Texas Dealer December 2019

Also In This Issue: – Michael W. Dunagan on Maximum Finance Charge Rates for 2020 – Two Common OCCC Questions – Preparing For An OCCC Exam – How to Comply with a Comptroller Audit

2019 TIADA Board of Directors PRESIDENT Robert Beck/Stop N’Drive Motors 711 N. General McMullen Dr. San Antonio, TX 78228 PRESIDENT ELECT Mark Jones/Mike Carlson Motor Company 264 Exchange Burleson, TX 76028 CHAIRMAN OF THE BOARD Juan Sabillón/Mi Tierra Auto Sales 7935 Gulf Freeway Houston, TX 77017 SECRETARY Ryan Winkelmann/BJ’s Autohaus 5005 Telephone Road Houston, TX 77087 TREASURER Eddie Hale/Neighborhood Autos 1717 US 287 Decatur, TX 76234 ICE PRESIDENT, WEST TEXAS V (REGION 1) Brad Kalivoda/Fiesta Motors 2599 74th Street Lubbock, TX 79423 ICE PRESIDENT, FORT WORTH V (REGION 2) Chad Lancaster/Chacon Autos 11800 E. Northwest Hwy Dallas, TX 75218 ICE PRESIDENT, DALLAS V (REGION 3) Greg Reine/Auto Liquidators 39670 LBJ Freeway Dallas, TX 75237 ICE PRESIDENT, HOUSTON V (REGION 4) Vicki Davis/A-OK Auto Sales 23980 FM 1314 Porter, TX 77365 ICE PRESIDENT, CENTRAL TEXAS V (REGION 5) Greg Phea/Austin Rising Fast 8024 IH 35 North Austin, TX 78753 ICE PRESIDENT, SOUTH TEXAS V (REGION 6) Jose Engler/Irving Motor Corp 211 Braniff Dr. San Antonio, TX 78216 ICE PRESIDENT AT LARGE V Robert Blankenship/Texas Auto Center 6809 N IH-35 Austin, TX 78744 ICE PRESIDENT AT LARGE V Armando Villarreal/McAllen Auto Sales 4215 S. 23rd Street McAllen, TX 78503

TIADA EXECUTIVE DIRECTOR Jeff Martin 9951 Anderson Mill Rd., Suite 101 Austin, TX 78750 Office Hours M-F 8:30am – 4:30pm 512.244.6060 • Fax 512.244.6218 jeff.martin@txiada.org

Vo l u m e X I X / I s s u e 12 / D e c e m b e r 2 019

TexasDealer

5 Officers’ Message

contents

by Mark Jones, TIADA President Elect

7 TIADA Membership Renewal Notice 9 Legal Corner: Maximum Finance Charge Rates for 2020

by Michael W. Dunagan

12 TIADA Auction App Directory 2019 14 On The Cover: 2019 Dealer Proficiency Quiz

by Michael W. Dunagan

17 Tax Assessor-Collector Best Practices

by TIADA Staff

21 Got Salvage?

by David George

22 Upcoming Events 25 Thanks to Our INDEPAC Contributors 26 TIADA Member Application 27 Two Common OCCC Questions

by Joseph Adamek

29 TIADA Dealer Academy: Education Offerings for Winter/Spring 31 Making a List, Checking It Twice…

Preparing For An OCCC Exam

by TIADA Staff

33 How to Comply With A Comptroller Audit by the Texas Comptroller’s Office

32 Local Chapters 36 TIADA Scholarship Application 39 Does Your Credit Application Need a Tune-Up?

by Ronald D. Gorsline and K. Dailey Wilson

41 New Members 42 2019 “In the Rearview” 46 Behind the Wheel

by Jeff Martin

Notice to all members concerning services and products: TIADA was established in 1944 to develop professional standards of service and conduct for the independent auto industry. Opinions expressed herein are not necessarily those of the TIADA management, the Board of Directors or the membership. Likewise, the appearance of advertisers or their indemnifications of TIADA does not constitute endorsement of the products or services featured.

Editor: Christopher Bean

Magazine Ad Sales: Patty Huber, 512-310-9795

officers’ message Handling a Dealership Audit or Exam

S

ince this is the compliance issue of the Texas Dealer, I thought I would talk about the dreaded dealership audit or exam. If you are in this business long enough, you will experience an audit or an exam from one, if not all, of the state agencies that regulate our business. In my experience, most of the audits and exams are scheduled far enough in advance so that you can be prepared. I understand from time to time you may have a “surprise” visit, but that’s not the norm.

Whether it’s the Comptroller, the Texas Department of Motor Vehicles or the Office of Consumer Credit Commission, they will usually contact you via U.S. mail, email or phone to inform you they will be coming to visit.

I expect you are like me when it comes to audits. I feel like we run a pretty compliant program, but I always get a little nervous when I get that notice and then I have a great sense of relief when the audit is over.

At our dealership we have implemented some practices to help the auditors complete the task at hand and move on quickly. We always set up a separate room or workstation for the auditor to do their work if they are going to be on site. We always have someone show them where the bathroom and the break rooms are located, and we make sure we have water or soft drinks available. I don’t see any advantage to creating obstacles or making things harder on the auditor than they need to be.

We also make sure the auditor knows who their point of contact is at the dealership (and how to contact them) throughout

by Mark

Jones

MCMC Corporate (Burleson) TIADA PRESIDENT ELECT

the audit. The last thing we want is to have the auditor confused about who can give them accurate information related to our recordkeeping files, policies and practices. We also make sure they understand how to get in touch with the person who is their point of contact from our dealership. We clearly communicate where the person is located in the office, when they take lunch breaks and if they have any scheduled meetings that might conflict with the time required for the audit. We try to avoid having an auditor sitting around waiting on someone from our dealership, that might make the entire process longer than it needs to be.

Lastly, we make sure all the key people associated with the audit or exam are available if there is an exit interview. If you run a smaller lot that could be only a few people but if you operate a larger dealership, multiple people might be involved in the exit interview. Having all the appropriate people in the exit interview ensures nothing is lost in translation and everyone has their questions answered. Conversely, just because someone is a key employee doesn’t necessarily mean they need to be involved with the exit interview. We do our best to avoid having the wrong people sitting in on an exit interview.

Incidentally. please be sure to review the Tax Assessor Collectors article on page 17, OCCC Exam on page 31 and Comptroller Audit on page 33.

Our goal is simple: be professional and help the auditor do their job as best we can, so we can get back to the business of selling cars as soon as possible.

If you are in this business long enough, you will experience an audit or an exam from one, if not all, of the state agencies that regulate our business.

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December 2019

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7

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legal corner

Maximum Finance Charge Rates for 2020

by Michael

Dealer Question: What is the

maximum finance charge rate I can use on a motor vehicle retail installment contract?

Answer: Dealers who hold vehicle finance licenses issued by the Office of Consumer Credit Commissioner (OCCC) are authorized to finance the sale of vehicles, and are allowed to add finance charge or time-price-differential to the amount financed (while the term “interest” is commonly used interchangeably with finance charge and time-price-differential, “interest” actually is the amount charged on a loan of money, and should not technically be used in the context of financing the sale of a motor vehicle).

T

he legislature has established a sliding scale of maximum rates, with higher rates allowed on older cars. The maximum rate that sellers of older vehicles can add to the amount financed is $15 per $100 per annum or, stated another way, 15 per cent add on (see accompanying chart). Depending on such variables as the length of the repayment period, the amount of each payment, and the frequency of payment (weekly, bi-weekly, semi-monthly or monthly), the annual percentage rate on 15 per cent add on can exceed 26 per cent.

Chapter 348 of the Texas Finance Code allows sellers of vehicles to finance any unpaid balance at rates that generally exceed the rates of interest that can be legally charged by banks and traditional lenders.

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For purposes of setting maximum rates of finance charge, Chapter 348 establishes four classes of vehicles based on the vehicle’s model year. The attached chart shows allowable rates for calendar year 2020. These rates are valid on sales that take place between January 1, 2020, and December 31, 2020. The maximum rates “roll over” on January 1 of each year.

The maximum rates of finance charges are stated in the Finance Code as “add-on” rates. For example, for vehicles that fall into the classfour category, sellers can charge fifteen dollars per one hundred dollars financed per annum.

These are maximum rates, and any rate lower than the maximum can be charged.

“Add-on” rates should not be confused with “annual percentage rates” which are the rates required to be disclosed on loans and retail installment sales by federal law. The Annual Percentage Rate (or APR), which appears in the so-call “Fed Box”, will usually be substantially higher than the add-on rate.

All financing sellers, with a few exceptions, are required by federal law to disclose the rate of finance charge as an annual percentage rate, or APR, on their contracts. Since

Dunagan

W.

TIADA GENERAL COUNSEL

The attached char t shows allowable rates for calendar year 2020. These rates are valid on sales that take place between Januar y 1, 2020, and December 31, 2020.

The maximum rates “roll over” on Januar y 1 of each year.

Texas law sets maximum rates as add-on rates, it is necessary to first calculate the amount of finance charge the creditor chooses to assess within the legal limit, then determine the APR for disclosure purposes. Federal Truth-In-Lending requires that any finance charge rate be advertised or expressed to a consumer as an APR. It is thus improper to advertise or discuss addon rates with customers.

The process of calculating the APR on contracts that provide 9

Maximum Finance Charge Rates for Calendar Year 2020 Class One Two Three Four

Year Models

Max. Rate

Alternate Rate

2021 and 2020 new

7.5 per cent add-on

18 per cent APR

Any new not appearing in Class One above; 2020, 2019 and 2018 used 2017 and 2016

10 per cent add-on

18 per cent APR

12.5 per cent add-on

18 per cent APR

2015 and older

15 per cent add-on

18 per cent APR

.

10

for payments other than equal monthly payments is extremely difficult. Most dealers rely on specialized software (often referred to as dealer management software, or DMS) to perform this function. (For a list of reviewed programs, see the OCCC website at http://www.occc.state. tx.us/).

Without appropriate software, it is virtually impossible for a creditor who collects weekly, bi-weekly, or semi-monthly payments to accurately calculate an APR and other required disclosures. Dealers should not guess at or estimate an APR as incorrect disclosures are the basis for claims for statutory damages and attorneys fees.

Note that the chart also includes a column for what is referred to as an “Alternate Rate.�

This rate is 18 per cent APR for all four classes. Many dealers have questioned what the alternate rate is, and how it affects the rates they can charge.

The alternate rate is an optional rate. A dealer has the option to use either the standard or alternate rate. As an example, a dealer financing the sale of a 2015 model- year vehicle can charge up to 15 per cent add-on (since this year model falls into Class Four) or the alternative rate of 18 per cent A.P.R. Since the 15 per cent add-on rate translates to over 26 per cent A.P.R. on a typical T e x a s

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weekly payment contract, a higher legal return can be achieved using the standard rate than the alternative rate.

On the other hand, the sale of a class-two vehicle would be subject to a 10 per cent add-on maximum.

Since the actual yield on 10 per cent add-on would be lower than 18 per cent, the alternative rate would allow the seller a higher legal return.

OCCC rules also require the disclosure of a “contract rate” which is different from the add on rate and A.P.R. DMS providers that comply with Texas requirements properly calculate and disclose the contract rate. The OCCC website has additional information about maximum rates and contract rates.

Remember that the so-called “add-on rate,” which is

the rate used to calculate the finance charge added to a contract, can’t be used on the contract documents or in any communication with consumers, such as advertising. In order that credit consumers can shop rates on an “apples to apples” basis, federal law requires all discussions about rates to refer to the chosen universal rate, or the A.P.R. It would be improper to have an add-on rate appear anywhere on a contract.

Michael W. Dunagan is an attorney in Dallas, Texas who has represented the Texas Independent Automobile Dealers Association for over 40 years. He has written a number of books and hundreds of articles for trade journals and law reviews. His clientele includes dealers, banks, finance companies, auto auctions and credit unions.

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TIADA Auction Directory 2019

Save thousands on buy or sell fees at these participating auctions! * VALID FOR SELL FEE ONLY AT INSURANCE AA LOCATIONS ** ONLINE AUCTION AVAILABLE

Abilene

METRO AUTO AUCTION AUSTIN

www.allianceautoauction.com 6657 US Highway 80 West Abilene, TX 79605 325.698.4391, Fax 325.691.0263 GM: Brandon Denison Friday, 10:00 a.m. $AVE : $200

Corpus Christi

ALLIANCE AUTO AUCTION ABILENE

IAA DFW*

www.iaai.com 4226 East Main Street Grand Prairie, TX 75050 972.522.5000, Fax 972.522.5090 GM: Robert Brown Tuesday, 9:00 a.m. $AVE : up to $200 Sell Fee

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IAA FORT WORTH NORTH*

IAA ABILENE*

IAA CORPUS CHRISI*

MANHEIM DALLAS**

www.cmauctions.com 2258 S. Treadaway, Abilene, TX 79602 325.677.3555, Fax 325.677.2209 GM: Gregory Chittum Thursday, 10:00 a.m. $AVE : $200

NEW

www.iaai.com 7700 US 277, Hawley, TX 79601 325.675.0699, Fax 325.675.5073 GM: Terrie Smith Thursday, 9:30 a.m. $AVE : up to $200 Sell Fee

Amarillo IAA AMARILLO*

www.corpuschristiautoauction.com 2149 IH-69 Access Road Corpus Christi, TX 78380 361.767.4100, Fax 361.767.9840 GM: Hunter Dunn Friday, 10:00 a.m. $AVE : $200

www.iaai.com 4701 Agnes Street, Corpus Christi, TX 78405 361.881.9555, Fax 361.887.8880 GM: Patricia Kohlstrand Wednesday, 9:00 a.m. $AVE : up to $200 Sell Fee

Dallas-Ft. Worth Metroplex NEW

www.iaai.com 11150 S. FM 1541, Amarillo, TX 79118 806.622.1322, Fax 806.622.2678 GM: Shawn Norris Monday, 9:30 a.m. $AVE : up to $200 Sell Fee

Austin

ADESA AUSTIN

www.adesa.com 2108 Ferguson Ln, Austin, TX 78754 512.873.4000, Fax 512.873.4022 GM: Rich Levene Tuesday, 9:00 a.m. $AVE : $200

AMERICA’S AA AUSTIN / SAN ANTONIO www.americasautoauction.com 16611 S. IH-35, Buda, TX 78610 512.268.6600, Fax 512.295.6666 GM: John Swofford Tuesday, 1:30 p.m. / Thursday, 2:00 p.m. $AVE : $200

INSURANCE AUTO AUCTION AUSTIN* www.iaai.com 2191 Highway 21 West, Dale, TX 78616 512.385.3126, Fax 512.385.1141 GM: Geoffrey Rabb Tuesday, 9:00 a.m. $AVE : up to $200 Sell Fee

12

www.metroautoauction.com 8605 Cullen Ln., Austin, TX 78748 512.282.7900, Fax 512.282.8165 GM: Brent Rhodes 3rd Saturday, monthly $AVE : $200

ADESA DALLAS

www.adesa.com 3501 Lancaster-Hutchins Rd. Hutchins, TX 75141 972.225.6000, Fax 972.284.4799 GM: Allan Wilwayco Thursday, 9:30 a.m. $AVE : $200

ALLIANCE AUTO AUCTION DALLAS www.allianceautoauction.com 9426 Lakefield Blvd., Dallas, TX 7520 214.646.3136, Fax 469.828.8225 GM: Chris Dean Wednesday, 1:30 p.m. $AVE : $200

www.iaai.com 3748 McPherson Dr. Justin, TX 76247 940.648.5541, Fax 940.648.5543 GM: Jack Panczyk Tuesday, 9:00 a.m. $AVE : up to $200 Sell Fee

NEW

www.manheim.com 5333 W. Kiest Blvd., Dallas, TX 75236 214.330.1800, Fax 214.339.6347 GM: Rich Curtis Wednesday, 9:00 a.m. $AVE : $100

MANHEIM DALLAS FORT WORTH** www.manheim.com 12101 Trinity Blvd.

Fort Worth, TX 76040 817.399.4000, Fax 817.399.4251 GM: Nicole Graham-Ponce Thursday, 9:30 a.m. $AVE : $100

METRO AUTO AUCTION DALLAS www.metroaa.com 1836 Midway Road Lewisville, TX 75056 972.492.0900, Fax 972.492.0944 GM: Scott Stalder Tuesday, 9:00 a.m. $AVE : $200

TEXAS LONE STAR AUTO AUCTION

AMERICA’S AA DALLAS

www.tlsaa.com 2205 Country Club Drive Carrollton, TX 75006 214.483.3597, Fax 214.483.3814 GM: Patrick Stevens Tuesday, 1:00 p.m. / Thursday, 2:00 p.m. $AVE : $200

IAA DALLAS*

El Paso

www.americasautoauction.com 219 N. Loop 12, Irving, TX 75061 972.445.1044, Fax 972.591.2742 GM: Ruben Figueroa Tuesday, 1:00 p.m. / Thursday, 1:00 p.m. $AVE : $200 www.iaai.com 204 Mars Road, Wilmer, TX 75172 972.525.6401, Fax 972.525.6403 GM: Joshua Boyd Wednesday, 9:00 a.m. $AVE : up to $200 Sell Fee

EL PASO INDEPENDENT AUTO AUCTION www.epiaa.com 7930 Artcraft Rd, El Paso, TX 79932 915.587.6700, Fax 915.587.6700 GM: Luke Pidgeon Wednesday, 10:00 a.m. $AVE : $200 T e x a s

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IAA EL PASO*

www.iaai.com 14651 Gateway Blvd. W, El Paso, TX 79927 915.852.2489, Fax 915.852.2235 GM: Jorge Resendez Friday, 10:30 a.m. $AVE : up to $200 Sell Fee

MANHEIM EL PASO

www.manheim.com 485 Coates Drive, El Paso, TX 79932 915.833.9333, Fax 915.581.9645 GM: JD Guerrero Thursday, 10:00 a.m. $AVE : $100

IAA HOUSTON*

Midland Odessa

IAA HOUSTON NORTH*

www.iaai.com 701 W. 81st Street, Odessa, TX 79764 432.550.7277, Fax 432.366.8725 GM: Christopher Rogers Thursday, 11:00 a.m. $AVE : up to $200 Sell Fee

www.iaai.com 2535 West. Mt. Houston, Houston, TX 77038 281.847.4700, Fax 281.847.4799 GM: Alvin Banks Wednesday, 9:00 a.m. $AVE : up to $200 Sell Fee www.iaai.com 16602 East Hardy Rd., Houston-North, TX 77032 281.443.1300, Fax 281.443.4433 GM: Christina Nieves Thursday, 9:00 a.m. $AVE : up to $200 Sell Fee

MANHEIM HOUSTON

Harlingen/McAllen IAA MCALLEN*

www.iaai.com 900 N. Hutto Road, Donna, TX 78537 956.464.8393, Fax 956.464.8510 GM: Ydalia Sandoval Tuesday, 9:00 a.m. $AVE : up to $200 Sell Fee

BIG VALLEY AUTO AUCTION**

www.bigvalleyaa.com 4315 N. Hutto Road, Donna, TX 78537 956.461.9000, Fax 956.461.9005 GM: Lisa Franz Thursday, 9:30 a.m. $AVE : $200

www.manheim.com 14450 West Road, Houston, TX 77041 281.924.5833, Fax 281.890.7953 GM: Brian Walker Tuesday, 9:00 a.m. / Thursday 6:30 p.m. $AVE : $100

MANHEIM TEXAS HOBBY

www.manheim.com 8215 Kopman Road, Houston, TX 77061 713.649.8233, Fax 713.640.6330 GM: Darren Slack Thursday, 9:00 a.m. $AVE : $100

Longview

ALLIANCE AUTO AUCTION LONGVIEW

Houston

ADESA HOUSTON

www.adesa.com 4526 N. Sam Houston, Houston, TX 77086 281.580.1800, Fax 281.580.8030 GM: Michael Schenks Wednesday, 9:00 a.m. $AVE : $200

AMERICA’S AA HOUSTON

www.americasautoauction.com 1826 Almeda Genoa Rd, Houston, TX 77047 281.819.3600, Fax 281.819.3601 GM: John Swofford Thursday, 2:00 p.m. $AVE : $200

AMERICA’S AA NORTH HOUSTON www.americasautoauction.com 1440 FM 3083, Conroe, TX 77301 936.441.2882, Fax 936.788.2842 GM: Buddy Cheney Monday, 6:30 p.m. $AVE : $200

www.allianceautoauction.com 6000 East Loop 281, Longview, TX 75602 903.212.2955, Fax 903.212.2556 GM: Chris Barille Friday, 10:00 a.m. $AVE : $200

IAA LONGVIEW*

www.iaai.com 5577 Highway 80 East, Longview, TX 75605 903.553.9248, Fax 903.553.0210 GM: David Cooper Thursday, 9:00 a.m. $AVE : up to $200 Sell Fee

Lubbock

IAA LUBBOCK*

www.iaai.com 5311 N. CR 2000, Lubbock, TX 79415 806.747.5458, Fax 806.747.5472 GM: Lori Davee Tuesday, 9:00 a.m. $AVE : up to $200 Sell Fee

AUTONATION AUTO AUCTION - HOUSTON TEXAS LONE STAR AUTO AUCTION** www.autonationautoauction.com 608 W. Mitchell Road, Houston, TX 77037 822.905.2622, Fax 281.506.3866 GM: Mike Green Thursday, 6:00 p.m. $AVE : $200

HOUSTON AUTO AUCTION

www.houstonautoauction.com 2000 Cavalcade, Houston, TX 77009 713.644.5566, Fax 713.644.0889 GM: Tim Bowers Tuesday, 1:00 p.m. $AVE : $200

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www.lsaalubbock.com 2706 E. Slaton Road., Lubbock, TX 79404 806.745.6606 Wednesday, 9:30 a.m $AVE : $75/Quarterly

Lufkin

LUFKIN DEALERS AUTO AUCTION

www.lufkindealers.com 2109 N. John Reddit Dr., Lufkin, TX 75904 936.632.4299, Fax 936.632.4218 GM: Wayne Cook Thursday, 6:00 p.m. $AVE : $200

IAA PERMIAN BASIN*

ONLINE

ACV AUCTIONS**

www.acvauctions.com 800.553.4070 $AVE : $250

San Antonio

ADESA SAN ANTONIO

www.adesa.com 200 S. Callaghan Rd San Antonio, TX 78227 210.434.4999, Fax 210.431.0645 GM: Clifton Sprenger Thursday, 10:00 a.m. $AVE : $200

IAA SAN ANTONIO*

www.iaai.com 11275 S. Zarzamora San Antonio, TX 78224 210.628.6770, Fax 210.628.6778 GM: Brian Sell Monday, 9:00 a.m. $AVE : up to $200 Sell Fee

MANHEIM SAN ANTONIO**

www.manheim.com 2042 Ackerman Road San Antonio, TX 78219 210.661.4200, Fax 210.662.3113 GM: Mike Browning Wednesday, 9:00 a.m. $AVE : $100

SAN ANTONIO AUTO AUCTION**

www.sanantonioautoauction.com 13510 Toepperwein Rd. San Antonio, TX 78233 210.298.5477 GM: Brandon Walston Tuesday, 10:00 a.m. / Thursday, 1:30 p.m. $AVE : $200

Tyler

GREATER TYLER AUTO AUCTION www.greatertyleraa.com 11654 Hwy 64W, Tyler, TX 75704 903.597.2800, Fax 903.597.3848 GM: Wayne Cook Tuesday, 5:00 p.m. $AVE : $200

Waco

ALLIANCE AUTO AUCTION WACO

www.allianceautoauction.com 15735 I-35 Frontage Road Elm Mott, TX 76640 254.829.0123, Fax 254.829.1298 GM: Carmen Robinson (Sales Manager) Friday, 10:00 a.m. $AVE : $200

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on the cover

by Michael W. Dunagan TIADA General Counsel

(Editor’s note: Each of the following questions is taken from information that appeared in Legal Corner columns in Texas Dealer magazine in 2019.)

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Compliance QUESTIONS

1. A valid mechanic’s lien is ___________(inferior or superior) to a prior recorded mortgage lien on a vehicle.

2. T he State Comptroller takes the position that:

a. B oth the purchase price of GPS units and air time charges are taxable to the dealer. b. The purchase of GPS units is taxable, but air time charges are not taxable. c. The purchase price of GPS units is not taxable, but air time charges are taxable to the dealer. d. The purchase of the GPS is not taxable since the device is attached to the vehicle and increases the sales tax the state receives when the vehicle is sold.

3. True or False: I can refuse to allow a debtor to retain salvage and repair a vehicle that has been declared a “total loss’ by the insurrance company and subject to a debt cancellation agreement.

4. W hich of the following types of sharing of information would trigger the use of a long-form privacy notice that contains an “opt-out” provision?

a. Customers’ personal information given to a finance company that is looking to buy a dealer’s receivables. b. Customers’ personal information given to a collector who is attempting to collect a past-due account.

c. Customers’ personal information given to a licensed marketing firm to carry out a sales campaign. d. Customer’s pay-off balance given to another dealer who is negotiating with my customer to work a trade. e. None of the above.

5. D eferred down payments must be scheduled to be paid:

a. B efore the first regular payment is due. b. Within thirty days after the date of the contract. c. B efore the second regular payment is due. d. B efore the contract matures.

6. T he minimum holding period after a private sale post-repossession notice is sent is:

a. 10 days b. 20 days c. 21 days d. 30 days

7. W hich of the following items of personal identification is not acceptable as proof of identity for purposes of transferring title to a buyer?

a. A foreign country passport b. A matricula card c. United States military identification card d. United States Citizenship and Immigration Services identification (green card)

8. True or False. A dealer who offers warranties on the vehicles he sells can use the “Buyer’s Guide” to establish the terms of the warranties.

Bonus

RETAIL QUESTIONS 9. W hich of the following is a legal basis for making a yes or no credit decision:

a. Religion b. Damaged Credit c. Gender d. Ethnic origin

10. A debtor’s personal information can be shared with which of the following without violating the debtor’s privacy rights:

a. A repossession agent b. A law enforcement official c. A non-related finance company that is buying dealer paper d. A ll of the above

11. T rue or False: A dealer who offers warranties on the vehicles he sells can use the “Buyer’s Guide” to establish the terms of the warranties.

12. A lien on a vehicle becomes “perfected” at what point?

a. W hen the state issues a title certificate with the lien recorded on it. b. When the county tax office accepts the assigned title and transfer fees. c. When the buyer signs the motor vehicle installment contract. d. W hen the buyer signs the Form 130U.

13. The debt cancellation provisions of a Debt Cancellation Agreement kick in upon which of the following: a. T he collateral is totalled. b. T he collateral is stolen. c. The collateral is used in the commission of a crime. d. The engine locks up.

Answers can be found on page 45.

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feature

Tax Assessor-Collector Best Practices

by TIADA Staff

I

t’s safe to say no one likes standing in line or waiting for anything these days. With the popularity of food delivery services on the rise, we don’t even wait in line for our lunch — even at drive-through fast food joints. So… why do we still have lines at the tax office?

Wouldn’t it be great if we could DoorDash those documents away?

TIADA recently reached out to a number of Tax Assessor-Collectors from different counties to ask two basic questions: 1) What can dealers do to speed things up at the tax office; and 2) What is the number one mistake or issue you see dealers making today?

John Ames from Dallas County said, “We encourage all dealers to join the webDealer and the SIT online portal programs in Dallas County. This will expedite their transaction time and prevent them from waiting in our lobbies. If a visit to the Tax Office is necessary, please come early, before 10 am.”

Not all dealers qualify for WebDEALER, but if you are interested, check with your tax assessor and see if it might work for your dealership.

As you might expect, many tax assessors stressed a thorough review of your paperwork before arriving at the tax office. Ronnie Keister from Lubbock County pointed out that they consistently have to pause and get dealers or agents to fill in the driver’s license numbers, addresses, dealer P numbers etc. “That can be very time consuming,” added Keister. The Comal County Tax Assessor, Cathy Talcott and the El Paso County Assessor, Ruben Gonzalez concur. “When incomplete paperwork is submitted to us, it causes multiple trips to and from our office,” said Talcott. “We know that time

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“We know that time is money, and it would be a win-win for everyone if the dealers would take a few additional minutes to review the paperwork before it leaves their office.”

Cathy Talcott, Comal County Tax Assessor-Collector 17

is money, and it would be a win-win for everyone if the dealers would take a few additional minutes to review the paperwork before it leaves their office. Confirm that all blanks are not only filled in, but filled in correctly.

My staff follows Chapter 6 of the Motor Vehicle Dealer Manual, and I ask that all dealers carefully review this important chapter.” The TxDMV Dealer Manual can be found online on the TxDMV website.

Gonzalez was even more specific about dealing with incomplete paperwork. “Dealers omit lienholders, odometer reading, vehicle color, driver’s license information and dates. Another issue is the failure to capture the complete legal name of the applicant. Although a driver’s license copy is not required of the customer, some dealers do not know how we capture the complete legal name.” The name on the 130-U should always match the current name on the identification used to purchase a vehicle. Gonzalez also pointed out that dealers will miss complete addresses and date of sale and expect TAC deputy to complete this missing information at the counter. This, no doubt, will slow down the line for everyone. Gonzalez ended by reminding dealers, “Visiting our office in the morning prior to the lunch hours speeds up the process. If dealers visit during the lunch hours, they can expect a longer waiting period unless they drop off their work.”

Many more Consignors @ DAAOKC.COM

Linda Bridges in Bee County gave a simple answer to address both of our questions. “Training! Training of title clerks and finance personnel is paramount in reducing the time in line due to title issues and compliance issues.” Bridges went on, “When staff is trained properly in what is required by the Texas Department of Motor Vehicles, the title transactions are processed in a more effective and efficient manner.

This cuts down time in line to correct or reject title transactions and deals with any compliance issues. I believe if the local TAC and dealerships work together to provide quality training for staff in both locations, most issues can be resolved before they arise.”

SB 604 (Buckingham, Lakeway & Birdwell, Granbury) was passed during the last legislative session. The bill will require individuals who apply to obtain an independent dealer’s license to take an online education course, as well as a one-time education course for dealers who received their license in the last ten years. TxDMV will approve the content and courses material with input from the Tax Assessors.

The goal is to address many of these issues prior to licenses being issued.

Many of the TAC’s we spoke to see the same mistakes; timely transfer, understanding how to use a Power of Attorney (POA), submitting the original vehicle inspection report for out of state sales, correctly filling in the county of transfer form VTR – 136 and reporting your Special Inventory Tax, also known as Vehicle Inventory Tax. Ames points out two compliance issues that would help dealers. “One, ensure that their MCO matches what is on the 130-U and two, provide the original VIR for out of state titles.” Both El Paso and Lubbock County see issues with the POA. TIADA has written on this issue numerous times as it can be confusing when it comes to using a POA and the form VTR41A. More information can be found on the TIADA website in the “Knowledge Base” or thorough reading of Chapter 6 in the TxDMV user manual.

Talcott emphasized an area in which TIADA has seen big fines during the last few years. “Reporting SIT/VIT inventory sales and reports by the 10th of each month — many dealers don’t realize that a TAC has the ability to determine if a dealer fails to report all of their sales on a monthly basis. Failure causes a penalty collection. Annual declarations by February 1st is also important. The County TAC needs a copy of this declaration. Steep penalties can be assessed for failure to file timely.”

Next time you head to your TAC, make sure you have done or are doing everything you can to help make the process run smoothly.

1028 S Portland, OKC 73108, PH: 405-947-2886

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e-Tag Supplies —

In Stock for Immediate Shipment!

MOTO

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ETAIL

INSTAL

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SALES

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316 bpc #24-4

BUY ONLINE AT www.AmericasAutoAuction.com

West Michigan

MI

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Lancaster

Chicago

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LOCATIONS

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Tulsa

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North Houston

Baton Rouge

Pensacola

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Atlanta, GA Austin, TX Baton Rouge, LA Birmingham, AL Boston, MA Bowling Green, KY

4

Chicago, IL Dallas, TX Detroit Toledo, OH Greenville, SC Harrisburg, PA Houston, TX

Interstate 94, MI Jacksonville, FL Kansas City, MO Lancaster, PA North Houston, TX Pensacola, FL

Austin

LOCATIONS IN TEXAS

Dallas

TUESDAYS & THURSDAYS AT 1PM 219 N. Loop 12 Irving, Texas 75601 Phone: 972.445.1044

Pittsburgh, PA St Louis, MO Tulsa, OK Virginia Beach, VA West Michigan, MI

TUESDAYS & THURSDAYS AT 1PM

16611 South IH 35, Buda, Texas 78610 Phone: 512.268.6600

Houston

THURSDAYS AT 1:30PM

1826 Almeda Genoa Rd, Houston, Texas 77047 Phone: 281.819.3600

AuctionCredit is located within each of our Texas facilities for all of your auction financing needs. www.auctioncredit.com

North Houston

MONDAYS AT 6:30PM

1440 FM 3083 Conroe, Texas 77301 Phone: 936.441.2882

feature

Got Salvage?

by David George

Chief Investigator, Texas Department of Motor Vehicles

L

egislative sessions often bring forth changes for motor vehicle dealers, but the 86th Texas Legislative Session made a significant change for independent motor vehicle dealers. House Bill 1667 amended Texas Occupations Code Chapter 2302 to allow holders of independent motor vehicle dealer general distinguishing numbers to act as salvage vehicle dealers. The amendment does not include holders of franchise, wholesale, or mobility motor vehicle dealer general distinguishing numbers. Independent motor vehicle dealers buying and selling salvage and nonrepairable titled motor vehicles must comply with the same laws that govern salvage vehicle dealers, so those interested in expanding into the salvage industry should become familiar with the specific requirements to ensure compliance. The Texas Department of Motor Vehicles holds monthly salvage dealer training seminars throughout the state to provide the salvage industry with pertinent information and updates. The schedule is available on the TxDMV website at www.TxDMV.gov in the Dealers tab under Dealer Training Seminars. Registration is available online.

Some of the major topics discussed include:

Disclosure Requirements: Licensed Texas dealers offering salvage and nonrepairable titled vehicles for sale are required to display a notice alerting potential buyers to the type of title issued to the vehicle. At the time of sale, dealers must also obtain a purchaser’s signature on a disclosure statement acknowledging awareness of the type of title issued to the vehicle being purchased; including whether the salvage or nonrepairable title was issued due to flood damage.

Templates meeting the requirements outlined in Texas Administrative Code rules 221.50 and 221.51 are available on the TxDMV website.

National Motor Vehicle Title Information System (NMVTIS): Licensed Texas dealers offering salvage and nonrepairable titled vehicles for sale are December 2019

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required to open an account with NMVTIS. Dealers must submit a report detailing all vehicles brought into the dealer’s inventory every 30 days at minimum.

Notification of Scrapped or Destroyed Vehicles: Salvage vehicle dealers acquiring salvage

or nonrepairable motor vehicles for the purpose of dismantling, scrapping, or destroying are required to report to the TxDMV before the 31st day after the vehicle is acquired. Reporting requirements are satisfied by completion of Form VTR-340, Surrendered Ownership Evidence for Vehicles to be Dismantled, Scrapped, or Destroyed, and submission of the completed form to the local Regional Service Center along with surrender of the properly assigned ownership document for each vehicle. The dealer receives a copy of the Form VTR-340 with a date/time stamp for use as proof of ownership until the vehicle is sold to a metal recycler utilizing the Salvage Vehicle Dealer Bill of Sale for a Junk Motor Vehicle Form VTR-203.

Rebuilding Salvage Motor Vehicles: A salvage vehicle that has been rebuilt, repaired, or reconstructed may not be transferred on a salvage title. In accordance with Texas Administrative Code rule 221.11, the seller of a salvage vehicle that has been rebuilt, repaired, or reconstructed must hold a motor vehicle dealer general distinguishing number; therefore, a rebuilt salvage title 21

Upcoming Events

GE A V L SA

2020

TIADA DEALER ACADEMY Online registration available. www.txiada.org

February 10

Keeping Your BHPH Dealership Legal and Compliant Houston, TX

24

Facebook/Instagram Workshop: Increase Sales and Measure Your ROI Dallas, TX

April 6 From Inventory to Acquistion to

Tracking Service Department Metrics Arlington, TX (see pg. 29)

OTHER TIADA EVENTS January 2 0 Board of Directors Meeting Austin, TX

April 2 0 Board of Directors Meeting Austin, TX

must be obtained in the name of the licensed motor vehicle dealer prior to the vehicle being sold.

The aforementioned topics are only a handful of the major requirements imposed on the salvage industry. The TxDMV highly recommends that dealers interested in buying and selling salvage and nonrepairable vehicles attend a Salvage Dealer Training Seminar to gain a better understanding of the laws governing the salvage industry.

resource guide The TIADA Website: www.txiada.org Members can log in with their username/password and access our Dealer Member Directory, Legislative Action Center, Compliance Consultation Service and much more.

Register for all upcoming TIADA events online through the Calendar of Events, access our online membership application, find contact information for all our Local Chapters, and access many additional resources through our Knowledge Base.

Texas Department of Motor Vehicles 888.368.4689 www.txdmv.gov Office of Consumer Credit Commissioner 800.538.1579

22

www.occc.state.tx.us

Texas Comptroller 800.252.1382 www.window.state.tx.us NIADA 800.682.3837 www.niada.com

REPOSSESSIONS American Recovery Association 972.755.4755 www.repo.org or contact TIADA state office

FORMS Burrell Printing 800.252.9154 www.burrellprinting.com

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December 2019

Special Thanks to our

2019 INDEPAC Contributors (as of November 30, 2019)

$2,000 +

Tommy Gregory*

Eddie Hale Blake Ingram Mark Jones*

Greg Reine

Bob and Erika Blankenship

$1,000 -$1,999

Jeff Atchison Robert Beck Robert Berry Clint Cockerell John Freeman Pilar Goodson

Phil Lathrop Juan Sabillรณn Paul Scott

$500-$999 Vicki Davis Jeff Martin Kevin Roy

$250-$499 Keith Hagler* Wayne Meagher

Michael Thomasson Ryan Winkelmann Greg Zak*

Chris Templin Miguel Trevino

Sonny Paredez Bobby West

$100-$249 Chris Bean Robert Edenfield Carleton Heller*

Byron Riley* Christina Sabillรณn Kathrine Tolsch

Tommy Wittrock

*Monthly Contributors December 2019

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feature

Two Common OCCC Questions

by Joseph Adamek

Office of Consumer Credit Commissioner

A

s a Senior Review Examiner with the Office of Consumer Credit Commissioner (OCCC), I routinely answer questions about the admissibility of certain fees on motor vehicle retail installment transactions. Two of the most common fees I am asked about are convenience fees and GPS/tracking device charges.

Convenience Fees on Motor Vehicle Retail Installment Transactions

A convenience fee is a charge imposed for the privilege of paying a payment using a method that is not standard for the company (e.g., credit card payment over the internet). Section 348.108 of the Texas Finance Code lists all the authorized charges for collecting debt on a retail installment contract. Convenience fees (also known as expedited payment fees, payment processing fees, or service fees) are not authorized to be charged or collected by a retail seller in connection with receiving payments on a motor vehicle retail installment transaction. A retail seller (also known as a dealer) cannot receive any portion of a convenience fee, or receive any December 2019

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incentive from a third-party for utilizing a payment processing service.

Under certain circumstances, a dealer may allow a retail buyer to pay through a third-party payment processor, and the processor may charge a fee for its service.

This fee must be entirely between the buyer and the payment processor, and no portion of the fee may be retained by the dealer. For a convenience fee to be permissible, the dealer must ensure that: (1) the entire fee is remitted to the third-party payment processor, (2) the dealer does not receive any direct or indirect benefit from the fee (e.g., interest from an account in which the payment processing fees are held), (3) the fee is not required (i.e., other payment methods are available), and (4) the dealer retains adequate documentation that the fees are remitted entirely to the third-party payment processor.

GPS/Tracking Devices on Motor Vehicle Retail Installment Transactions

A dealer installing a GPS device to track a vehicle for repossession is a type of pre-default enforcement. Any 27

pre-default enforcement must be agreed to by the debtor according to Section 9.607(a)(1) of the Texas Business and Commerce Code. The act of a dealer installing a tracking device without effective consent is also a possible criminal offense according to Section 16.06 of the Texas Penal Code. Retail sellers must obtain consent, in writing, before installing tracking devices on motor vehicles sold in connection with a retail installment transaction.

A dealer may not charge a fee for GPS/tracking devices on motor vehicle retail installment transactions.

This type of fee is not authorized as an itemized charge by Section 348.005 of the Texas Finance Code.

In summary, dealers choosing to install tracking devices on motor vehicles must (1) incur the cost of the device and device installation, and (2) obtain effective consent before the tracking device is installed.

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Dealer Academy Education Offerings for Winter/Spring 2020

Instructor-Led Courses Keeping Your BHPH Dealership Legal and Compliant Presented by Michael W. Dunagan, TIADA General Counsel and author of the standard-setting books, “Dealer Financing of Used Car Sales” and “Texas Automobile Repossession: A Lien Holder’s Legal Guide.”

This seminar is the final answer in BHPH compliance. Mike speaks dealer, and with 40 years of experience representing hundreds of BHPH dealers, he knows your business inside and out. He will focus on the practical side of compliance that understands you have a business to run -and you want to run it right.

9:00am - 4:00pm

$249 TIADA Members, Each Additional $199 (must be from same dealership), $499 Non-members MONDAY, FEBRUARY 10, 2020, HOUSTON

Facebook/Instagram Workshop: Increase Sales and Measure Your ROI Presented by Lindsay Shearon, Dealer Consultant with Dealer OMG. This jam-packed session will explore the finer points of Facebook and Instagram marketing for dealers and go far beyond the quest for likes. Ideal for any dealer GM or Owner who is tired of not knowing their advertising ROI. 8:30am - 12:00pm

$149 TIADA Members, Each Additional $99 (must be from same dealership), $299 Non-members MONDAY, FEBRUARY 24, 2020, DALLAS

From Inventory Acquisition to Tracking Service Department Metrics: Getting and Selling the Right Vehicle Is the Bottom Line Presented by Brent Carmichael, Executive Conference Moderator, 20 Groups. NCM Associates.

This workshop is uniquely designed to cover the service department essentials that will increase your bottom line.

It will also include hands-on, interactive training that will allow you to inspect vehicles and learn exactly how to spot the most commonly overlooked types of vehicle damage. Wrap up the day with an interactive Q & A session with a panel of top dealers in Texas that will share how these practices are being implemented at their dealerships and walk you through their process of getting vehicles from the auction to the frontline.

9:00am - 4:00pm

$249 TIADA Members, Each Additional $199 (must be from same dealership), $499 Non-members MONDAY, APRIL 6, 2020, ARLINGTON

Cashflow, Budgeting, Forecasting, Sales and Collections – Critical Topics for the Success and Continued Growth of your Businesses Presented by Bill Elizondo, Chief Operating Officer, AFS Dealers, LLC BHPH/LHPH Web Based Software, Training and Consulting.

Choose Full Day or Half Day 9:00am - 4:00pm

The morning session will cover cashflow (Where are you now?) budgeting (Where do you want to go?), and forecasting (Where have you been?) and will focus on strategies around these areas. In the afternoon, dive into the Selling System and best practices and find out how your collection practices will empower your business as “The Real Money Maker.” Come for the whole day or just the half that works for you!

Full Day: $249 TIADA Members, Each Additional $199 (must be from same dealership), $499 Non-members Half Day (a.m. OR p.m.): $149 TIADA Members, Each Add’l $99 (must be from same dealership), $299 Non-members

MONDAY, JUNE 8, 2020, HOUSTON

Register online at www.txiada.org or by phone at 512.244.6060.

Texas Independent Automobile Dealers Association

Keep inventory moving with flexible financing.

Getting cars on the lot without the hassle of traditional financing.

BacklotCars.com/Float

feature

Making a List, Checking It Twice….

Preparing For An OCCC Exam

by TIADA Staff

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Local Chapters CORPUS CHRISTI G.R. Moore The Car Shack (dates announced at www.txiada.org)

EL PASO Ricardo Gardea Cars Plus Meeting – 3rd Friday (Monthly)

FORT WORTH Chris Templin Auto Land Meeting – 4th Thursday of Jan–May and Sep–Oct

HOUSTON Rudy Roudbari Sarco Enterprise Meeting – 2nd Tuesday (Monthly)

SAN ANTONIO Jose Engler Irving Motors Corp (dates announced at www.txiada.org)

VICTORIA Dennis Schroller Victoria Autos Direct Meeting – 1st Monday (Monthly)

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feature

How to Comply with a Comptroller Audit

by Texas Comptroller of Public Accounts Staff

O

ften, important information requires “refreshers.” This article provides a refresher on how your dealership should comply with a Comptroller audit.

Audits may sometimes have a negative connotation, but they serve an important purpose: Ensuring that payment and reporting requirements are correctly followed.

Our goal is to try and make an audit that your dealer is required to complete be as free from issues as possible.

We hope you find the following frequently asked questions about audits conducted by our office helpful, in the event you are audited.

Question: I received a Notice of Routine Audit. What do I do?

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Answer: Included with your Notice of Routine

Audit is an audit questionnaire. Complete the questionnaire and return it to the auditor. You will, shortly thereafter, be contacted by telephone to set up a mutually agreeable date and time to begin the audit and to schedule the entrance conference; your first face-toface meeting with the auditor.

Question: Why was my business chosen for an audit?

Answer: The law authorizes the Comptroller’s office

to examine the books and records of a business to determine if the correct tax was paid to our office. Most audits are routine, with businesses selected by a computer program. Occasionally, an audit may be generated from leads supplied by customers, competitors or others. Regardless 33

of the reason, the auditor is there to examine your compliance with Texas tax laws and to ensure that the correct tax — no more, no less — has been paid.

Question:

635 Fritz Dr. Ste 210 Coppell, TX 75019 469-637-0150

Audits may sometimes have a negative connotation, but they serve an important purpose: Ensuring that payment and reporting requirements are correctly followed.

Our goal is to try and make an audit that your dealer is required to complete be as free from issues as possible.

What periods does an audit cover?

Answer: The statute of limitations for all state taxes is generally four years; therefore, an audit will normally cover the most recent fouryear period. The audit can go beyond the four-year period if: • a return was filed erroneously and the tax due would increase by 25 percent or more; • no tax return was filed; or • a fraudulent tax return was filed with the intent to evade taxes.

Question: I was audited four

years ago. Why am I being audited again?

Answer: Occasionally, followup audits may occur even if the last audit resulted in no tax deficiency. Follow-up audits may be due to changes in filing amounts, changes in tax law, leads from other audits, customers, competitors or others.

Question: What records will

the auditor examine?

Answer: Before the audit begins, the auditor will let you know what accounting records they will need. Keep in mind that even if the notice is for a specific 34

type of tax audit, such as a motor vehicle seller-finance tax audit, the auditor may also check for other taxes for which you may be responsible.

Typically, the records requested for an audit include, but are not limited to: • s ales invoices; • a utomobile sales folders; • c ustomers’ contracts; • f inancing contracts; •p urchase invoices for supplies; • purchase invoices and journals for equipment, furniture, fixtures, etc.; • c urrent files of resale and exemption certificates; • accounting books, general ledgers, other ledgers and subsidiary journals; • c harts of accounts and financial statements reflecting profit and loss; T e x a s

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• federal income tax returns; • bank statements; • working papers and accounting data used to prepare tax returns; • computer records; • documentation supporting unaudited refunds; and • documentation supporting credits taken on returns.

Question: How long does an audit last?

Answer: The size and complex-

ity of a business determines how much time an audit may take.

Audit time may also be affected by the availability of records.

Question: Will the auditor look

at all my records for all four years?

Answer: This will be determined by the size and complexity of your business. The auditor will initially examine a portion of your records in order to look for errors. If errors are found, the auditor will1perform EPI-TIADAhalf 12-19.pdf 11/12/19

either a detailed audit (examine all records for the entire audit period) or a sample audit. A sample audit uses generally recognized sampling techniques so that the auditor can examine a representative portion of the records and project the errors found over the entire audit period.

Question: I understand that the

auditor needs to look at my sales invoices in order to verify that I collected tax correctly, but why my purchase invoices?

Answer: If a seller does not charge the correct tax, the buyer, as the ultimate consumer, must pay it.

Many Texas taxpayers, for example, buy items from out-of-state sellers who do not have a permit to collect Texas taxes. In any case, if the seller, either in Texas or out of state, does not collect Texas tax, the buyer has the responsibility to report and pay the tax. The correct way to report those taxes is by completing the 10:30 AM

“Taxable Purchases” section of the sales tax return.

Question: When a customer buys an automobile, I usually give away items as incentives, and to advertise my dealership. Are these examples of taxable purchases?

Answer: Yes. For example, the dealer owes sales or use tax on purchases of items such as key chains, license plate holders with the dealership’s name, and any other items given away as a promotion.

For more information about what to expect during an audit, please review our publication Notice of Routine Audit — How your Audit will Proceed at https://comptroller. texas.gov/taxes/publications/96-146. pdf. You can also request tax assistance by visiting our website at https://comptroller.texas.gov/ web-forms/tax-help/.

C

M

Y

CM

MY

CY

CMY

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ATTENTION STUDENTS!!!

$1,000

Marvin Norwood Scholarship DEADLINE

May 11, 2020 {Applications and/or any required documents received after May 11, 2020 will NOT be accepted.} Criteria and Guidelines 1. Each applicant must be entering or currently enrolled in an accredited college or a trade school. Proof of enrollment must be included with this application.

Date: Name:

DOB:

Address: City:

State:

Zip:

Email: (You will received email confirmation of receipt.)

Telephone Number: High School Last Attended:

2. Each applicant must provide a letter from their TIADA member sponsor that includes the sponsor’s address and phone number.

Address:

3. Each applicant must complete the application form.

Date of Graduation:

4. A copy of high school transcripts is required for applicants who are college freshmen. If applicant is currently enrolled, provide college transcripts with official university imprint.

Other High Schools Attended (Names and Addresses):

5. Provide a detailed description of participation in any academic, honorary, civic or extracurricular activities in college. In addition, a detailed description of high school activities is required from college freshmen along with a college acceptance letter.

6. Compose an essay of no more than two typed, double-spaced 8 ½” x 11” pages. The essay should discuss the applicant’s relationship with their TIADA scholarship sponsor, current education goals and future aspirations as it relates to the applicant’s subject/training area.

7. Provide at least two (but no more than three) letters of recommendation, no older than one year, from college/high school faculty, employers or other appropriate sources (not related).

36

SCHOLARSHIP APPLICATION

City:

State:

Zip:

Dates of Attendance:

College(s) you are attending or plan to attend for admission:

Parents Name(s): TIADA Member Name (Sponsor): TIADA Member Company Name: TIADA Member Address: City:

State:

Zip:

Sponsor Signature Should you have any questions, please contact TIADA at 512.244.6060. Please return the completed application with all required documents to: TIADA Attention: Scholarship Applications 9951 Anderson Mill Rd. Suite 101, Austin, TX 78750

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December 2019

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TIADA Auction App turns your phone into

CASH

*

Score savings on your phone with coupons that range from $75 to $250 each on buy-sell fees.

*Only available to current TIADA dealer members. Cash only represents redeemed discount value and does not mean actual currency.

feature

Does Your Credit Application Need a Tune-Up?

by Ronald D. Gorsline and K. Dailey Wilson Hudson Cook, LLP

W

hen a customer sits down at the finance desk in your dealership, the first step is to get some basic information. But the credit application isn’t just about obtaining identifying information. Federal law requires certain disclosures to appear in a credit application, and there are other disclosures that, while not required, are recommended. A credit application should include the following disclosures:

Alimony, Child Support, and Separate Maintenance

If your credit application asks whether an applicant is receiving alimony, child support, or separate maintenance payments, the application also must state that the applicant is not required to reveal that income unless he or she wants to rely on that income in the determination of creditworthiness.

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Credit Report

The Fair Credit Reporting Act allows persons to pull credit reports for “permissible purposes,” including in connection with an application for credit. The submission of an application (even if the creditor doesn’t tell the customer that his or her credit report is being pulled) or a separate express written authorization allows a creditor to pull a credit report. Even though the application itself allows the creditor to pull the applicant’s credit report, including a statement in the application authorizing a credit report puts the applicant on notice that you will be checking his or her credit and may help avoid misunderstandings.

Telephone and Text Message Authorization

Providing a cell phone number on a credit application constitutes consent to receive account-related calls and text messages, including servicing and collection calls. Even though not required, it is a good idea to include a disclosure explaining that by providing a cell phone number in connection with the application, the customer consents to receive account-related communications. If the creditor will engage in any marketing by placing calls or sending text messages to a cell phone (e.g., calling the customer to sell an extended warranty), the Telephone Consumer Protection Act requires that the creditor first obtain the customer’s prior express written consent. This consent can be obtained by including a specific disclosure in the application, along with a place for the customer to initial or sign, indicating that the customer wants to receive marketing calls and texts. However, the customer is not required to agree to receive marketing communications and must be able to apply for credit without giving such consent.

References

Consider revising your application to include a statement explaining when references will be contacted. The Consumer Financial Protection Bureau has cited companies for failing to inform customers that their references will be contacted for collection purposes, even though the Fair Debt Collection Practices Act allows creditors to contact references to obtain location information about a customer.

The credit application is the first document that you put in front of your customer. You don’t want the transaction to be a lemon — that is, faulty from the start.

Give your credit application a multi-point inspection today, and make sure that it includes these important federal disclosures.

40

Ronald D. Gorsline is a partner in the Tennessee office of Hudson Cook, LLP. He can be reached at 423.490.7562 or by email at rgorsline@hudco.com. K. Dailey Wilson is an associate in the Tennessee office of Hudson Cook, LLP. Dailey can be reached at 423.490.7567 or by email at dwilson@hudco.com.

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Please Welcome Our Newest TIADA Members DEALER MEMBERS Alema Auto Sales Adrian Cervantes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5302 County Road 2507, Caddo Mills, TX 75135 Auto Centrix Inc. Travis Robinson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3340 Wiley Post Rd, Carrollton, TX 75006 Auto Source of Texas Amir Kutob . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1608 14th St., Plano, TX 75074 Brothers Motors Kristyn Heisler . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226 S Houston School Rd, Lancaster, TX 75146 Darr Auto Sales Jim Darr . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2828 Franklin Ave, Waco, TX 76710 Del Norte Auto Armando Valverde . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3447 May St., Fort Worth, TX 76110 DFW Car Mart Ed Kent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2020 E Division St, Arlington, TX 76011 East Dallas Motorcars Tony Alberty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12150 Shiloh Rd, #112, Dallas, TX 75228 Elite Automotive Elizabeth Haro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9011 Montana Ave, El Paso, TX 79925 Epic Auto Group Azim Akhtar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3104 S. Rigsbee Dr., Plano, TX 75074 Exclusive Automotive LLC Michael Williamson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9806 Waterview Pkwy, Rowlett, TX 75089 Finn’s Discount Auto, Inc Steve Finn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8020 Alameda, El Paso, TX 79915 Hot City Auto Anthony Pascente . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PO Box 485, Conroe, TX 77305 H-town Car Sales Patricia Vanni . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 Highway 6 S, Houston, TX 77079 Mendo Motorz LLC Ernest Sanchez . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6525 Walzem Rd, San Antonio, TX 78239 Nate’s Automotive, LLC Monica Vincent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 813 Brown Trail, Ste 8, Bedford, TX 76022 New Beginning Motors Juan Padilla . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4012 South Fwy, Fort Worth, TX 76110 Tony’s Auto Plex Antonio Maldonado . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3532 SW Military Dr, San Antonio, TX 78211 Village Motors 2 James Beck . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6315 Industrial Dr, Sachse, TX 75048 Weber Creek Motors Corky Avila . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7649 Weber Rd., Corpus Christi, TX 78415

ASSOCIATE MEMBERS Dealer Associates Brown & Brown

Zane Gober . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3905 Coulter Ct, Arlington, TX 76016

we are. counselorlibrary.com 877-464-8326

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in the Re 2019

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earview December 2019

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43

Ignorance is no defense.

Know the law.

Repo and financing issues are among the most common violations found by the OCCC. If you own a previous edition of these books from 2008 or earlier, it is recommended that you upgrade to the current editions.

Dealer Financing of Used Car Sales This comprehensive book covers all aspects of the complicated world of seller-financing in Texas, including Maximum Finance Rates; Retail Installment Contracts; Contract Amendments; VIT; Repair Charges; Federal Disclosures and more.

TIADA Member Price: $125 (non-members $175)

Texas Automobile Repossession: A Lien Holder’s Legal Guide Everything you need to know about repossessions is addressed in this book, including Notification Requirements, Post-Repo Procedures, Private Sale vs. Strict Foreclosure, Bankruptcy, Post-Disposition Accounting, Tracking and Shut-off Devices, the 60% Rule and more. PLUS – includes all required forms.

TIADA Member Price: $125 (non-members $175)

TIADA

Now available for purchase online at www.txiada.org under “Legal Resources” or call 512.244.6060 to order by phone.

When ordering online, login with your TIADA username and password to receive the discounted rate. All prices include shipping. Orders are shipped in 3-5 business days. texas independent automobile dealers association

Attorney Michael W. Dunagan is the author of the two must-have books for every Buy-Here, Pay-Here dealer in Texas. Mr. Dunagan has been General Counsel to TIADA for over 40 years.

His law firm specializes in the representation of independent Texas car dealers.

44

TIADA texas independent automobile dealers association

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Answers to the Annual Compliance Quiz 2019

6. b. Strict Foreclosure (also known as Acceptance of

(questions found on pg. 14–15)

7. b. A matricula card is not acceptable proof of identity

1. A valid mechanic’s lien is superior to a prior recoded mortgage lien on a vehicle. (January, 2019; Fraudulent Mechanic’s Lien Claims Still Concern Car Creditors)

2. A. The Comptroller’s Office takes the position that

a GPS is for the lien holder’s benefit and does not fall under any exemption to sales tax; thus both equipment costs and air-time charges are considered to be taxable.

(March, 2019; Answering Dealer Questions About Sales Tax on GPS Units and Air-Time Fees)

3. True. The Texas Finance Code specifically provides

that one of these two items triggers debt cancellation under a DCA. (March, 2018; Looking at Insurance Options: Debt Cancellation Agreements Offer an Alternative)

4. None of the Above. All of the listed areas of shar-

ing are exempted from the Gramm-Leach-Bliley Act and the Federal Trade Commission’s Privacy Rule and thus none of the items would trigger the need to use the long-form notice with an opt-out. (June, 2019; A Review of Privacy Notice Requirements for Car Creditors)

5. c. Deferred down payments must be scheduled on the contract for payment before the second regular installment is scheduled to be paid. (February, 2019; Handling Deferred Down Payments)

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Collateral In Satisfaction) results in the forgiveness of any balance owed by the debtor. Thus, no deficiency can be reported to a credit bureau. (June, 2018; Do-It-Yourself Compliance Review: Getting Your House In Order). to support transfer of title. (April, 2019; Driver’s License Required?)

8. False. Any dealer offering a warranty must have a separate limited warranty agreement to spell out the terms of the warranty. (May, 2019; Offering Limited Warranties: The Dealer’s Options)

Bonus — RETAIL ANSWERS

9. b. All others are prohibited credit decision fac-

tors under Regulation B and the federal Equal Credit Opportunity Act.

10. d. All of the listed areas of sharing are exempted from the Gramm-Leach-Bliley Act and the Federal Trade Commission’s Privacy Rule .

11. False. Any dealer offering a warranty must have a separate limited warranty agreement to spell out the terms of the warranty.

12. b. Texas law provides that the tender of all required forms, documents, and payment to the County Tax Office establishes perfection.

13. a and b. The Texas Finance Code specifically pro-

vides that one of these two items triggers debt cancellation under a DCA.

45

behind the wheel

by Jeff

Martin

One More For the Road

TIADA EXECUTIVE DIRECTOR

W

hew, if you just read this magazine cover to on their website, you will find a page titled “Posters for cover you digested a lot of compliance inforthe Workplace.” There you will find the posters required mation. That must be it, right? There can’t be

by Texas as well as any federal required posters and all more, right? are available in a printable PDF. If you have been in business long enough, you know Now you know you can’t print these posters and there is always more. I want to leave them sitting on your conclude this compliance isdesk. Per the Workforce sue with a few softballs that are Commission, “Posters should easy to comply with but often be displayed in such a way UNDER THE FAIR LABOR STANDARDS ACT overlooked. that each employee can readLet me interrupt this article ily see them (generally, the with a brief word from my ficrequirements have language tional attorney: The author of such as “conspicuously The law requires employers to display this poster where employees can readily see it. this article, Jeffery Lee Martin, is placed” and “readily accesOVERTIME PAY not a labor law attorney. In fact, sible” to employees). That CHILD LABOR he is not an attorney at all and would mean that employees TIP CREDIT the information you are about to who do not normally get to read should not be construed as certain offices would not be NURSING legal advice. served by posters displayed at MOTHERS Thanks, fictional attorney! those offices. The offices, or Either way, as an employer there sub-offices, where those emENFORCEMENT are specific posters the Texas ployees normally congregate Workforce Commission and the would need to have the postUS Department of Labor say I ers displayed for the benefit ADDITIONAL INFORMATION must display. These posters inof the employees who are clude specific language and the served by each such location.” agencies have explicit areas in If you have questions the workplace they say I must about where to display postpost them. And you do too. ers at temporary worksites, Here is the good news, these mechanic shops, virtual ofposters will not cost you a fice spaces etc. there is inforpenny, other than time and enmation on that too. And if ergy. The Texas Workforce Commission provides many you need additional help you can call TWC Labor Law resources for small businesses including information on unit at 800.832.9243. If you still need help, then I guess required and optional posters that can be found on their you will need to hire a real attorney. website, www.twc.texas.gov. If you search for “posters” Good luck and here’s to staying compliant.

EMPLOYEE RIGHTS

At least 1½ times the regular rate of pay for all hours worked over 40 in a workweek.

An employee must be at least 16 years old to work in most non-farm jobs and at least 18 to work in non-farm jobs declared hazardous by the Secretary of Labor. Youths 14 and 15 years old may work outside school hours in various non-manufacturing, non-mining, non-hazardous jobs with certain work hours restrictions. Different rules apply in agricultural employment.

Employers of “tipped employees” who meet certain conditions may claim a partial wage credit based on tips received by their employees. Employers must pay tipped employees a cash wage of at least $2.13 per hour if they claim a tip credit against their minimum wage obligation. If an employee’s tips combined with the employer’s cash wage of at least $2.13 per hour do not equal the minimum hourly wage, the employer must make up the difference.

The FLSA requires employers to provide reasonable break time for a nursing mother employee who is subject to the FLSA’s overtime requirements in order for the employee to express breast milk for her nursing child for one year after the child’s birth each time such employee has a need to express breast milk. Employers are also required to provide a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public, which may be used by the employee to express breast milk.

The Department has authority to recover back wages and an equal amount in liquidated damages in instances of minimum wage, overtime, and other violations. The Department may litigate and/or recommend criminal prosecution. Employers may be assessed civil money penalties for each willful or repeated violation of the minimum wage or overtime pay provisions of the law.

Civil money penalties may also be assessed for violations of the FLSA’s child labor provisions.

Heightened civil money penalties may be assessed for each child labor violation that results in the death or serious injury of any minor employee, and such assessments may be doubled when the violations are determined to be willful or repeated. The law also prohibits retaliating against or discharging workers who file a complaint or participate in any proceeding under the FLSA. • Certain occupations and establishments are exempt from the minimum wage, and/or overtime pay provisions.

• Special provisions apply to workers in American Samoa, the Commonwealth of the Northern Mariana Islands, and the Commonwealth of Puerto Rico.

• Some state laws provide greater employee protections; employers must comply with both.

• Some employers incorrectly classify workers as “independent contractors” when they are actually employees under the FLSA. It is important to know the difference between the two because employees (unless exempt) are entitled to the FLSA’s minimum wage and overtime pay protections and correctly classified independent contractors are not.

• Certain full-time students, student learners, apprentices, and workers with disabilities may be paid less than the minimum wage under special certificates issued by the Department of Labor.

WAGE AND HOUR DIVISION UNITED STATES DEPARTMENT OF LABOR

1-866-487-9243 TTY: 1-877-889-5627 www.dol.gov/whd

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