Texas Dealer February 2018

INSURANCE

WHACK-A-MOLE

* * H OW BHPH DEALERS CAN PROTECT THEMSELVES IN A WORLD OF NAMED-DRIVER POLICIES

CHASING INSURANCE

In This Issue: – Michael W. Dunagan on What to Do When Peaceable Repossession Is Impossible – What Does Tax Reform Mean for Your Dealership?

– How to Shop for a DMS

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2018 TIADA Board of Directors PRESIDENT Greg Zak/Dixon Motors 7902 North Freeway Houston, TX 77037 Office: 281.931.1300 Email: greg@dixonmotorcars.com PRESIDENT ELECT Juan Sabillón/Mi Tierra Auto Sales 7935 Gulf Freeway Houston, TX 77017 Office: 713.644.2446 Email: jmsabillon@mitierraautosales.com CHAIRWOMAN OF THE BOARD Kathrine Tolsch/CICO Auto Sales 11050 Harry Hines Blvd.

Dallas, TX 75229 Office: 214.352.9282 / Fax: 214.352.8227 Email: cicoauto@verizon.net SECRETARY Robert Beck/Stop N’Drive Motors 711 N. General McMullen Dr. San Antonio, TX 78228 Office: 210.432.1101 Email: stopdrive@texas.net TREASURER Mark Jones/Mike Carlson Motor Company 264 Exchange Burleson, TX 76028 Office: 817.703.7973 Email: mjones@mcmcauto.com VICE PRESIDENT, WEST TEXAS (REGION 1) Paul Scott/Fiesta Motors – Lubbock 2599 74th Street Lubbock, TX 79423 Office: 806.765.3640 Email: pscott@gofiestamotors.com VICE PRESIDENT, FORT WORTH (REGION 2) Eddie Hale/Neighborhood Autos 1717 US 287 Decatur, TX 76234 Office: 940.539.2272 Email: ehale@neighborhoodautos.com VICE PRESIDENT, DALLAS (REGION 3) Greg Reine/Auto Liquidators 39670 LBJ Freeway Dallas, TX 75237 Office: 972.780.0001 Email: greg@autoliquidators.net VICE PRESIDENT, HOUSTON (REGION 4) Ryan Winkelmann/BJ’s Autohaus 5005 Telephone Road Houston, TX 77087 Office: 713.641.0980 Email: ryan.winkelmann@sbcglobal.net VICE PRESIDENT, CENTRAL TEXAS (REGION 5) Robert Blankenship/Texas Auto Center 6809 N IH-35 Austin, TX 78744 Office: 512.280.5333 Email: bob@texasautocenter.net VICE PRESIDENT, SOUTH TEXAS (REGION 6) Armando Villarreal/McAllen Auto Sales 4215 S. 23rd Street McAllen, TX 78503 Office: 956.668.8088 Email: armando@mcallenautosales.net VICE PRESIDENT AT LARGE Greg Phea/Austin Rising Fast 8024 IH 35 North Austin, TX 78753 Office: 512.828.0001 Email: greg@risingfastmotorcars.com VICE PRESIDENT AT LARGE Vicki Davis/A-OK Auto Sales 23980 FM 1314 Porter, TX 77365 Office: 281.354.3355 Email: aokautosales@embarqmail.com 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

Volume XVIII

/ Issue 2

/ Fe b r u a r y 2 018

texasDealer

5 Officers’ Message

contents

by Mark Jones, TIADA Treasurer

8 Letter to the Editor 11 Legal Corner: What To Do When Peaceable Repossession Is Not Possible

by Michael W. Dunagan

12 Upcoming Events 14 News & Notes 17 2017 Market Survey of Car Buyers

by Somir Paul

20 TIADA Scholarship Application 22 On The Cover: Insurance Whack-a-Mole: How BHPH Dealers Can Protect Themselves in a World of Named-Driver Policies

by Kate Johanns

24 Local Chapters 28 New Members 30 Shopping for a DMS

by Justin M. Osburn

34 2018 Auction App Directory 37 Dealerships: Here Are the Answers to Your Questions About Tax Reform

by David Wiggins

44 TIADA Member Application 45 Behind the Wheel

by Jeff Martin

Download the TIADA Auction App! Now you can download the all new TIADA Auction App on your smart phone. It offers the same great savings of the VIP Auction Card but with the convenience of a mobile app.

Get up to $200 off a a buy/sell fee at over 40 participating auctions around the state. See page 15 for details!

The Editor of the Texas Dealer magazine is Michael Spurlin, Social and Communications Director of TIADA. To change your address for subscription and/or for other TIADA products, call the TIADA state office at 512.244.6060 or fax 512.244.6218. E-mail: info@txiada.org. New Membership/Subscriptions: If you are a member of TIADA, you may receive this magazine free of charge. Membership year runs from Jan 1 to Dec 31. Back issues are available for $20 each subject to availability. Send a check or money order, along with your name and mailing address to TEXAS DEALER, Attn: Back Issues, 9951 Anderson Mill Rd., Suite 101, Austin, TX 78750. Sorry, no billing. 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.

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UCD-035 (01/18)

officers’ message What Are You Going to “Change” in 2018?

by Mark

Jones

Mike Carlson Motor Company (Burleson) TIADA TREASURER

CHANGE: (Transitive Verb) To undergo transformation or make a transition

I

: The act or instance of making or becoming something different : To make radically different or choose a new position or direction.

t is definitely not breaking news to TIADA members that in the last few years the aggressive buying habits of the subprime lenders have made running a successful independent dealership quite different, and we have all certainly seen CHANGE! In the past, we just worried about what our competitor down the street was doing different than us to steal away our customers. Today, we find ourselves competing directly against franchise dealerships with huge advertising budgets, rebate programs, and well trained F&I directors who are all vying to get a much larger slice of the pie in the subprime/BHPH space than ever before.

It seems that I have spent this last month having conversations everyday with other dealers that are all asking me the same general question. What do we need to CHANGE in our daily business in order to recapture our market share and take back the higher level subprime/ BHPH customers?

The famous philosopher Socrates may have provided us the answer over 1600 years ago when he said,

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“The secret of change is to focus all of your energy, not on fighting the old, but on building the new.” So then, how do we build the new, and what changes do we need to make in our businesses to bring back the types of customers that we may have lost? Let’s quickly take a look at a few areas that consumers are asking for from our industry and honestly ask ourselves if we need to “quit fighting our old ways” and “start building our new ways.”

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In order for us to compete and gain back market share, we have to deliver services to our customers that are time sensitive, solve specific problems with our product and services and, most importantly, match what today’s consumers want. We have to give them “value propositions” that convince our ideal customers why they should buy from us and not from our competition. Here are a few value propositions to chew on this month that are very popular with car buying customers in 2018... are you willing to change?

Consumers want to know BEFORE they arrive at your doorstep that the financing is finalized and they just need to choose their next vehicle when they arrive.

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Customers have always been impatient waiting to see if they could get approved at the dealership, and “pre-approvals” are a thing of the past. Consumers want to know BEFORE they arrive at your doorstep that the financing is finalized and they just need to choose their next vehicle when they arrive.

Giving them access to be able to complete a full credit application (either online or through their mobile device) and digitally attach any required documents so that you can underwrite and process their financing request and give them the decision is the answer. This is what customers want... are you willing to change?

Interactive Website That Is Accurate and Has New Technology

Your #1 sales representative that works for you 24/7, 365 days a year is your website. This is the face of your dealership in today’s world…yet, we are guilty in most cases of trying to shortcut costs here.

I frequently browse other dealerships and am amazed at the number that look EXACTLY THE SAME. They are “pre-fabricated, plug and play sites” that can be purchased at a low cost and a small monthly charge. Many of them even appear to have the same vehicles (stock photos?) and I am sure that some dealers have not updated their vehicle selection in the last six months.

People want to see the actual units that you have in stock TODAY that they can drive home AND they want to take a “virtual test drive” by spinning the car around on their screen and climbing inside the vehicle while sitting at home or on their cell phone at work. This is what customers want... are you willing to change?

History Reports and Better Warranties That Cover More Than Powertrain

If you are like me, I often read the surveys in all of the various trade publications and emails that tell us what consumers said influenced where they purchased their vehicle. Two items that continue to constantly rate in the top five reasons are the “quality of the vehicle” and “the security of having a warranty.”

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Now, we all know that just because a unit has a clean vehicle history report does not mean that it is any better mechanically than another unit that has a previous accident report, but, this is what today’s buyers want.

The old saying that “perception is reality” could not ring any truer when it comes to history reports.

Millions of dollars have been spent on TV and Radio commercials by companies that sell these reports and they have successfully convinced buyers what they need to look for to “protect themselves” from getting a bad used vehicle.

As far as Warranty Programs, the old days of giving a 30 day/1,000 mile or even a 3 month/3,000 mile powertrain warranty is just not cutting the mustard any longer. Buyers expectations of “what is fair” has changed and they want to be protected so that they have LITTLE OR NO OUT OF POCKET EXPENSE for at least the first 12 months/12,000 February 2018

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miles of ownership (including free oil changes!). I know this one is hard to swallow but, this is what customers want... are you willing to change?

Lower Down Payments at Point of Sale

I recently spent an afternoon with our finance manager looking through old credit applications that we had in boxes from 2008-2009.

Amazingly, the average income level of the customers from 10 years ago is exactly the same as our current credit applications from 2018!

Basically, many consumers today are dealing with 2018 cost of living prices on a 2008 salary. They simply do not have the same disposable income for down payments that we think that they should have in order to purchase a vehicle.

Until we see wages increase, if we want to deliver the same volume of sales each month, it pains me to say that lowering our required initial investment may be a trend that is

becoming the new normal… This is what customers want... are you willing to change?

Change itself can certainly be scary. The fear of “the unknown” has stopped people from progressing and reaching their full potential since the beginning of time.

However, making a change might be EXACTLY what your dealership needs. I know that starting the process can sometimes seem almost impossible, but regardless of what changes you are thinking about making in 2018, I applaud you for trying a new direction, adjusting, and doing something different.

My hope is that we will all take the advice of Socrates and “focus all of our energy on building the new.”

Please don’t forget that you have over 1,500 TIADA team members standing beside you who are rooting you on!

Have a great tax season my friends. Hope to see you soon.

7

letters to the editor Harvey Relief

Editor’s Note: Tony and Karrie Pearce of American Auto Company, were among the many members whose homes and businesses were damaged by Hurricane Harvey and received assistance from NIADA’s Emergency Relief Fund.

Their story was detailed in the November 2017 issue of Texas Dealer.

M

y wife and I want to thank you so much for your gift in this personally difficult time. Both of us were surprised and humbled by the generosity and concern displayed on behalf of the dealers’ association. The gift will be put to good use as we move forward in our lives.

It has been almost eight years ago that my wife and I “took the leap” and opened our own business. Because I had

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worked for franchise dealers for the prior 20 years, I believed going into business for ourselves would not be much of a stretch. As all of you know, I was wrong!! Working in the car business and becoming a buy-here, pay-here dealer were completely different. From the beginning, my fatherin-law, George Karlen, urged me to join the association. He knew that I was going to need all the help and experience that I could get! As a result of following his suggestion, I have received many benefits such as continued dealer education, legal advice and countless personal experiences shared with me from fellow association members.

I live and work in Beaumont, Texas. During Harvey, we received over 60 inches of rain in 72 hours. As a result, our home, along with thousands of others, was flooded. We had 68 inches of water that remained in our house for over one week. After the flood receded, we were allowed back into our neighborhood to access our home. The home my wife and I have lived in for over 20 years. The home I just finished paying off this past year.

As we walked through the front door, we experienced emotions ranging from disbelief and shock, to sadness as we surveyed our destroyed possessions. When we evacuated, we left in a hurry (that’s another story!) bringing only a few changes of clothes. Needless to say, the house and all of its contents were destroyed. All of the old photographs and family memorabilia, everything, gone.

Meanwhile, we have a business to run. Thankfully the inventory was dry, but what about all those accounts?

How many were flooded? How many are insured? How many have been displaced and forced to move to another town. Anyway, you get the picture!

In Steve Jordan’s letter, he said that “recovery is a process that does not happen overnight.” He is right.

However, I will say recovery does happen and we are on our way, one day at a time, one claim at a time. Many have it far worse! I am blessed to have my health, my family and an opportunity. I am blessed to be an independent used car dealer and to be in an industry whose only limits on success are self-imposed. Again, my family and I are so grateful for your kind support and generous gift from the NIADA Emergency Relief Fund.

www.daaokc.com

Sincerely, Tony and Karrie Pearce, American Auto Company

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February 2018

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by Prime-Time Business Institute Michael York has traveled the country, working with dealers of all sizes. Named the “International Business Coach of the Year” by Prime-Time Business Institute, he has trained literally thousands of individuals on personal and professional growth. His presentation during the 2017 Annual Conference was one of the most highly attended sessions in recent memory.

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EPI-TIADAhalf Feb2018.pdf

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legal corner

What To Do When Peaceable Repossession Is Not Possible Dealer Question: I know that as a car creditor with a lien on a vehicle, I can peaceably repossess the vehicle when the contract is in default. Occasionally, a debtor will hide the vehicle or lock it up in a garage where I can’t repossess it.

I’ve contacted our local police department for help, but they tell me they can’t get involved without a court order. What are my next steps when a peaceable repossession is not possible?

Answer: The Uniform Commercial Code (the Texas version is known as the Texas Business and Commerce Code) provides that the holder of a security interest in collateral can upon default peaceably repossess the collateral without any type of legal process. The key word here is “peaceably.”

C

ourt cases have held that the refusal of a debtor to relinquish possession of collateral takes the situation out of the realm of peaceable. If a repossession can’t be accomplished peaceably (that is, with the permission of the debtor, or without the knowledge of the debtor and without breaching the peace), then it will be necessary to obtain an order (or “writ”) from an appropriate court.

Law enforcement officers have generally been trained that they can’t order a debtor to turn over collateral to the creditor without a court order. A creditor, being a private citizen, can peaceably repossess collateral without a court order. A law enforcement officer, by virtue of his or her position, is, in the eyes

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of the law, a government official.

The U.S. Constitution forbids governments or government officials (except in a few emergency situations) from taking property from a citizen without due process of law. Due process of law is accomplished in this situation by applying for relief from a court.

On those occasions when selfhelp repossession is not available to the vehicle lien holder, such as when the collateral is hidden or locked up and the debtor refuses to return it or when repossession cannot be accomplished without breaking and entering or other breach of the peace, the creditor may have no alternative but to turn to the court system to enforce his or her rights to the collateral. The most appropriate remedy for a secured creditor seeking court-ordered return of collateral is referred to in Texas as sequestration (in some states the process is referred to as replevin).

Sequestration is a process by which a court, upon suit being filed and upon being presented with

by Michael

Dunagan

W.

TIADA GENERAL COUNSEL

Sequestration is a process by which a court, upon suit being filed and upon being presented with evidence of certain required conditions, can order the collateral to be seized by a constable or sheriff and held pending final judicial determination of the ownership rights to the collateral. evidence of certain required conditions, can order the collateral to be seized by a constable or sheriff and held pending final judicial determination of the ownership rights to the collateral.

Recourse to sequestration involves the use of the officers empowered by the state (as opposed to self-help repossession), so constitutional due process 11

Upcoming Events TIADA DEALER ACADEMY Online Registration available at www.txiada.org

February 2018 1 3 Connecting with Subprime Car

Buyers on Facebook Online

March 2018 8 Uncommon Leadership: The

Challenge of Becoming Remarkable Online

2 6 Collect the Cash, Not the Car

San Antonio, TX

April 2018 9 Keeping Your Dealership Legal and Compliant Victoria, TX

3 0 Social Media Marketing for

Independent Dealers Houston, TX

May 2018 2 1 Sales Essentials for

Retail/Special Finance Dealers Houston, TX

OTHER TIADA EVENTS April 2018 1 5 Board of Directors Meeting

Austin, TX

12

considerations arise, and strict compliance with legal procedures is required.

To obtain a writ of sequestration, the secured creditor must show that he or she is legally entitled to possession of the property and that the party in possession will “conceal, dispose of, ill-treat, waste, or destroy the property or remove it from the county during the suit.” A bond must also be posted, in an amount set by the court, before a writ will issue.

Once a judge is satisfied that the creditor is entitled to an order of possession, he or she will sign an order for the clerk of the court to issue the writ of sequestration. The order will also specify the amount of bond that is to be posted by the creditor. Court rules require bonds to be at least the amount of the value of the property plus costs. Some courts will allow local individuals with non-exempt real property to post signature bonds.

Others may require a corporate surety bond or a cash bond.

After the bond is received and approved by the court clerk, the writ is issued and sent to the sheriff or constable instructing the officer to take possession of the property. Sequestration is only a temporary taking process, so the secured creditor must go forward with obtaining a final judgment awarding ultimate possession. However, once property is taken by an officer with a writ, many defaulting debtors don’t respond to the suit.

If the debtor doesn’t respond, the creditor is entitled to take a default judgment.

To obtain a writ of sequestration, the secured creditor must show that he or she is legally entitled to possession of the property and that the party in possession will “conceal, dispose of, ill-treat, waste, or destroy the property or remove it from the county during the suit.”

Once the officer takes possession of the property, the creditor can ask the court to grant it possession after ten days, absent the filing of a counterbond by the debtor. While it is rare for a debtor to file a counter-bond, the court could award possession to the debtor pending a final determination of the legal rights of the parties.

Because of the technical procedural due process requirements of sequestration, it will usually be necessary for an attorney to prepare the appropriate pleadings and affidavits.

Justice-of-the-Peace courts have the authority to issue emergency orders, including writs of sequestration, but not all J.P.s will undertake to handle a sequestration. Some will allow individuals without attorneys to file suits seeking sequestration writs in their courts. Some even provide forms for creditors to fill out. Justice courts have jurisdiction in cases where the value of the collateral does not exceed $10,000.00.

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It has been our experience that most J.P.s, choose not to get involved in issuing writs. To determine whether your local J.P. will process a sequestration action and whether the lien holder can file without an attorney, call the justice court and ask the judge or civil clerk.

If the value of the vehicle exceeds $10,000, it will be necessary to file the action in a county or district court.

Generally, representation of an attorney will be required at that level.

We occasionally run into situations where debtors simply refuse to honor the officer’s demand for possession under the writ. It is then necessary to file an action in the court seeking to have the debtor held in contempt of court. This process requires additional procedural steps and thus adds to the expense of the process.

While our discussion up to now has involved lien holders obtaining possession from debtors after default, the sequestration process can be used whenever a third party is wrongfully in possession of collateral and refuses to return it. Examples would include someone who has “bought” the vehicle from the debtor without clearing the lien; a third party holding a vehicle to secure some type of obligation owed by the debtor that is not superior to the vehicle lien; and a person claiming a wrongful mechanic’s or storage lien (see my article “Fraudulent Mechanic’s Lien Claims Still Concern Car Creditors” in the February, 2016 issue of Texas Dealer for more about steps to take when confronted with a questionable lien claim).

Finally, a practical consideration about sequestration: When neither the debtor nor the vehicle can be found, this remedy is of little value.

The writ must be served upon the debtor (or a person in illegal possession of the property). The sheriff or constable attempting to serve the writ will typically not provide skip-tracing services, and will rely on the creditor to supply a valid address.

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Conclusion

Given the cost and time restraints of the sequestration process, selfhelp repossession is still the most desirable way to retake collateral.

But when peaceable repossession is unavailable, sequestration is the safest and best remedy for a car creditor.

(Editor’s Note: This article is taken from Dunagan’s book, Texas Automobile Repossession: A Lien

Holder’s Legal Guide. The book is available online at txiada.org or by contacting the TIADA office.)

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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news & notes

Happenings in the Industry…

compiled by Texas Dealer staff

Travis County’s Bruce Elfant Named Tax AssessorCollector of the Year

T

ravis County Tax Assessor-Collector was recently named the 2017 Tax Assessor-Collector of the Year by the Tax Assessor-Collectors Association of Texas. The state’s 254 tax assessor-collectors recognized Elfant for his contribution to his county, state and nation.

“It is said his success is validated by strong leadership, community participation, compassion and the upholding of public values,” said the association’s vice president, Linda Bridge of Bee County, as she announced the winner of the Tax Assessor-Collector of the Year. “He embodies the spirit of excellence in public stewardship and consistently demonstrates a deep devotion to public interest, civic duty and social justice.”

Elfant has served as Travis County’s tax assessorcollector since 2012. “I am humbled, grateful, proud and thankful to the state’s tax assessor-collectors for naming me the 2017 Tax Assessor-Collector of the Year,” Elfant said.

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feature 2017 Market Survey of Car Buyers

by Somir Paul

Woodlands Financial Services

T

he following data comes from the Market Survey of Car Buyers conducted each year by Woodlands Financial Services, Inc. In total, 400 car buyers were surveyed from November 1–30, 2017. Last year’s sample size was 350. Customers were randomly selected and interviewed either in person at the Woodlands Financial Payment center or via telephone.

Key Findings WHAT BROUGHT YOU TO THE DEALER?

Drive by, referrals and repeat customers accounted for 91.5% of the total buyers at the store compared to 84% in 2016.

50

47.25 40

40 %

30

26.75

25 19

17.5

20 10

9

7 0.5

0

4

1

3

2017

2016

TV/Radio Referred by Friend

Magazine/NP Repeat Customer

Dealer Website Driving By Woodlands Financial Services Dealer Conference 2017

#1 REASON TO BUY? 45 40 35 30 25 % 20 15 10 5 0

42.5

20.75

42

20.5

17

17

20

12.25 0.5

3.5

1

2017 Appearance

Location

3

2016 Financing

Price

Customer Service

Selection/Inventory

Critical factors that influenced the buying decision in order of importance are: the right inventory selection, financing, customer service and then price. This is the first time in the survey’s history that finance is in second place.

Woodlands Financial Services Dealer Conference 2017

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WHAT AMOUNT OF MONTHLY PAYMENT CAN YOU MAKE ON THE NEXT VEHICLE?

There was a 9% increase in customers willing to make a monthly payment of $300 to $400. Additionally, there was an increase in the customers willing to pay more than $500 per month.

50 39.75

40

33

31

30

30

22

20

14.5

12

10 0 %

13

0.75

$300 or Less

$301-$400

$401-$500

2017

$501+

4

Cash in Full

2016 Woodlands Financial Services Dealer Conference 2017

WHEN DO YOU PLAN TO BUY YOUR NEXT VEHICLE? 40

36

33.75

35

30

29

27

10

10.25

27

24

25 % 20 15

The customers that want to buy a car next year (2018) is 6.75% higher in this year’s survey compared to the same time last year.

13

5

0 This Year

Next Year 2017

Future

Undecided

2016 Woodlands Financial Services Dealer Conference 2017

Last year 40% of customers said that they would not go back to the same dealer. This year, that number dropped to 26%. The YES number is still at 45%, but the undecided has gone up from 15% to 29%.

DO YOU PLAN TO BUY FROM THE SAME DEALER AS YOUR LAST PURCHASE? 50

45.25

45 40

40

30 %

26

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20

15

10

0 2017

Yes

No

2016

Undecided

Woodlands Financial Services Dealer Conference 2017

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WHY WOULD YOU CHOOSE NOT TO BUY FROM THE LAST DEALER YOU VISITED/PURCHASED? 40 33

30 21

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16

15

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14

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12

8

13

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0 2017 Customer Service

Price

19

11

5

%

19

2016

Not Enough Selection

Axis Title

Car Problems

Closed/Moved

* Multiple answers given

Wants a NEW vehicle

Other

Woodlands Financial Services Dealer Conference 2017

Customer Service ratings have substantially improved. Unhappy customers were 32% in 2014, 14% in 2016 and 8% in 2017.

The top two reasons for voluntary returns this year were inability to afford the vehicle and non-payments.

These reasons make up 72% of the voluntary returns compared to 60.5% in 2016. Meanwhile, mechanical reasons for a returns dropped to 23% compared to 30% in 2016.

WHY DID CUSTOMERS VOLUNTARILY RETURN THEIR VEHICLES? 50

45

40 30

30.5

27

30

30

23

20 10 0

0

1

1

2017 Budget Mechanical Purchased New

1

1

1

0.5 0.5

Customer Service Moved Terms

3

2

1

2

2016 Deceased Non-Payment Wrecked/No Ins Woodlands Financial Services Dealer Conference 2017

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ATTENTION STUDENTS!!!

$1,000

Marvin Norwood Scholarship DEADLINE

May 8, 2018 {Applications and/or any required documents received after May 8, 2018 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. High school senior applicants must be in the top 25% of class.

Other High Schools Attended (Names and Addresses):

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

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

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).

20

SCHOLARSHIP APPLICATION

City:

State:

Zip:

Dates of Attendance:

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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on the cover

by Kate Johanns Contributing Writer

INSURANCE

WHACK-A-MOLE *HOW BHPH DEALERS CAN PROTECT THEMSELVES IN A WORLD OF NAMED-DRIVER POLICIES

CHASING INSURANCE

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O

wning a buy-here pay-here dealership has never been easy, but in the 15 years since Texas began allowing insurance companies to abandon standard auto coverage in favor of cunningly worded policies rife with exclusions, it’s become one giant game of insurance whack-a-mole.

“It’s a nonstop daily battle,” says Robert Beck, TIADA Secretary and the owner of Stop N’ Drive Motors in San Antonio. “Subprime insurance companies play on words, and the consumer is almost guaranteed to walk out with a policy with a named driver exclusion.”

Since 2003, insurance companies in Texas have been permitted to sell policies with named driver exclusions, meaning the only household members covered to drive a car are those whose names are on the policy. If someone else from the residence happens to be behind the wheel during an accident, the insurance company denies the claim—leaving both the consumer and the BHPH dealer/lienholder in the lurch.

Take one of Beck’s customers, who did what any normal person wants to do: Show off his car. Unfortunately, Beck’s customer and his brother happened to be in an accident while the brother was driving, and the car was totaled, resulting in a loss for Stop N’ Drive.

“The consumer doesn’t behave any differently than you would with your car,” Beck says. “These are toilet-paper policies.”

Working to protect BHPH dealers from the financial losses associated with named-driver exclusions has long been a TIADA priority. The association takes a three-pronged approach: Fight against these subprime policies in the Legislature, advocate for state rules and

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regulations that protect lienholders, and educate BHPH dealers about various strategies they can employ to protect themselves from risk.

At the end of the day, no one approach works for every dealer. The right combination of chasing insurance, collateral protection insurance and debt cancellation agreements is unique to each dealership, depending on sales volume and the actual cash value of its inventory. What is universal, however, is the need for BHPH dealers to educate themselves on a changing marketplace.

“What I call the ‘old model’ isn’t working anymore,” TIADA General Counsel Michael W. Dunagan says.

The Evolution of Substandard Policies

The “old model” sounds so simple compared with the challenges faced by today’s BHPH dealer. A buyer would purchase property damage insurance, and the dealer would monitor the buyer’s coverage, ensuring the collateral remained

covered throughout the term of the lien. Because insurance companies sold standard policies that contained protections for lienholders, the biggest problem a BHPH dealer faced was a lowball valuation of a damaged car. But now, insurance companies are free to write their own policies, so they write extremely targeted policies for specific groups of consumers—policies chock-full of exclusions and requirements that must be met before a claim is paid. With enough exclusions, a driver in the subprime market can walk away with “full” coverage that doesn’t cover much of anything. The insurance company makes money based on the volume of subprime policies they write— and the low losses that result from denial of claims.

“Customers don’t really know what they’re buying,” TIADA Executive Director Jeff Martin says.

“They just know they need to get insurance. They don’t know what they’re getting out of it.”

Add a lack of understanding to the straw purchases so common in the BHPH industry, and it’s a recipe for dealer headaches and increased uninsured losses.

“It’s a nonstop daily battle.

Subprime insurance companies play on words, and the consumer is almost guaranteed to walk out with a policy with a named driver exclusion.”

Robert Beck, Stop N’ Drive Motors, San Antonio 23

Local Chapters VICTORIA Billy Jurkash Northpoint Auto Sales, Inc. 361.655.9191 npas@att.net Meeting – 1st Monday (Monthly) FORT WORTH Mark Jones MCMC 817.703.7973 mjones@mcmcauto.com Meeting – 4th Thursday of Jan–May and Sep–Oct

“I don’t believe my customers know what they’re signing up for,” says Ryan Winkelmann, owner of BJ’s Autohaus in Houston.

“Customers go with the cheapest rate. They want ‘full’ coverage but with the minimum requirements, and they’re not worried about the lienholder getting paid. They’re worried about getting back on the road.”

And, Winkelmann says, expecting a driver not to hand his keys to someone else simply isn’t realistic.

“Let’s face it: I drive my wife’s car all of the time, and she drives mine,” he says.

not and the breadwinner is involved in such an accident, the results can be dire.

“As I did more research, I was appalled that companies were selling such policies,” says Thompson, who has been an insurance agent for 35 years. “I have spent hours trying to explain this to my peers. These policies are being sold to people who are not educated on what they’re getting. People are truthfully just buying based on price. Auto dealers are put in the position where their loans are not protected. And small car dealers are losing large sums on an annual basis.”

A Solution Stopped in the Senate

For the past three sessions, Thompson has filed and successfully passed the Walter Sullivan Act in the House, gaining more overwhelming support with each passing session. Thompson’s former chief of staff, Emily Kirchner, explains that while the bill’s language has been tweaked each subsequent session based on Texas Department of Insurance feedback regarding implementation, its intent has remained the same: “Prohibit named driver policies, but allow specific individuals to be excluded by name on a policy to ensure policyholders understand who is covered and who is not.”

TIADA has supported each iteration of Thompson’s bill—most

DALLAS COUNTY Eddie Hale Neighborhood Autos 940.539.2272 ehale@neighborhoodautos.com Meetings as needed/TBD HOUSTON Rick Maroney Maroney Auto Sales 713.691.3800 rmaroney@usa.net Meeting – 2nd Tuesday (Monthly) SAN ANTONIO Robert Beck Stop N’ Drive Motors 210.432.1101 stopdrive@texas.net Meetings quarterly (dates announced at www.txiada.org) EL PASO Ricardo Gardea Cars Plus 915.778.8285 cars_plus@att.net Meeting – 3rd Friday (Monthly) 24

Named driver policies were the creation of a Texas Legislature seeking to further deregulate insurance, so the ultimate solution to the BHPH dealer’s problem—prohibiting such policies—must be statutory as well. It’s a cause close to the heart of Rep. Ed Thompson (R–Pearland), whose close friend Walter Sullivan was killed in a 2011 automobile accident. The other vehicle’s owner had a named driver policy, and the driver at the time of the accident was not named on the policy, so no coverage existed.

Sullivan’s family had taken financial precautions for such a situation, Thompson says, but if a family has

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recently, HB 915—and the association has not been alone. Consumer watchdog group Texas Watch, which estimates 1.5 million cars in Texas are covered by named driver policies, also supports the bill.

“Named-driver policies are junk polices that have endangered millions of Texas families for far too long,” Texas Watch Executive Director Ware Wendell says. “They shouldn’t qualify as insurance in our state.”

(Wendell is no stranger to this issue—in 2013, he served as Sen. Wendy Davis’ chief of staff when Davis passed into law a TIADAsupported bill requiring additional disclosures to consumers purchasing named-driver policies.

While the disclosure bill brought additional legislative awareness to the issue, in practice BHPH dealers say it hasn’t effected much change.)

HB 915’s opposition came from companies that turn a profit by selling named-driver policies, Kirchner says.

“They argue they would have to drastically increase monthly premiums, pricing many people out of buying insurance, so more uninsured motorists would be on the road,” she says. “However, Rep. Thompson’s office has the data to show that a 5 percent to 7 percent monthly increase is all that would be required to ensure a more transparent product that covers drivers, and this does not prohibit drivers from purchasing a legitimate insurance product.”

Despite passage with overwhelming support in the House in 2013, 2015 and 2017, the Walter Sullivan Act has been stopped in its tracks in the Senate, dying in the Business and Commerce Committee. One potential clue as to why: DFW area insurance giant Al Boenker III—who, February 2018

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through his companies, sells named-driver policies—is a top contributor to Lt. Gov. Dan Patrick’s campaign, already contributing $100,000 to the Texans for Dan Patrick PAC during the 2018 election cycle.

Steps BHPH Dealers Can Take

With a Legislature that only meets every two years and a lack of Senate support, a BHPH dealer can’t afford to wait for a statutory solution. It’s critical that dealers have a plan of attack to protect their interests: devote employee time to “chasing insurance,” or constantly monitoring which customers have insurance and which don’t; force-placing collateral protection insurance, or CPI, when customers drop damage protection coverage; or offering debt cancellation policies to customers at the time of sale. Each option has pros and cons.

“We’ve chosen to go the route of education, but you can still get bit,” Beck says. “Things fall through the cracks.”

At TIADA’s request, the Office of Consumer Credit Commissioner (OCCC) issued an opinion letter in December 2012 affirming that a BHPH dealer can reject named-driver policies as part of a sales transaction. At Stop N’ Drive Motors, customers are only urged to buy insurance when the dealer is on the phone to ensure that they aren’t sold a substandard policy.

“We press the issue until we get a policy we can accept,” Beck says.

And while state law prohibits a dealer from dictating the source of insurance, a BHPH dealer can refer customers to specific insurance agents.

The problem is, many companies default to a named-driver policy come renewal time six months later, and the cycle begins anew. At Abilene Used Car Sales, two of 24 employees deal only with insurance. “We educate them,” says office manager Jennifer Lovelady. “A lot get mad.”

For more than five years, Abilene Used Car Sales has relied on CPI to mitigate its risk—and owner

Despite passage with overwhelming support in the House in 2013, 2015 and 2017, the Walter Sullivan Act has been stopped in its tracks in the Senate, dying in the Business and Commerce Committee.

25

Tommy Gregory says it’s been popular with customers, some of whom would rather have CPI than their own insurance.

CPI has been an option for Texas BHPH dealers since the late 1990s.

An auto finance creditor can insure its lienholder interest in the collateral if the customer fails to provide or maintain the insurance required until the end of the credit agreement.

Bill Murphy of CP Insurance Associates was a BHPH dealer in Austin in the mid-1990s when he saw a need for self-financing dealers to protect themselves in a manner similar to banks and credit unions.

He began searching for a company willing to write such policies and eventually partnered with American National.

“No customer walks in and says, ‘I need a policy that protects the lienholder,’” Murphy says. “If the lienholder doesn’t look out for himself, who will?”

Whether a dealership is big enough to have CPI is a matter of economics, Murphy says. “Dealers that sell more than 15 cars a month, depending on the cost of the car, are typically big enough to have CPI.” Chris Kirwan of Berkshire Risk Services, which provides CPI coverage along with back-office insurance monitoring services, explains that CPI is a straight pass-through to the consumer. “With the Texas CPI statute, any auto finance entity is allowed to pass on the cost of coverage—the actual premium plus administrative costs incurred.”

CPI covers physical damage and does not include any type of liability insurance. A BHPH dealer can force-place CPI at any point during the finance term when the customer has allowed dealer-required insurance to lapse—as soon as the end of a two-week grace

26

period after driving the vehicle off the lot. Kirwan explains that he’s seen many dealers have success with allowing customers to leave the lot without insurance, as long as the customer has acknowledged that CPI will be added within a fixed period of time if the customer doesn’t purchase his own coverage.

“This approach—allowing uninsured cars off the lot—may seem intuitively ill-advised, but it is the better of the two options,” Kirwan says. “Dealers who demand evidence of insurance upfront generally get exactly what they ask for: insurance at the time of sale, followed by steep attrition as customers who purchased coverage solely to obtain possession cancel off, leaving the dealer to chase reinstatements or add CPI. The better approach is to explain how insurance will be enforced—‘Mr. Customer, you provide it or we will’—and let people sort themselves naturally into one category

CHASING INSURANCE

or the other at the time of sale.”

The third and newest option for BHPH dealers is the debt cancellation agreement. This is a noninsurance addendum to a credit agreement that, in exchange for a monthly fee, obligates the creditor to cancel the debt in the event of a total loss or unrecovered theft of the financed auto. The customer voluntarily enrolls at the point of sale; debt cancellation cannot be force-placed.

Debt cancellation provides a “logical solution to an illogical process,” says Shorty McKenny of Assured Vehicle Protection, a provider of debt cancellation agreements. “Debt cancellation protects the dealer and the consumer in the event of a total loss.”

A debt cancellation agreement is a waiver, not insurance. It does not provide a benefit in the case of a fender-bender, something BHPH dealers need to be conscientious about. “In the event that a dealer promises to fix a car, the promise to pay becomes insurance,” McKenny says.

No matter which strategy or combination of strategies a BHPH dealer employs, it’s critical to think about how to protect yourself, especially in an insurance market rife with exploding losses and premiums. There might not be a way for BHPH dealers to win this game of insurance whack-a-mole every time—but at least the tools exist to reduce the amount of time spent playing it.

“This is a challenging and complex issue dealers will continue to grapple with in the coming years,” Martin says. “Although we’ve recently encountered legislative roadblocks on this issue, we’ll continue working on all fronts as we search for solutions that protect both our members and their customers.”

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Please Welcome Our Newest TIADA Members DEALER MEMBERS CW Auto Solutions Cindy White PO Box 1043 Pinehurst, TX 77362 Dillon Auto Sales - Branch Michael Dillon 2828 Palmer Hwy Texas City, TX 77590 DriveTime - Kingwood Licensing Department 22211 Eastex Freeway Kingwood, TX 77339 DriveTime - Northwest Freeway Licensing Department 17930 Northwest Freeway Jersey Village, TX 77065 Enterprise Holdings Rick Botello 21128 Spring Towne Dr Spring, TX 77388

Freeman Auto Center John Freeman 12018 Hwy 146 Dickinson, TX 77539

Mi Tierra Auto Sales - Pasadena Christina Sabillon 4545 Spencer Hwy Pasadena, TX 77504

J.G. Hollins Motors Sarah Davis 4414 Old Yale St. Houston, TX 77018

Neighbors Auto Sales Abdul Osman 19923 Brookway Oak Ct Spring, TX 77379

Kwality Auto Sales & Finance Sam Mohammad 14512 West Rd. Houston, TX 77095

PPLCars.com Adel Khechana 12530 Country Arbor Ln. Houston, TX 77041

MCMC Customer Service Ray Lloyd 1301 E. Weatherford St. Fort Worth, TX 76102

Texas Certified Cars LLC Fadi El Mislmani 5828 Star Ln Houston, TX 77057

Mi Casa Motor Credit LLC Pilar Goodson 706 Little York Houston, TX 77076

Victoria Pre-owned Rudy Rodriguez 308 Dunbar Dr Victoria, TX 77904

ASSOCIATE MEMBERS ADESA Houston Michael Schenks 4526 N Sam Houston Pkwy West Houston, TX 77086 BacklotCars Nathan Sterner 1000 W. 25th Street, Suite E Kansas City, MO 64108 Jett Vehicle Finance Mary Butler 17555 El Camino Real Suite 200 Houston, TX 77058

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Dealer Academy Education Offerings for Spring 2018

Instructor-Led Courses Collect the Cash, Not the Car

Presented by Brent Carmichael, Executive Conference Moderator, 20 Groups. NCM Associates, Inc. It has been a challenging year in the Buy Here, Pay Here industry, aided by another odd tax season and increased apathy by our customers in regards to their payments. Dealers are finding that every collection opportunity needs to be capitalized on and that’s where this seminar can help.

9:30am - 4:00pm

$249 TIADA Members, Each Additional $199 (must be from same dealership) $499 Non-members MONDAY, MARCH 26, 2018, SAN ANTONIO

Keeping your 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.”

One of the quickest ways to ruin a dealership’s profit margin is to be hit with a fine from a regulatory agency, or to lose a lawsuit filed by a customer. This seminar will focus on the practical side of compliance that understands you have a business to run – and you want to run it right. All independent dealers – those who finance in-house and those who secure third-party financing for customers- will benefit from this workshop’s focus on federal regulations, OCCC compliance, DMV enforcement, and much more.

$199 TIADA Members, Each Additional $149 (must be from same dealership) $399 Non-members 9:00am - 4:00pm

MONDAY, APRIL 9, 2018, VICTORIA

Social Media Marketing for Independent Dealers Presented by Andrew Street, CEO of Dealer OMG and Partner at Four Kicks Marketing.

In this session you will learn about the latest technology that allows dealers to identify the specific audience they want to reach- location, credit score, age, etc.-, and to market directly to those prospective customers on Facebook. Andrew Street will do a deep-dive into this technology, Facebook Data, Data Warehouses, and your own dealership’s data. You will walk away with an understanding of tactics that work best to make your social media marketing spending more precise and cost-effective.

9:00am - 1:00pm

$199 TIADA Members, Each Additional $149 (must be from same dealership), $399 Non-members MONDAY, APRIL 30, 2018, HOUSTON

Sales Essentials for Retail/Special Finance Dealers Presented by Justin Osburn, 20 Group Moderator & Training Consultant at NIADA.

Justin Osburn, moderator of Dealer 20 Groups, presents this training on everything from setting dealership sales goals, to getting prospective customers onto your lot, to closing the deal. This is the most relevant sales training for independent dealers focusing on today’s car buyer. Through interactive demonstrations of specific techniques, attendees will leave with an action plan and the resources to remain competitive in the market.

9:00am - 1:00pm

$199 TIADA Members, Each Additional $149 (must be from same dealership), $399 Non-members MONDAY, MAY 21, 2018, HOUSTON

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

Texas Independent Automobile Dealers Association

feature Shopping for a DMS

by Justin M. Osburn

I

20 Groups Moderator & Training Consultant, NIADA

’ll never shake what was arguably my worst 72 hours as a dealer. I decided to transition from one DMS (dealer management system) to another. Our previous DMS was integrated with Quickbooks and the new DMS housed its own mid-level accounting suite. I flew the vendor’s accounting specialist in to oversee the conversion on the accounting side. I can recall spending endless hours with my accounting team going through box after box of accounting ledgers and reports attempting to reconcile beginning balances. The specialist wanted to know what our starting balances would be and was asking for information we just didn’t know. In a frenzy, we were trying to complete the balances. I had no idea my team was so unprepared. I was embarrassed, stressed and frustrated. Whose fault was it? Mine. But sometimes you don’t know what you don’t know. Now, over a decade later, I’d like to share some of the considerations that are most critical when evaluating a DMS. It doesn’t matter if you are jump-starting your very first dealership or operating a well-established machine, the process of selecting or converting to a new dealer management system (DMS) can be overwhelming. I’ve experienced two DMS conversions and both were nothing short of a nightmare. In my retail 20 Groups I hear many dealers with similar stories. Along the way, I picked up some valuable lessons that may help you avoid some large and small landmines the next time you are in the market for a DMS. Here are five perimeters to consider when comparing which system is the best option for your dealership.

Inventory Management

A DMS system stores your inventory, and all of its other features or benefits are contingent on the inventory management segment. The very basic features that you will need include entering and tracking repairs and reconditioning costs; VIN decoding and the ability to store photos. Other features that make inventory management more user friendly include checking for recalls and pulling vehicle history reports.

Sales Processing

Your DMS needs to be able to process the various types of sales you conduct at a minimum. If you transact cash, wholesale and outside financed sales, be sure the options you are looking at can handle those types of sales. If you do a few BHPH credit contracts (or high

30

volume), you will need a DMS capable of handling BHPH transactions. Odds are you will want a DMS that can save your customers’ credit applications and personal information, a recap or summary of each sale and insurance information. OFAC checks is a plus as well.

Tip — Get your team’s buy-in before the conversion. Let them know the reasons why the change is necessary and how it will help them reach their goals with improved efficiency. Also, encourage assistance from you team in the selection process.

Forms Printing and Costs

Typically, a good DMS system will input and schedule your forms for you. You may have to send them all of your forms, but many will program them in the system. This will ensure your forms will print properly once you go live. Investigate the process and cost of creating customer forms after you go live. Be sure to clarify the charges and costs of adjusting form packs and form corrections after the initial install. Many States and DMS systems are now capable of online registration and titling which can improve efficiency in many dealerships. Examine the capability to print personalized letters and auto letters for things like birthdays, late payment an annual privacy notices.

Tip – Be prepared for the conversion by organizing all of your form packets. Form packets consists of: Cash Deals, primary buyer; Cash Deals, primary and co-buyer; Outside Finance, primary buyer; Outside Finance primary and co-buyer… etc.

Customer Management

For those of you in or thinking about writing BHPH credit contracts, having a stable customer management module is critical. Review the ability to track BHPH customer due dates, payment schedules, late fees and contact schedules and history. Are you able to sort by name, type of account and/or deficiency?

Accounting

Many dealers start out without an accounting suite.

Regardless if the accounting suite is a module or a linked integration, review your ability to enter bills, record deposits, print checks, reconcile your bank statement, and post T e x a s

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to the general ledger. Many DMS’s offer infinite reports and charts, and that looks sexy, but typically we need accurate income statements, balance sheets, cash flow statements, and aged inventory reports. Avoid paying too much extra for reporting functions you will never use.

Tip — Ensure your lead accountant is heavily involved in the selection and conversion and is aware in advance of what accounting must prepare. Also, ensure your lead accountant checks and verifies the data after conversion.

Other features that can be important based on your budget and needs are vehicle history reports, value guides, credit reporting, payment processing, texting capabilities, GPS Device integration, service contracts, website and vehicle marketing as well as a CRM. Tip — Be sure to allocate a testing period running tests to verify the new DMS is working properly and double check forms for errors and accurate calculations.

Many DMS systems offer a more affordable version for smaller dealers with enhancement and premium packages as your dealership(s) grow and demand larger features.

There are plenty of options out there at affordable prices for those just getting started. Looking for a system you can

grow into that offers solid support and functionality on both ends can eliminate the need to switch DMS down the road, saving you a lot of time, money and stress.

Last, the NIADA convention is on the horizon, this year in Orlando, FL. I have found attending the convention with a short list of vendors and/or products and services you want to learn more about will plus up your convention experience. It’s an opportunity to visit many different vendors and ask targeted questions about how their system may work for you and your team. It saves countless hours searching online in your office and scheduling demos.

I highly recommend speaking with a few other dealers who have been through a conversion and get their insights as well. Ask your top three potential vendors for references and call those dealer-customers and get their feedback.

Remember, no matter how prepared you think you are for a DMS conversion, it will have wrinkles, it will take longer, cost more and add more stress to you and the team than expected.

If you have a specific question about shopping for a DMS, write me at justin@niada.com.

Justin Osburn is a moderator, consultant and trainer for NIADA Dealer 20 Groups, offering more than a decade of experience in retail and Buy Here-Pay Here executive management. He can be reached at justin@niada.com

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2018 TIADA Auction Directory ABILENE Alliance Auto Auction Abilene www.allianceautoauction.com

6657 US Highway 80 West Abilene, TX 79605 325.698.4391, Fax 325-691-0263 General Manager: Brandon Denison Friday, 10:00 a.m.

C.M. Company Auctions, Inc. www.cmauctions.com

2258 S. Treadaway Abilene, TX 79602 325.677.3555, Fax 325.677.2209 General Manager: Gregory Chittum Thursday, 10:00 a.m.

AUSTIN ADESA Austin

www.adesa.com

2108 Ferguson Ln., Austin, TX 78754 512.873.4000, Fax 512.873.4022 General Manager: Rich Levene Tuesday, 9:00 a.m.

America’s AA Austin / San Antonio www.americasautoauction.com

16611 S. IH-35, Buda, TX 78610 512.268.6600, Fax 512.295.6666 General Manager: John Swofford Tuesday, 1:30 p.m. / Thursday, 2:00 p.m.

Insurance Auto Auctions Austin* www.iaai.com

2191 Hwy 21 West, Dale, TX 78616 512.385.3126, Fax 512.385.1141 General Manager: Geoffrey Rabb Tuesday, 9:00 a.m.

Metro Auto Auction – Austin www.metroautoauction.com

8605 Cullen Ln., Austin, TX 78748 512.282.7900, Fax 512.282.8165 General Manager: Brent Rhodes 3rd Saturday, monthly

CORPUS CHRISTI Corpus Christi Auto Auction

www.corpuschristiautoauction.com

2149 IH69 Access Road Corpus Christi, TX 78380 361.767.4100, Fax 361.767.9840 General Manager: Hunter Dunn Friday, 9:30 a.m.

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Insurance Auto Auctions Corpus Christi* www.iaai.com

4701 Agnes Street Corpus Christi, TX 78405 361.881.9555, Fax 361.887.8880 General Manager: Adriana Serrano Wednesday, 9:00 a.m.

DALLAS/FORT WORTH METROPLEX ADESA Dallas

www.adesa.com

3501 Lancaster-Hutchins Hutchins, TX 75141 972.225.6000, Fax 972.284.4799 General Manager: Brad Garrett Thursday, 9:30 a.m.

Alliance Auto Auction Dallas www.allianceautoauction.com

9426 Lakefield Blvd., Dallas, TX 7520 214.646.3136 General Manager: Chris Dean Wednesday, 1:30 p.m.

America’s AA Dallas

www.americasautoauction.com

219 N. Loop 12, Irving, TX 75061 972.445.1044, Fax 972-591-2742 General Manager: Robert Hammonds Tuesday, 1:00 p.m. / Thursday, 1:00 p.m.

Insurance Auto Auctions Dallas* www.iaai.com

204 Mars Road, Wilmer, TX 75172 972.525.6401, Fax 972.525.6403 General Manager: Henry Valenzuela Wednesday, 9:00 a.m.

Insurance Auto Auctions DFW* www.iaai.com

4226 E. Main St, Grand Prairie, TX 75050 972.522.5000, Fax 972.522.5090 General Manager: Jennifer Wesner Tuesday, 9:00 a.m.

Manheim Dallas Fort Worth www.manheim.com

12101 Trinity Blvd., Fort Worth, TX 76040 817.399.4000, Fax 817.399.4251 General Manager: Nicole Graham-Ponce Thursday, 9:30 a.m.

Metro Auto Auction – Dallas www.metroaa.com

1836 Midway Rd., Lewisville, TX 75056 943.492.0900, Fax 972.492.0944 General Manager: Scott Stalder Tuesday, 9:00 a.m.

Texas Lone Star Auto Auction www.tlsaa.com

2205 Country Club Drive Carrollton, TX 75006 214.483.3597, Fax 214.483.3814 General Manager: Jeff Dunning Tuesday, 1:00 p.m. / Thursday, 2:00 p.m.

EL PASO El Paso Independent Auto Auction www.epiaa.com

7930 Artcraft Rd, El Paso, TX 79932 915.587.6700, Fax 915.587.6700 General Manager: Luke Pidgeon 10:00 a.m. Standard Sale

Insurance Auto Auctions El Paso* www.iaai.com

14651 Gateway Blvd. W, El Paso, TX 79927 915.852.2489, Fax 915.852.2235 General Manager: Jorge Resendez Friday, 10:30 a.m.

Manheim El Paso

www.manheim.com

485 Coates Drive, El Paso, TX 79932 915.833.9333, Fax 915.581.9645 General Manager: Brian Walker Thursday, 10:00 a.m.

HARLINGEN/MCALLEN

Manheim Dallas

Big Valley Auto Auction

5333 W. Kiest Blvd., Dallas, TX 75236 214.330.1800, Fax 214.339.6347 General Manager: Rich Curtis Wednesday, 9:00 a.m.

4315 N. Hutto Road, Donna, TX 78537 956.461.9000, Fax 956.461.9005 General Manager: Lisa Franz Thursday, 9:00 a.m.

www.manheim.com

www.bigvalleyaa.com

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Manheim South Houston www.manheim.com

9605 Galveston Road Houston, TX 77034 713.948.0001, Fax 713.948.0300 General Manager: Darren Slack Tuesday, 6:00 p.m.

Manheim Texas Hobby

MIDLAND/ODESSA Insurance Auto Auctions Permian Basin* www.iaai.com

701 W. 81st Street, Odessa, TX 79764 432.550.7277, Fax 432.366.8725 General Manager: Barbara Hallmark Thursday, 11:00 a.m.

www.manheim.com

Insurance Auto Auctions McAllen* www.iaai.com

900 N. Hutto Rd, Donna, TX 78537 956.464.8393, Fax 956.464.8510 General Manager: Ydalia Sandoval Tuesday, 9:00 a.m.

8215 Kopman Road Houston, TX 77061 713.649.8233, Fax 713.640.6330 General Manager: Darren Slack Thursday, 9:00 a.m.

LONGVIEW

HOUSTON

Alliance Auto Auction Longview

ADESA Houston

www.allianceautoauction.com

www.adesa.com

4526 N. Sam Houston , Houston, TX 77086 281.580.1800, Fax 281.580.8030 General Manager: Michael Schenks Wednesday, 9:00 a.m.

America’s AA Houston

www.americasautoauction.com

1826 Almeda Genoa Rd. Houston, TX 77047 281.819.3600, Fax 281.819.3600 General Manager: Rob Frazier Thursday, 2:00 p.m.

America’s AA North Houston www.americasautoauction.com

1440 FM 3083, Conroe, TX 77301 936.441.2882, Fax 936-788-2842 General Manager: Buddy Cheney Monday, 6:30 p.m.

Houston Auto Auction

www.houstonautoauction.com

6000 East Loop 281 Longview, TX 75602 903.212.2955, Fax 903.212.2556 General Manager: Chris Barile Friday, 10:00 a.m.

Insurance Auto Auctions Longview* www.iaai.com

2535 West. Mt. Houston, Houston, TX 77038 281.847.4700, Fax 281.847.4799 General Manager: Michelle Casper Wednesday, 9:00 a.m.

Manheim Houston www.manheim.com

14450 West Road, Houston, TX 77041 281.924.5833, Fax 281.890.7953 General Manager: Eddie Pope Tuesday, 9:00 a.m. / Thursday, 6:30 p.m.

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Insurance Auto Auctions San Antonio* www.iaai.com

11275 S. Zarzamora San Antonio, TX 78224 210.628.6770, Fax 210.628.6778 General Manager: Brian Sell Monday, 9:00 a.m.

Manheim San Antonio

San Antonio Auto Auction

Insurance Auto Auctions Lubbock*

13510 Toepperwein Road San Antonio, TX 78233 210.298.5477, Fax 210.298.5484 General Manager: Brandon Walston Tuesday, 9:30 a.m. / Thursday, 1:30 p.m.

www.iaai.com

Manheim West Texas

www.iaai.com

200 S. Callaghan Rd San Antonio, TX 78227 210.434.4999, Fax 210.431.0645 General Manager: Clifton Sprenger Thursday, 9:00 a.m.

LUBBOCK

Insurance Auto Auctions Houston North*

Insurance Auto Auctions Houston*

www.adesa.com

www.manheim.com

5311 N. CR 2000, Lubbock, TX 79415 806.747.5458, Fax 806.747.5472 General Manager: Lori Davee Tuesday, 9:30 a.m.

16602 East Hardy Rd., Houston, TX 77032 281.443.1300, Fax 281.443.4433 General Manager: Louis Cappi Thursday, 9:00 a.m.

ADESA San Antonio

5577 Highway 80 East Longview, TX 75605 903.553.9248, Fax 903.553.0210 General Manager: Robert Dunning Thursday, 9:00 a.m.

6767 North Freeway, Houston, TX 77076 713.644.5566, Fax 713.644.0889 President: Tim Bowers Tuesday, 1:00 p.m. www.iaai.com

SAN ANTONIO

www.manheim.com

614 E County Road 7200 Lubbock, TX 79404 806.745.1905 General Manager: Nicole Graham-Ponce Tuesday, 10:00 a.m.

2042 Ackerman Road San Antonio, TX 78219 210.661.4200, Fax 210.662.3113 General Manager: Mike Browning Wednesday, 9:00 a.m. www.sanantonioautoauction.com

TYLER Greater Tyler Auto Auction www.greatertyleraa.com

11654 Hwy 64 W, Tyler, TX 75704 903.597.2800, Fax 903.597.2800 General Manager: Wayne Cook Tuesday, 5:00 p.m.

LUFKIN

WACO

Lufkin Dealers Auto Auction

Alliance Auto Auction Waco

www.lufkindealers.com

2109 N. John Reditt Dr. Lufkin, TX 75904 936.632.4299, Fax 936.632.4218 General Manager: Wayne Cook Thursday, 6:00 p.m.

www.allianceautoauction.com

15735 I-35 Frontage Road Elm Mott, TX 76640 254.829.0123, Fax 254.829.1298 General Manager: James Baron Friday, 10:00 a.m.

35

Dealer Academy 2018 Presents

Presented by Brent Carmichael, Executive Conference Moderator, 20 Groups. NCM Associates, Inc. This has been a challenging year in the Buy Here, Pay Here industry, aided by another odd tax season and increased apathy by our customers in regards to their payments. Dealers are finding that every collection opportunity needs to be capitalized on and that’s where this seminar can help.

Collect The Cash, Not The Car is designed to help you and your collection teams maximize your collection opportunities.

Through this 1-day course you can expect to learn:

9:30am - 4:00pm $249 Members, Each Additional $199 (must be from same dealership)

$499 Non-members

• How to maximize the collectability of every customer • How to overcome the common and not so common customer objections • Effective skip tracing methods and tools • Effective phone collection techniques We have put together a very strong course outline that includes a wide array of role playing, classroom learning and interactive activities that will allow your collection team to soak up the information and come back to your dealership ready to collect the cash and not the car.

Sponsored by:

Monday, March 26, 2018 San Antonio, Texas Double Tree Suites by Hilton Hotel 37 NE Loop 410 | San Antonio, TX 78216 210.366.2424

www.avpadmin.com

Texas Independent Automobile Dealers Association

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

feature

Dealerships: Here Are the Answers to Your Questions About Tax Reform

by David Wiggins

Principal, CliftonLarsonAllen

T

he recent tax reform legislation is the largest tax overhaul since 1986. While there are some elements of simplification(increasing the standard deduction, removing the alternative minimum tax (AMT) for businesses, etc.), the law as passed is quite complex. It will take years for the IRS to issue rulings and interpretations and for tax court rulings to settle disputes and offer clarity.

The change most dealers are immediately curious about is the treatment of pass-through entity income (e.g., income flowing to an owner’s personal return from an S corporation or LLC). Under the new law, the top personal tax rate was reduced from 39.6% to 37%.

Dealerships structured as pass-through entities are

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eligible for an additional 20 percent deduction against income, reducing the effective tax rate to 29.6%.

The following discussion includes answers to many of the questions dealers are asking about the new tax law.

Is interest still deductible?

For businesses with less than $25 million in average annual gross receipts, interest will continue to be deductible in full. For those with over $25 million in gross receipts (which includes most dealerships), non-floor plan interest is limited to 30% of net income before interest and depreciation. Floor plan interest is deductible in full. Since the deduction limitation is a function of 37

income, the limitation is most likely to apply in years in which profitability is down. If you have significant non-floor plan interest, then it may be worthwhile to analyze whether you expect the interest limitation to apply for 2018 and consider whether any changes should be made to your existing capital structure in response to the limitation.

Interest (other than floor plan interest) exceeding the limitation amount can be carried forward to future years. If you elect to do so, the limitation would not apply to interest incurred in real property development or rental real estate operations. As an aside, the floor plan expense carve out in the law was very valuable because floor plan interest is not netted with floor plan assistance received from the factory for tax purposes. Had the limitation applied to floor plan interest, it is possible a dealership could break

even or lose money for the year yet still owe significant tax.

Was LIFO affected?

Although repeal of LIFO was discussed at various times in the tax reform process, the final bill retains it as a viable tax savings strategy. Because tax rates will likely be reduced for both C corporations and S corporations, dealerships on LIFO prior to 2018 will likely not only get deferral benefits from LIFO but permanent tax savings due the rate changes (based on the expected tax rates).

Since the AMT has been eliminated for C corporations, this will also ensure that dealers on LIFO realize the full benefits of the related deductions.

Is the cash method now allowed for dealerships?

The new law allows for businesses with less than $25 million in gross receipts to adopt the cash method

of accounting for tax purposes.

Accordingly, smaller dealerships may be eligible to adopt the cash method of accounting if desired. The $25 million gross receipts threshold is applied on a combined basis for commonly-owned businesses. Your dealership’s specific situation will need to be reviewed to determine if the cash method would be of benefit.

Is full expensing allowed for fixed asset purchases?

Bonus depreciation has been enhanced with a full deduction of the cost of most new or used property acquired after September 27, 2017.

Real estate will generally not be eligible for the bonus depreciation, but certain real estate improvements will qualify. Unfortunately, when dealers were allowed to exclude floor plan interest from the 30% interest limitation, the service included a related provision stating that businesses that

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use the floor plan interest exclusion are not eligible to use bonus depreciation for the year; thus, this item will have to be determined each year.

All fixed asset acquisitions made between September 27, 2017, and December 31, 2017, will qualify for bonus depreciation because the interest limitation doesn’t apply until 2018.

If we don’t get bonus depreciation, can we still claim Section 179 expense?

Yes. While many dealers will not be eligible for bonus depreciation, you may be able to immediately expense the cost of certain new and used equipment purchases under Section 179. The maximum amount per year that can be expensed under Section 179 been increased from $500,000 to $1,000,000, effective for tax years beginning in 2018, subject to a phaseout beginning when the total cost of acquisitions during a year exceeds $2,500,000. You can even elect to immediately expense the cost of some building improvements, including the cost of replacing a roof or HVAC system. Now “qualified real property” for which Sec 179 can be claimed includes roofs, heating, ventilation and air-conditioning (HVAC) property,

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fire protection and alarm systems, and security systems.

Are entertainment expenses affected?

In the past, business-related entertainment expenses were 50%. Under the new law, the cost of businessrelated entertainment is generally not deductible. Baseball tickets given to employees or customers, luxury boxes at stadiums, etc., are now nondeductible. Business-related meals continue to be deductible at 50% (going to dinner with the factory rep, etc.). Business meals on site for the employer’s convenience (including Saturday salesperson lunches, etc.) are 50% fully deductible. Holiday parties remain 100% deductible.

I own an S corporation.

What will my tax rate be?

The effective rate on your passthrough income will vary each year based on your circumstances. Instead of establishing a pass-through tax rate (like was the case with C corporations), Congress settled on passthrough entities being taxed at ordinary rates but with a deduction of up to 20 percent of qualifying income.

Determining what “qualifying income” is will be tricky enough, but

Congress added several limitations on the deduction as well. They include a limitation of the greater of: 50% of the W-2 wages paid by

the business, or The sum of 25% of the W-2 wages

paid plus 2.5% of the unadjusted basis of all depreciable property used in the qualified business In the end, the blended federal tax rate for many dealerships with pass-through income will end up at about 29.6%.

Because the C corporation rate is lowered to 21%, should a dealership switch from an S corporation to a C corporation?

The earnings of a C corporation are generally subject to a lower tax rate than the earnings of a passthrough entity (21% vs. 29.6%).

However, the earnings of a C corporation are subject to a second level of tax of up to 23.8% when the corporation pays a dividend or is liquidated or sold. The second level of tax means the owners of a C corporation keep about $0.60 for every $1.00 in corporate earnings, compared to about $0.70 for a pass-through entity, making a

39

pass-through entity the entity of choice for a business that distributes most or all of its earnings.

If you are looking to reinvest your earnings in the dealership, the lower current cash tax expense in a C corporation environment may make a C corporation the preferred entity.

Each dealer’s situation is unique, and there are other factors to consider as well, including whether the business owns appreciating assets (like real estate), the impact of state taxes on cash flow, and the business exit strategy and timeline.

Modeling after-tax cash flow on a

present-value basis is a great way to evaluate different structures for your business.

If I plan to sell my dealership in the near future, does a C corporation now make sense more than an S corporation?

Generally, no. Buyers typically prefer to structure the purchase of a business as an asset purchase so that they can amortize purchased goodwill and take a fair market value cost basis in acquired inventory. If the C corporation sells its assets and

then liquidates, two levels of tax will generally apply — a 21% corporatelevel income tax and a 23.8% shareholder-level tax. The second level of tax results in an overall federal tax rate of about 40% for C corporations versus 29.6% for flow-through entities. Each taxpayer’s situation is different, and we encourage you to consult your tax advisor to discuss your entity structure to help you plan for the potential sale of your business.

What about state income tax?

As you may have heard, the deduction for state income tax and real estate tax paid by individuals will be limited to $10,000 per year, starting in 2018. Thus, state income tax paid by dealers on pass-through dealership income will generally not be deductible.

For example, an S corporation dealer making $2 million a year in a state that has a 6% tax rate will lose about $110,000 in state tax deductions ($120,000 state tax, $10,000 deduction limitation). Business property taxes continue to be fully deductible.

Is my home mortgage interest still deductible?

The deduction for interest on up to $1.0 million of mortgage debt incurred on or before December 15, 2017, continues to be deductible.

Interest on home equity indebtedness will not be deductible, starting in 2018. For debt incurred after December 15, 2017, the interest on up to $750,000 of mortgage debt will be deductible. Some taxpayers will no longer itemize their deductions as a result of the increased standard deduction and the repeal or limitation of certain itemized deductions (e.g., the $10,000 limit on the deduction for taxes). Taxpayers that no longer itemize their deductions will not receive a benefit for their mortgage interest going forward.

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e-Tag Supplies —

In Stock for Immediate Shipment!

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D: and Docu e: ........ compradoe acordada por ERE ** is paid (6) ................ Phon............... $ S COV for Fee ify who razonabl identTEM ................ ........

V.I.N.: SYS (7) $ (Seller must ................ ................ for ............. r charges ................ ................ ................

N. Othe sed ........ sed ........ asses ......... $ ff To: .......... ........ ge isPayo ge is asses ................ to ce Char ce Char ................ ........ $ Finan ........

Finan .... ........ on, ...... ........ which the ................ which the to ................ ................ sthestateinspecti ges Upon ges Upon ................ ................ IftheSellerperformts,andothercharges. ssed) ess: ................ zed Char zed Char . ge is Asse Addr ........................ ................ contrac mentagency.

Plus Itemi Total Itemi ce Char ................ athirdpartyorgovern oftheinsurance,service Balance $ TAL ................ h No Finan Unpaid ................

Seller to SUB-TO than $ retainparts ................

5. Total insurer By: (Upon Whic ................tion fee will be paid by theSellermayalso nt not more have. The ................

Quoted loss.

Sales Tax ................ inspec Seller and I already damage ornot been ctible amou 6. Total (5 + 6) ........ ered of has Sales Tax) agencies. Any statefee will be retained by $ of insura in:nce with a dedu Financed e proof trade ment in the eventtime andATION OF Cash Tend ssed Upon service : nt I owe, or provid to any 7. Amount the policy ing at this (Not Asse paid by Seller to govern fee and deputy Good Until e I want regaberdpaid under in the amou TO entary anyon has not eter is workTHE ITEMIZ andSED Charge with will be ge or loss nce from ants CAU IN 8. Financefee, and license fee inspection fee. Docum person to . The odom company st dama DUE $ the rty anceAGE and warr ts insura ED prope youis as ed again insur stated aboveINCLUDED byTY ge.

DAM as TOTAL an esen name obtain insur Taxes, title retain $7.00 of each dama ge le repr may r FINANC IS teral PER ed to flood airab will ct. Ihase ed nce. I mustl milea the colla PRO Purc or unrep the Seller this contra expos law, You rty insura and actua INSURANCE loss AND byfigur I must keep Rate. ired a total not been owe under proof of prope URY 1. The trueBIL H SALE to red ntage ctnot INJ RANCE: not requce CAS and has ced. ITY been rende all that I you Perce subje is may ILY al title, paid repla fee LIA INSU give to TY balan ary fee ce subje ctils as I have red or FOR the Annuaryprinc has notBODreconditioned ipal ment . I agree PROPER nce until RGErepai sameAasdocument balanfor deta GEleFOR The vehic ipalAsk n of theA docu be the 2. ERA al fee. ess in Texas rebuilt/or this insura law.

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CT.retur S VEH of Paym ned check alre anty, or ed CT provide. vehicle suppl OTHERS FIGURE THE FINAthe scheduled insta all that rario rario warr AND registered. ract TRAUn ition Total E THI ts.writt ley, pero or honoe, requerida en warr no impli and rer may reading of the cont la this ing CON Un hono was last n es ance . add HAV Charge, es, factu por in adv you pric CON TRA sales tax, eteror venta vehicle YOU officació will S be makes a there erido sign una MAl Yrigh le manu ge by apply the Finance HOW YOU notif SERVICE r odom my lega pay CT, requ notmay seller uctible, charg which the Esta YOU os congive e majin and THI motor vehic ce Char TRA willionad ge and/o ER. es" protect righs.t to - Irelac som Unless the mileaof MSle,OF the S CON :IF de the laterage, ded er anti toLER r vehic the Finan Charge. You based las parte thelist by the state e the thatTHI TER moto por ract ER'S ORD as to a DEA hav not inclu to cove to the buy RANTIESed, on Iada vehicle inform lied warrlaw, ation cont . thethe was issued THE moto thisER a Finance ce Charge does uding se.

OF WAR ss EE TO THE LOT THIS BUY n the acord ASK I rSIGNED le which or impli Noteicelaw "imp keep N:LAIM THE TH ON NG: stat the vehic will AGR . Under TIO tion, incl on the rever s covering ORE on writte s, expre to a Finan

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T I sign T: IOFF in good SET FOR warr warr INS certificate infotitle EIPOR char THA SELLER’S Arbitrati 1-800 ER WA relied s noON ONS154 t any Mseller -252-9 nal nce SE hasitio contract the fina REC HER FIR Date: rs on the ement to CO., CON not CTmake EIT INC. DITI CON add CONSUM a copy of the , thent ICseller the does I affec of PURCHA CON TRA buyer AND sion IT. ndPRE ge that appea red by the Agre PRINMS TING orta : to OF provi le to the Ythis MECHANThis imp ELLTER Date vehic IT.ent of milea s. n is cove CALL entitled in a partial refu BY COP THE M for BURR ENTROF icleactio gSofFOR TO TEDreadin r a statem GMYOU vehtrans REV Date: and/oIEW DER EE or this AGR THI CE. AND REOR vehicle may obta ACK NOW LED OF A COMPLE 54 AND d motked, IT the K OF DTO E of LER'S OFFI (800) 252-91 S EIPT box is chec ur in use ERSTAN TO TAK THE BAC Date: THE DEAREORDER CALL Buyer: SEE BUY ER’ LEDGE REC WA S FREEthat may occ If this E READ, UND TO LER, AT I 999 HAV THE DEA r: 4/20/1 OF · I/WE ACKNOWTO ME, AND defects Buye CER : rred s Guide AN OFFI Co-Buyer OVED BYSale 501 · Buyer s Tax Defe GAVE IT 52-91 54 bpc #24-5 APPR ings · DER CALL 800-2 r: uyer: D: Earn UNTIL Selle EPTE REOR ent LER TO ACC Co-B DEA Installm d Inc. ING ON dule g Co., NOTeBIND Seller: - Sche 1· Burrel l Printin er:I SIGN IT. ER ISPag Offic ORD 2009 ANDCONTRACT YOU THIS hed09 · © Copyright Attac · 9/1/20 UNTIL rate 35 VALID t To Arbit bpc #24-43 By: Agreemen IS NOT Inc. TRACT g Co., hed l Printin THIS CON

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February 2018

T e x a s

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41

Does the estate tax still exist?

The estate tax remains in the tax law at the current rates, but the lifetime estate exemption is doubled from $5.60 million per spouse to $11.20 million per spouse. As of now, a married couple could pass an estate of up to $22.4 million without estate tax kicking in.

If my dealership loses money, can I still claim refunds of prior year tax?

Starting in 2018, net operating losses for C corporations and individuals with dealership passthrough losses can no longer be carried back. In prior years, such losses could be carried back two years.

Does this mean estate tax planning is no longer needed if my estate is less than $22 million?

Perhaps, if both you and your spouse plan on going to the afterlife

before the political winds blow in a different direction. The estate tax provisions can be changed by another Congress and administration.

In addition, your estate value may increase in the future, causing you to be subject to the estate tax. Even if you’re not subject to estate tax, wealth succession planning extends beyond minimizing estate taxes.

One strategy that will emerge in the near term will be gifting estate value to heirs using up the increased lifetime exemptions while those higher exemptions exist. There is no onesize-fits-all plan when dealing with estate tax and succession, so continue to engage your advisors on the subject despite the relaxed tax law.

Did Obamacare go away?

No. The 3.8% net investment tax on certain portfolio income is still in place. Many of the requirements related to health care reform are still in place. However, the penalty imposed on individual taxpayers that do not

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 at the Calendar of Events; access our online membership application; find contact information for all our Local Chapters, and find many additional resources at our Knowledge Base.

Texas Department of Motor Vehicles 888.368.4689 www.txdmv.gov Office of Consumer Credit Commissioner 800.538.1579 www.occc.state.tx.us 42

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

carry adequate health insurance is repealed beginning in 2019.

Since the 2017 year has ended, are there still some things I can do in light of tax reform changes?

There has been a lot of noise about various tax tricks, etc., that can be done for your 2017 year-end. Many have been generated from the tax headlines and not by actually reading the bill or making educated guesses on how the IRS will interpret the law. Some items are clear, however: Because tax rates are going to be

lower in most instances (top rate going from 39.6% to 37 percent or less for S corporation/partnership owners), tax deductions are worth more in 2017. If there were expenses you expected to incur in early 2018, accelerating them to 2017 will save tax. The obvious type of items are accrued expenses, prepaid items, etc.

Consider accelerated depre ciation to expense fixed asset purchases, service loaners, and rental vehicles.

Write off obsolete parts

inventories.

Adjust used vehicles down to

market value.

Write off old uncollectible

receivable.

Accrue bonuses to employees.

Dave Wiggins, Principal, CliftonLarsonAllen can be reached at 314-925-4316 or by email at David.Wiggins@CLAconnect.com. Please refer to the site disclaimers (http://www.

CLAconnect.com/disclaimer and http:// www.CLAconnect.com/WealthAdvisors/ Disclosures/) to review disclosures and legal terms of use (“Terms”) carefully before using this CliftonLarsonAllen LLP and its affiliates (“CliftonLarsonAllen”) material (“Material”). By using this Material you indicate that you acknowledge and accept these Terms. © 2018 CliftonLarsonAllen.

All rights reserved. “CliftonLarsonAllen” and “CLA” refer to CliftonLarsonAllen LLP. T e x a s

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February 2018

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.

TIADA texas independent automobile dealers association

TIADA Membership Application

2018

Business Name: ____________________________________________ Select one:

Dealer Member

TIADA texas independent automobile dealers association

TIADA texas independent automobile dealers association

Associate Member

Contact Person: ____________________________________________ Address: __________________________________________________

2018 TIADA Membership Dues:

City: _________________________________________ State: _______

$499

Zip: __________________ County: _____________________________ E-mail address: _____________________________________________ Phone: _______________________ Fax: ________________________

OR join our monthly payment plan of

$41.58 per month (Dues include NIADA membership and local chapter membership where applicable.)

Dealer P Number: ___________________________________________ Who referred you to TIADA? __________________________________ Mailing Address (if different from above): __________________________________________________________ City: _________________________ State: _______ Zip: ___________

PLEASE INDICATE PAYMENT METHOD: Check or Money Order payable to TIADA Check # __________ Credit Card Card Number: __________________________________________________ Sec.Code: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Expiration Date: ____________ Monthly Payments - $41.58 per month Via Credit Card (Please enter card information above) Via Bank Draft (Authorization Agreement required - contact state office)

Mail or Fax Application To: TIADA Membership Services, 9951 Anderson Mill Rd., Suite 101, Austin, TX 78750 FAX 512.244.6218

www.txiada.org

512.244.6060

Dues are not deductible as charitable contributions for income tax purposes but may be deductible as miscellaneous itemized deductions, subject to IRS restrictions. It is estimated that 20 percent of your dues dollars is used for lobbying activities and is therefore not deductible.

44

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February 2018

behind the wheel A Final Toast to 2017

F

or the last few years I have used this February issue to share some of the positive comments we receive while doing our best to represent you and your industry. This can be a very rewarding job in so many ways but hearing from the people we represent is one of the greatest rewards we receive.

“Thank you so much, you saved my bacon!”

— Kenny Smith, Ronnie Smith Motors, Abilene “Got it! Thank you for all of your help through this headache. I have learned a lot! I have never questioned my decision to join TIADA, but, at every turn, I have become more appreciative that we did. I am forever grateful that we can count on the association for guidance and up to date compliance training. We will be missing the conference this year, but I will be reading my Texas Dealer magazine extra close to stay on top of things.

We love TIADA!!”

— Michelle Hogan, Julio’s Motors, Austin “Thanks — we accomplished most of our agenda for the session so Congrats to you and your team with the success working with the legislators and getting our members involved.”

by Jeff

Martin

TIADA EXECUTIVE DIRECTOR

“Just wanted to let you know that our dealer license was finally renewed earlier today. We would like to personally thank you for connecting us with Ken at the TxDMV, and helping us get this matter resolved in a timely fashion…

Once again, we are proud to be members of the TIADA. We appreciate all that you and the staff at TIADA do for dealer members. It’s well worth the money to be a member of this great organization.”

— Pam Berger, Crossroads Auto Sales & Service, Victoria

— Paul Scott, Fiesta Motors, Lubbock “One more time. I love the TIADA Weekly Update.

This is a great communication piece on things happening in the state and the nation. Kudos to Michael or Teresa or whoever is working on this item.”

— Greg Zak, Dixon Motors, Houston February 2018

T e x a s

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45

“I have closed my business. I think TIADA is a great organization. Thanks.”

— Monty Mitchell, Mule Barn Auto, Jacksboro “On behalf of everyone here at MCMC... you ROCK! Thank you so much for helping us through resolving this issue. Of course I am happy for us, but hopefully this can serve as a precedent in case another dealer gets in a similar situation with a County Tax Office. We are very appreciative of all your diligence on this matter and hope to never have to bother you again!! (Don’t hold your breath)” — Mark Jones, MCMC, Fort Worth “Wow! You guys hit the ball out of the park again, what a nice convention, there was so much education to choose from.

AWSOME, GREAT JOB!!!! Congrats to the whole office staff. This was a homerun out of the park, thank you for your commitment and dedication to our TIADA.” — Juan Sabillon, Mi Tierra Auto Sales, Houston

46

“I wanted to give you an update to our conversation earlier. I have just heard back from TxDMV eLicensing. They are currently working on the Dealer License renewal and we should have everything completed by tomorrow. Thank you very much for your help, I certainly would not have made any progress without your assistance! (Hope you don’t mind, but I am keeping your number handy for future reference!)”

— Nikki Howard, Houston Automotive Group, Houston “Thanks for the help. The privacy notice you sent will work great!!”

— Gary Uptmore, Uptmore Motors, West “Thank you for your quick reply. I appreciate all your help and look forward to attending the Dallas conference in the summer. Perhaps one day, I can meet you in person! TIADA is undoubtedly the best resource a dealership can have. We read the articles and magazine cover to cover each month.

Thanks for being a big part of education and resources! Your service is extremely valuable and I am grateful to be a member!

Thanks again, and Merry Christmas and Happy New Year!”

— Connie Safar Sloma, Safar Motor Group, Frisco

I say: Kenny, it’s not our favorite thing to do but sometimes we have to be in the bacon saving business. Michelle, we hope you can make it to this year’s conference. Paul, you hit the nail on the head, it’s about member involvement. Greg, we all help with the weekly email, glad you like it. Pam, TxDMV gets most of the credit here, they know how to facilitate licensing. Monty, we hate to see you go, Mule Barn was one of our favorite names. Mark, well, Austin is the music Capitol of the world, so ok, we ROCK. Juan, great seeing you at conference. We will take some peanuts and Cracker Jacks with that comment.

Nikki, hang on to that number. We know people who can help. Gary, glad that worked for you — send Kolaches. Connie, the conference is in Dallas this year. Let’s meet there!

T e x a s

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February 2018

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