC. INTERNATIONAL AUTO CENTER, INC. INTERSTATE 94 VEHICLE AUCTION J D KLASSICS JACK'S AUTO SERVICE JEFF BENSON CAR CO. JERRY KASH, INC. JIM'S AUTO SALES JIM'S AUTO SALES, INC. JOHNSON'S AUTO SALES KALS AUTO SALES KALS AUTO SALES II KCS AUTO LAND KELLY'S CARS KOOPER'S CARS & MARINE LLC LAKELAND CAR CO LLC LAKESIDE AUTO SALES & FINANCE INC. LANE CAR COMPANY LLC LARRY'S USED CARS LIGHTHOUSE AUTO SALES, INC. LINDNER & SORENSON, INC. LOPRESTO'S AUTO SALES LUCKY AUTO SALES, INC. LYNN'S AUTO SALES M & B AUTO SALES, INC. M-97 AUTO PARTS MAJESTIC CAR CO. MARK'S AUTOS LLC MARSHALL MOTORS MD AUTO SALES LLC MICHIGAN MOTORS MOBILITY WORKS MONTCALM AUTO SALES LLC MOTORCARS OF LANSING MUSKEGON CAR CREDIT, INC. NATIONWIDE ACCEPTANCE CORP NICE CAR CO.. INC.
FARMINGTON HILLS DEARBORN HTS ALPENA REDFORD IONIA MUSKEGON MARLETTE CHARLOTTE SAGINAW SAGINAW LANSING CHARLEVOIX SCHOOLCRAFT WARREN WIXOM COLDWATER LANSING HUBBARD LAKE REDFORD PARMA PORTLAND GRAWN WAYNE WHITE PIGEON MUSKEGON SAGINAW TWIN LAKE WARREN WARREN KALAMAZOO FORT GRATIOT RICHLAND GRAND RAPIDS HOLLAND ORTONVILLE HARTFORD HOLLAND MENOMINEE OSSEO PONTIAC MORLEY SAGINAW WARREN FLINT MUSKEGON GRASS LAKE WYOMING PINCONNING MADISON HEIGHTS PONTIAC LANSING WYOMING CHICAGO OTTAWA LAKE
ONAWAY AUTO & FINANCE CO. P.T. AUTO SALES, INC. PARADISE MOTOR SALES, INC. PENN WARRANTY CORP. PEOPLE'S CHOICE AUTO SALES, LLC PREMIUM MOTOR SALES PRESTIGE IMPORTS WEST MICHIGAN R E RUEHS GARAGE, INC. R.A. IMUS, INC. RAINBOW MOTOR SALES RHO-MAR AGENCY, INC. RICHARD'S PERFORMANCE MOTORCARS RICHARDSON CHEVROLET BUICK, INC. RIVERSIDE AUTO LLC ROSE CITY MOTORS, INC. ROSENTHAL MOTORS RPM AUTO SALES RPM 10K MOTORSPORTS LLC RYAN AUTO SALES SHARP CAR CO. SMITH'S USED CARS SML INDUSTRIES LLC SOUTH LYON MOTORS, INC. SOVEREIGN AUTO PURCHASING SPRAGUE AUTO STRANE ENTERPRISES STUTTGART MOTORS LTD SUBURBAN AUTO SALES SUMMIT AUTO SALES, INC. SUPERIOR AUTOMOTIVE SUPERIOR MOTORS TAYLOR AUTO MART TELEGRAPH AUTO SALES, INC. TNT CLASSIC AUTOS TOM STEHOUWER AUTO SALES UNITED LEASING, INC. UNITY MOTORS LLC USED CAR FACTORY, INC. VAN DAM AUTO SALES, INC. VANDER HAAG CAR SALES VAN'S MOTOR SALES, INC. VIERS AUTO SALES VOLUNTEERS OF AMERICA MICHIGAN WA AUTOS WALT SICARD CAR COMPANY WEST MAIN SELECT AUTO SALES WEST MAIN SELECT AUTO SALES WEST MICHIGAN AUTO AUCTION WEST POINT AUTO SALES WESTWOOD AUTO PLUS LLC WILLIAMS AUTOMOTIVE, INC. ZELENKA AUTO SALES LLC ZIGGY'S AUTO SALES
ONAWAY ATTICA LANSING WILKES-BARRE TAYLOR KALAMAZOO GRAND RAPIDS IONIA PAW PAW COLDWATER FARMINGTON FOWLERVILLE STANDISH RIVERSIDE JACKSON PETOSKEY LANSING TEMPERANCE WARREN WYOMING HART ROSEVILLE SOUTH LYON FLUSHING BEAVERTON QUINCY BLOOMFIELD HILLS ROSEVILLE PONTIAC HOLLAND MT. MORRIS MONROE CARLETON DAVISON GRAND RAPIDS LANSING JENISON TRAVERSE CITY HOLLAND SCOTTVILLE TRAVERSE CITY LAPEER PONTIAC ROCHESTER HILLS SOUTH HAVEN KALAMAZOO KALAMAZOO MOLINE MATTAWAN FREMONT ROMULUS WEST OLIVE KALAMAZOO
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REWARDS PROGRAM OV ERVIEW Automotive Dealers Rewards is a program designed to reward our current customers for their support and use of our products. It is also intended to encourage others to join the increasing number of dealers that recognize the value of using products designed to assist them in growing their businesses. The program is based upon a points system. A point is earned for each product dollar spent with Automotive Dealers Resource (ADR). Once a Rewards account reaches a minimum of $250.00, you become eligible for a $5.00 credit towards that your next order of ADR products.
REWARDS PROGRAM DETAILS The Rewards Program starts with your visit to the Rewards Website: http://rewards.buyadr.com/. This website explains the Rewards Program and allows you to sign up. Once the signup form is completed, you will receive a virtual Rewards Membership Card with your unique rewards number. To activate the Rewards Program, during checkout you will be asked for your rewards number which will be applied to the purchase and recorded in your file on the Rewards Website. You can login to the Rewards Website to see a listing of your rewards account, select your preferred reward threshold and, if necessary, to change your personal settings. Once your account reaches the purchase threshold you have set, a coupon code will be generated and an email will be sent to you with the coupon code and the reward amount. That coupon can then be provided to an ADR employee or the code can be entered on line for credit toward your next product purchase.
HOW YOU EARN REWARDS Purchase point thresholds may be set at 250, 500, 1000 or 2000. For 250 points, you will be rewarded $5.00; for 500 points, $10.00; for 1000 points, $20.00; and for 2000 points $40.00 toward your next ADR product purchase. Product and service exceptions to the Rewards Program include those items for which prices are dictated by others such as: taxes; shipping; bonds; insurance; guide books; printing; etc. We appreciate your business and this is just our way of saying “Thank You�. ADR of Michigan Staff
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Best Practices
FOR GETTING YOUR CUSTOMERS FINANCED
In this economy, it’s imperative that your dealership take advantage of every opportunity to get your customers financed. Each deal is unique, but your best chance to fund each and every deal is to pay attention to the basics. Let’s focus on a key tenet: your finance source selection and partnership.
It’s possible that your customer could meet 99 percent of minimum program guidelines – but missing that one percent could cost you the deal!
Know the finance source policies. Knowing and following your finance sources’ guidelines for receiving applications can make or break your approval success rate. Additionally, understanding how to package your final deal will also speed your funding. Find out your finance sources’ policies regarding cash down, credit scores and scoring models, model year/mileage restrictions, PTI, and LTV. What about the lender’s book value (which book do they advance on?) Is your value accurate? Verify contract accuracy. Verify the accuracy of your contract prior to submission to the finance source. Are you sending the customer application to the finance source most likely to fund that candidate? Check customer quality, vehicle selection and advance sought. Create a complete funding package. Know the stipulations prior to delivery! Always create a checklist, whether packaging the deal on your own or providing to a clerk. Make sure you include all relevant data. Verify all stipulations prior to sending, and verify that all standard documents are included, complete and accurate. For example, a promissory note for $500 down could cost you time and effort to track down, maybe even a $500 write off. The missing stipulations for POI could cost your dealership $25,000 in funding, or worse, loss of an approval due to expiration - not to mention the frustration if the bank decides not to re-approve! Ensure your customer meets program guidelines. In times past, ’cash was king’. This is not necessarily true anymore. It’s possible that your customer could meet 99 percent of minimum program guidelines – but missing that one percent could cost you the deal! So make it easy on yourself. Don’t submit a deal with $250 cash down knowing the program minimum is $500. You may not receive a counter offer for an additional $250 down - you may just receive an “automated turn down”. (Did you know some finance sources have policies which prevent them from rehashing a turndown?) Avoid “shot gunning” deals. Shot gunning does not work to your advantage or speed your process. Actually, it does just the opposite. These days, finance sources are very tightly managing risk and cost. As a result, look to book and risk portfolio management are more critical than ever.
Build relationships. It’s important for you, the dealer, to build a solid relationship with your lenders. Get to know them and request that they provide you or your staff the training, education or feedback needed to have a successful partnership. Be accurate. Avoid vehicle value errors or ‘power booking’, ‘grossing up,’ or otherwise enhancing the truth. It may seem harmless to round up an applicant’s income to the nearest “x”, or even provide a luxury vehicle with all of the bells and whistles, but it is not in either your, or the finance sources’, best interest.Your customer could have provided an application for credit using a different income at a different location, thus creating a discrepancy. This could delay your approval, create additional stipulations or worse, cause a decline. Additionally, many finance sources are now completing their own customer interviews, either at random or generated based on the finance source’s risk assessment of your dealership’s performance or repossession rate. The ‘power booked’ car may have provided a nice advance and appearance of profit to your dealership, but if a discrepancy is found, you could be charged back, or even lose a finance source. Most importantly, communicate with your lenders at every turn. It’s never too late to be a great partner. Good selling! George Hartman is the Director of National Business Development at RouteOne LLC, a free, online credit application management service for franchised and independent dealers nationwide. RouteOne’s credit platform allows automotive dealers to submit credit applications to a wide variety of lenders, including prime, sub-prime, banks and credit unions. RouteOne offers dealers a vast array of F&I tools including credit bureau access, DSP integration, free reporting, and a host of subscriptionbased tools, with no long-term fees or contracts required at any time. RouteOne offers dealers a common platform for all their credit application financing needs. More information is available by contacting George Hartman directly at 248.862.7050 or ghartman@routeone.com. Dealers may also contact RouteOne Sales Support at 866.933.0663 or salessu port@routeone.com.
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