CATA General Counsel

Dennis M. O'Keffe, P.C.
1025 W. Everett Road
Lake Forest, Illinois 60045
847-482-0400 / Fax 847-482-1366
Email: dokeefe@dmokeefepc.com

Each CATA member is entitled to a limited amount of general legal advice from the association's general counsel, Dennis O'Keefe. Dennis has extensive experience in the automotive industry, dealer line associations and manufacturer relations, as well as state and local government.

A good example of how the CATA works to help its members deal with confusing governmental regulations was evident when a packed room of more than 140 greeted officials at Revenue Department seminar June 10, 2011. We had requested the seminar to review and clarify tax issues important to dealers, such as trade-in credits, goodwill repairs, sales to out-of-state purchasers, consumables and interim use exemptions.

The results of the seminar were beneficial, but also opened up other questions for the department from dealers and their staffs.

For instance, while DOR officials said Third-Party credits can be combined with "simultaneous" (same-day) credits, several dealers protested that they were fined for permitting such credits. Third-Party credits cannot be coupled with Advance trade-in credits.

Roger Koss, who heads the department's audit division, said dealers who believe they were wrongly penalized and fined can appeal to the department using Form EDA-98.

But Mark Dyckman, the department's deputy general counsel on property and sales tax litigation, said accurate paperwork is essential for auditors.

"Advance trade-in credits are a creature entirely of department rules," Dyckman said. "Since such allowances don't exist for any other industry, the department aggressively makes sure that all the "i's are dotted and the t's are crossed." Problems come from creative uses (of the credit) and poor documentation."

Revenue department officials touched on the ongoing sticking point involving several manufacturers' titling trusts, such as Ford Motor Co.'s Cab West, which by changing names disallowed any advance trade-in credits for off-lease vehicles.

John McCaffrey, the revenue department's general counsel, said dealers are caught in the middle of the department's dispute with the manufacturers. "They had a number of business reasons why they made a business change. But for every action, there is an equal and opposite reaction," and manufacturers likely did not foresee the dilemma for dealers.

McCaffrey said the latest budget proposed by the General Assembly subjects the department to a 26 percent budget cut. He said the department now will post forms for businesses to download, instead of printing and mailing forms, and he urged dealers to submit paperwork electronically to the department.

"You know in your own offices, the more paperless you go, the more money you save. It's the same with us," he said.

Revenue department officials also touched on taxation related to goodwill repairs, sales to out-of-state purchasers, consumables and interim use exemptions.

The CATA recorded the presentation and streamed it live on the association's Web site for those who weren't able to attend in person. It can be seen at www.cata.info/webcast_IDOR_forum.

General Questions

I understand that dealer cash is now taxable in Illinois. Can you explain?

I sell a car to a customer who provides me with the address of his Lake Geneva, Wisconsin home. Do I need to charge him Illinois sales tax?

How does a vehicle qualify for interim use exemption from sales taxes?

I spot delivered a car to a customer but I cannot obtain financing for him. What do I do if the customer refuses to return my vehicle or returns it with excess wear and tear or damage?

Does prior use need to be disclosed on the sale of a used vehicle?

My customer has informed me that he is "revoking acceptance" of the new car that he purchased. What does this mean and how can I contest it?

May I do a direct mail campaign wherein a coupon is offered to further discount a vehicle for sale?

May I send out a direct mail piece targeting customers who have filed for bankruptcy?

I am a Cadillac dealer. My buddy, who is the neighborhood Chevrolet Dealer, wants to purchase a Cadillac from me for his personal use. He provides me with a copy of his resale certificate and asks that I not charge retailers occupation tax/use tax on the transaction. Can I be held liable?

How far back may the manufacturer audit warranty claims or other incentive and reimbursement programs?

What amount of damage must be disclosed on a new or used vehicle?

How far away must a relocated or new franchise be from an existing franchise of the same line make?

What does the FTC used car rule generally provide?

May I obtain a consumer's credit report without written permission?

My customer purchased a vehicle, and executed all the paperwork. Now, two days later, he has returned the vehicle to my dealership and claimed that he is rescinding the sale under the Federal Trade Commission's "Cooling-Off Rule." Can he do this?

May I advertise a price for a vehicle wherein all rebates have been deducted, including a "loyalty" rebate that only applies to current owners of my manufacturer's vehicles?

May I offer an "Internet special" where a specific vehicle or vehicles from my inventory are available at a lower price for a consumer who has logged onto my Web site and printed out a discount coupon?

Does dealer cash have to be disclosed to a customer, like a rebate?

Credit run on a customer can't obtain credit. How long does the dealer have to keep the credit app and bureau?

If my dealership holds regular off site sales at a convention center, but obtains a permit that extends the convention center as part of my dealership, does the 3 day right of recission still apply?

Do you have to have a drivers license to purchase a car for cash?

Can we sell a car for cash if somebody is taking it out of country?

Can a customer purchase a vehicle for his mother "cash" utilizing a power of attorney?

I have a caustomer buying a car that lives in Toronto,Canada. Does he have to pay sales tax?

When quoting a payment, can you pack extra money in the payment?

Can you tell me about taxation on goodwill warranty claims.

My customer wants to trade in a car he holds clear title to. Can he use the trade as a tax credit against the selling price and have the same amount sent back to him as a payoff ?

If a customer asks for a copy of there credit report Is it ok to give to them?

Do tax trades have to come from Illinois?

Can I sell a car to a person with a Matrícula Consular de Alta Seguridad. We do run a OFAC report.Thanks,Tim Bernard

Questions And Answers

I understand that dealer cash is now taxable in Illinois. Can you explain?

You should note that dealer incentives paid to a dealer based upon the purchase of a vehicle from the supplier, and not conditioned on the retail sale of the vehicle, are not taxable. On the other hand, dealer incentives paid to the dealer and conditioned on the retail sale of a vehicle are taxable, except that:

Dealer incentives contingent, at the time of sale, on making or having any additional retail sales (stair step incentives) are not taxable; and
Dealer incentives or bonuses contingent on the dealer meeting certain manufacturer required marketing standards, facility standards or sales and service department satisfaction goals are not taxable (such as CSI store based or marketing based incentives).

I sell a car to a customer who provides me with the address of his Lake Geneva, Wisconsin home. Do I need to charge him Illinois sales tax?

The Illinois Revenue Code provides an exemption for Sales Taxes for purchases made by non-residents of Illinois. The fact that a customer has a domicile outside of Illinois does not mean that he is not an Illinois resident. However, beginning July 1, 2008, the Department of Revenue holds the dealer to the following requirements:

The purchaser must sign the following certificate: "I (purchaser), under applicable penalties, including penalties for perjury and fraud, state that I am not an Illinois resident. I understand that if I am a resident of Illinois that I am also liable for tax, penalty and interest on this purchase"
The purchaser must also provide one of the following:
1. A copy of the purchaser's permanent non-Illinois Drivers License; or
2. If a copy of the non-Illinois Drivers License is not kept or an Illinois license is present, a rebuttable presumption that the purchaser is an Illinois resident is created, which in turn requires the dealer to maintain other evidence of the non-residency of the purchaser, such as (i) Voters Registration Card with a non-Illinois address, or (ii) a copy of a purchase contract or lease agreement for a new non-Illinois residence, or (iii) a copy of a non-resident tax return, or (iv) credit report listing the purchaser's primary residence in another state, or (v) property tax records claiming a homestead in another state, or (vi) other similar documentation.

If the documents above are kept, then, absent fraud, the Department will only proceed against the purchaser for any claim that the exemption did not apply. If the documentation above is not kept, the Department will disallow the exemption, subject to further review by the Department. In the case of a motor vehicle lease, the above provision shall apply to the lessee as if the lessee was the purchaser.

How does a vehicle qualify for interim use exemption from sales taxes?

Beginning July 1, 2008, the Illinois Department of Revenue set forth certain tests for automatic disqualification, safe harbor, and situations not involving either of the above with respect to interim use exemption.

Certain activities automatically disqualify a vehicle from the interim use exemption. They are:

Titling a vehicle in any person other than the retailer, manufacturer, the manufacturer's captive finance company; or
Retailer claims IRC Section 179 depreciation on the vehicle (i.e., treats the vehicle as a totally deductible business expense in the first year); or
If the vehicle is leased, the gross receipts from the lease of the vehicle exceeds the ultimate sales price of the vehicle.

If the dealer meets all six of the following requirements, the vehicle will automatically qualify for the interim use exemption:

The vehicle must meet one of the following three requirements. It is:
1. Listed in the dealer's records as inventory; or
2. Not depreciated by the dealer under IRC Section 167; or
3. Otherwise indicated on dealer's records, documents, or operations as available for sale during the interim use period.
The interim use period is less than 24 months.
Vehicle is of the same general type sold by the dealer (i.e., a dealer of automobiles and light trucks that purchases another automobile or light truck, regardless of the brand, can do so and have it qualify for interim use, but cannot buy a trailer home or a large truck of a type not otherwise sold by the dealer and then claim interim use).
The vehicle is ultimately sold by the dealer.
For dealers who also lease or rent vehicles similar to the type of vehicle for which the interim use is claimed, then the dealer's annual lease/rental revenue for all such vehicles must be less than the annual sales revenue for such vehicles.
If the vehicle is leased under a lease agreement for more than 30 days, then the lease agreement must contain a provision that if a buyer is found for the vehicle, then either (i) the lease may be terminated within 7 days, or (ii) the lessee will receive a comparable vehicle substituted by the dealer for the vehicle within 7 days.

Finally, if the vehicle is not automatically disqualified, but does not qualify under the safe harbor, then the Department of Revenue will use all applicable and available facts to determine if interim use applies. These factors include, but are not limited to: the retail sales history of such type of vehicles; inventory records; advertising on the vehicle and at the location of the vehicle; manufacturer's contract terms, conditions, discounts and rebates; length and location of use or lease prior to sale; whether depreciation is taken under IRC Section 167; ownership and control documents; and if leased, whether the lease contract provisions provide that the vehicle is subject to recall, substitution allowance, and sale during the lease period.

I spot delivered a car to a customer but I cannot obtain financing for him. What do I do if the customer refuses to return my vehicle or returns it with excess wear and tear or damage?

If a customer refuses to return the vehicle, the dealer may sue for replevin and/or damages. However, the dealer does not normally have the right to repossess the vehicle at this time. Repossession is an extraordinary remedy which may be exercised by a dealer only when he has a security interest in the vehicle and there is a default. Inasmuch as the security interest normally won't arise until execution of the retail installment contract, repossession is not available to dealers in these instances.

Oftentimes dealers use riders to the Retail Installment Contracts with language that provides that the buyer shall return the automobile and that the seller shall return to the buyer all deposits less the value of any damage done to the vehicle. However, the Illinois Attorney General has issued an opinion that such language is in violation of Section 2C of the Illinois Consumer Fraud and Deceptive Business Practices Act which provides in relevant part: "If the furnishing of merchandise ... is conditioned upon the consumers ... having a credit rating acceptable to the seller and the seller rejects the credit application of that consumer, the seller must return to the consumer any down payment ... made on the purchase order or contract and may not retain any part thereof. The retention by the seller of part or all of the down payment ... is an unlawful practice within the meaning of the Act."

Does prior use need to be disclosed on the sale of a used vehicle?

A recent Illinois appellate case indicates that a selling dealer has an affirmative obligation to disclose prior use of a used vehicle, specifically if the vehicle was used in fleet or rental operations. Moreover, this obligation is not limited to only the previous owner's use. It appears that a good method of meeting this duty imposed by the courts would be to provide a customer with a complete vehicle history at the time of sale, using one of the well known services to accomplish this. This information should be made available to the customer prior to his executing the closing documents; the dealer should have the customer sign an acknowledgement that he has provided this information prior to the sale and should retain that acknowledgement in the dealer file.

My customer has informed me that he is "revoking acceptance" of the new car that he purchased. What does this mean and how can I contest it?

Under Section 2-608 of the Uniform Commercial Code, revocation of acceptance is provided as an extraordinary remedy to a car buyer. The remedy is available only when the product's non-conformity substantially impairs the product value to the buyer. While "substantially impairs" is an undefined term, the courts are given wide discretion in this area. The issue is to be judged from the perspective of the buyer, and might well include consideration of diminished value, as well as market value. The UCC clearly provides that revocation must be taken within a reasonable time after the buyer discovers or should have discovered the ground for it and before any substantial change in the condition of the goods which is not caused by their own defects. It is possible to contest revocation on the theory that although the condition of the car may not have changed much in the physical sense, its value on the marketplace will already have declined appreciably since it is a secondhand car. However, if a buyer is successful in revoking acceptance, he is entitled to have refunded the entire retail price plus perceived monetary damages.

May I do a direct mail campaign wherein a coupon is offered to further discount a vehicle for sale?

No. This offer would be in violation of two Illinois provisions. The first, Section 475.530 of the Illinois Administrative Rules on Motor Vehicle Advertising, prohibits cash rebates, including, without limitation, a payment or an offset to a consumer or a payment to a dealer or a third party on behalf of the consumer on the condition that the consumer purchase or lease a motor vehicle, unless it is funded solely by the manufacturer pursuant to a manufacturer's rebate program. Additionally, the Illinois Consumer Fraud and Deceptive Business Practices Act regulates "coupons." It prohibits the use of any coupon offered in connection with a retail sale where the price is arrived at through bargaining or negotiation.

May I send out a direct mail piece targeting customers who have filed for bankruptcy?

This issue is covered by the Loan Advertising to Bankrupts Act. That Act provides that no person engaged in the business of making loans or selling property or services under installment contracts may include in any solicitation of or advertisement for such business any language stating or implying that a loan or extension of credit will be made to a person who has been adjudged a bankrupt. Accordingly, a dealer should avoid the use of the words "bankrupt," "bankruptcy," and the like. It is permissible to imply that credit will be made consumers who have "bad credit" or the like. Fines for violating this provision can amount to up to $1,000 for each person the advertisement reaches.

Yes. In Illinois, sales of tangible personal property for resale are exempt from tax. However, in this instance, this is a sale for use rather than for resale. Upon audit, the Department of Revenue would deny a resale exemption because the Chevrolet dealer does not have a franchise to sell new Cadillacs, but may only sell that car as a used vehicle. Personal use takes place prior to that sale, and accordingly the transaction is a sale for use rather than a sale for resale, and subject to ROT tax. When the vehicle is sold "used" by the Chevrolet dealer, ROT tax must be charged again predicated upon that sales price.

How far back may the manufacturer audit warranty claims or other incentive and reimbursement programs?

The Illinois Motor Vehicle Franchise Act provides that the manufacturer shall have the right to require documentation for warranty claims and to audit such claims within a one year period from the date the claim was paid or credit issued by the manufacturer. With regard to other incentive and reimbursement programs, the manufacturer has the right to audit such claims within a 12 month period after the date of the transactions that are subject to audit. Notwithstanding the above, the manufacturer retains the right to charge back any fraudulent claim if he establishes in a court of competent jurisdiction in this State that the claim is fraudulent.

What amount of damage must be disclosed on a new or used vehicle?

On a new vehicle, the Illinois Motor Vehicle Franchise Act, as amended January 1, 2003, provides that a dealer must disclose in writing any damage of which he has actual knowledge, incurred between the end of the manufacturing process and the time of delivery, which exceeds 6% of the MSRP of the vehicle, excluding damage to glass, tires, bumpers, video and telephonic components, and in dash audio equipment, if said items were replaced with OEM equipment. With regard to the sale of a used vehicle, no Illinois Statute applies. Accordingly, the theory of common law misrepresentation would provide for dealer liability for an intentional misrepresentation of a material fact relied upon by the customer to his detriment. In this context, intentional means the dealer "knew or should have known" of the damage. The definition of "material" is left to the courts, but the rule of thumb is that it is material if the purchaser would have made a different purchase decision had he had knowledge of the damage.

How far away must a relocated or new franchise be from an existing franchise of the same line make?

The Illinois Motor Vehicle Franchise Act provides that the manufacturer may not grant an additional franchise in the relevant market area of an existing franchise of the same line make or relocate an existing motor vehicle dealership within or into the relevant market area of an existing franchise of the same line make without a showing of good cause. The appointment of a successor motor vehicle dealer at the same location as its predecessor, or within two miles of such location, or the relocation of an existing dealer within two miles of the existing location, is exempt from these requirements. In a county having a population of more than 300,000 persons, the manufacturer is prohibited from relocating a franchise within seven miles of the nearest dealer of the same line make absent a showing of good cause. With regard to the appointment of a new franchise, the manufacturer is prohibited from granting an additional franchise in the relevant market area, which is defined as an area within ten miles from the principal location of the dealership in a county of more than 300,000 persons or the area of responsibility as defined in the franchise agreement, whichever is greater, absent a showing of good cause. With regard to both a proposed relocation or grant of additional franchise, the manufacturer may attempt to show, and has the burden to establish, that good cause exists. The relocation or granting of the new franchise may not take place before the hearing process is concluded pursuant to the Franchise Act. A determination whether good cause exists is made by the Motor Vehicle Review Board pursuant to Subsection (c) of Section 12 of the Franchise Act.

What does the FTC used car rule generally provide?

The used car rule, which became effective in 1985, requires a dealer to post a window sticker, called the Buyer's Guide, on every used car or light truck offered for sale. The Buyer's Guide must be in the exact format required by the rule and must be filled in according to the directions. In addition, the Buyer's Guide, or a copy, must be provided to the purchaser at the time of sale, and the information contained therein must be incorporated into the Contract for Sale. Any dealer who offers six or more used vehicles for sale in twelve months is covered by this rule. However, sales to other dealers are excluded. Demonstrators are specifically covered. You should further note that if a used car transaction is conducted in Spanish, a Spanish language version of the Buyer's Guide must be provided to the consumer. Finally, if your dealership enters into a service contract with a consumer either at the time of sale or within 90 days thereafter, federal law prohibits you from disclaiming or modifying any implied warranty to the consumer.

May I obtain a consumer's credit report without written permission?

Yes. The dealer may always obtain a credit report if the dealer has signed permission from the consumer. However, the FTC has recently interpreted the revised Fair Credit Reporting Act to provide for a two part test for obtaining a consumer's credit report without a signature. Those two parts are:

The consumer clearly understands that he or she is initiating the purchase or lease of a vehicle; and
The seller has a legitimate business need for the consumer report to complete the transaction.

Accordingly, a dealer may not obtain a credit report without written permission when a consumer is requesting only a test drive or asking questions about prices or financing, or if it is solely for the purpose of negotiating with a customer.
There are inherent risks in taking credit applications over the phone. Penalties can run to $2,500 per violation. When in doubt, written permission is always recommended, and such permission should be retained by dealers for three years.

No. The Cooling-Off Rule, which provides three days to cancel purchases of $25 or more, applies to sales at the buyer's home, workplace, or dormitory, or at facilities rented by the seller on a temporary or short-term basis, such as hotel or motel rooms, convention centers, fair grounds, and restaurants. It applies even when the purchaser invites the salesperson into his home. However, it does not apply to sales made on the premises of the dealership. It further specifically exempts sales of automobiles, vans, trucks or motor vehicles at auctions, tents sales or other temporary places of business, provided that the seller is a seller of vehicles with a permanent place of business.

May I advertise a price for a vehicle wherein all rebates have been deducted, including a "loyalty" rebate that only applies to current owners of my manufacturer's vehicles?

No. A "loyalty" rebate, like a "college graduate," "Farm Bureau," or "finance company" rebate is a "limited rebate" under the terms of the Illinois Administrative Rules on Motor Vehicle Advertising, inasmuch as such rebates are not generally available to every consumer seeking to purchase or lease a motor vehicle. As such, it is a violation of Section 475.530 of those Rules to advertise a price or amount of an installment payment in which limited rebates have been deducted, or to advertise a total amount of rebate if a portion of the total consists of a limited rebate.

No. Any advertised price has to be available to all purchasers, and cannot be limited to only those who have logged onto the Internet. Additionally, use of a coupon on an Internet site would similarly be in violation of the Illinois Consumer Fraud and Deceptive Business Practices Act provision that prohibits the use of any coupons offered in connection with a retail sale where the price is arrived at through bargaining or negotiation.

Does dealer cash have to be disclosed to a customer, like a rebate?

There is no requirement that dealer cash be disclosed to a customer. However, some forms of dealer cash are subject to Illinois Sales/Use tax. If a dealer elects to pass the tax on to the customer, the amount of tax shown will indicate that there is dealer cash, and how much it is. Alternatively, the dealer can pay the tax himself and not disclose.

Credit run on a customer can't obtain credit. How long does the dealer have to keep the credit app and bureau?

Crowe Horwath provides a records retention checklist, wherein they note that denied credit applications must be kept for two years.

If my dealership holds regular off site sales at a convention center, but obtains a permit that extends the convention center as part of my dealership, does the 3 day right of recission still apply?

No. The Federal Trade Commission’s "Cooling-Off Rule," which provides three days to cancel purchases of $25 or more, applies to sales at the buyer's home, workplace, or dormitory, or at facilities rented by the seller on a temporary or short-term basis, such as hotel or motel rooms, convention centers, fair grounds, and restaurants. It applies even when the purchaser invites the salesperson into his home. However, it does not apply to sales made on the premises of the dealership. It further specifically exempts sales of automobiles, vans, trucks or motor vehicles at auctions, tents sales or other temporary places of business, provided that the seller is a seller of vehicles with a permanent place of business.

Do you have to have a drivers license to purchase a car for cash?

A driver’s license is not necessary to buy a car in Illinois. But the customer has to show you some form of identification so that you are comfortable that the person is who he says he is, for OFAC and other identity checks. As for proof of insurance, dealerships are not reduced to checking insurance on behalf of the police; rather, they check for it on behalf of the lien holder. But if it’s a cash deal, insurance is not your problem. However, knowing the customer doesn’t have a driver’s license, you can’t let him drive the car away. He would have to bring a licensed driver with him to take delivery. The amount of these hypothetical cash deals is unknown. But if the amount is above $10,000, it will trigger Form 8300 being filed with the government.

Can we sell a car for cash if somebody is taking it out of country?

You can sell a car for cash if it is leaving the country. But if the customer takes delivery of the vehicle in Illinois, it is a taxable transaction. To avoid tax, you the dealership must arrange with a freight forwarder to put the car onto a boat. If the customer doesn’t get possession of the car until it reaches Japan, the deal would be tax-exempt. Google the term "freight forwarder Chicago" and you’ll see about 12 firms to choose from. Keep a copy of the bill of lading in the deal jacket (don’t send to Springfield). On the ST-556, Part 5 deals with tax-exempt transactions. Check the final box, Other, and on the line beside it, print Delivered to Freight Forwarder. The amount of these hypothetical cash deals is unknown. But if the amount is above $10,000, it will trigger Form 8300 being filed with the government.

Can a customer purchase a vehicle for his mother "cash" utilizing a power of attorney?

The customer can place the title/registration in anyone’s name he chooses. Power of attorney is written authorization to represent or act on another's behalf in private affairs, business, or some other legal matter. It would only needed from the other direction, say, if the trade-in is in his mother’s name and she’s not present at the transaction. The amount of these hypothetical cash deals is unknown. But if the amount is above $10,000, it will trigger Form 8300 being filed with the government.

I have a caustomer buying a car that lives in Toronto,Canada. Does he have to pay sales tax?

The Illinois Vehicle Code defines a state as all 50 states plus Canada and Puerto Rico, so this transaction essentially is no different from a sale to someone from Wisconsin. On Part 5 of Form ST-556, you just have to smash-mouth the word Canada where the 2-letter state abbreviation goes. Issue a drive-away permit for customer to get the car home.

When quoting a payment, can you pack extra money in the payment?

Payment packing is not allowed, as it would take you out of compliance with the Equal Credit Opportunity Act and the Truth-in-Lending Act. If a monthly payment is quoted, use an APR to calculate the payment. The APR should be the same APR that the customer ends up with on the Retail Installment Contract. After a rate is agreed upon in the sales process, don't adjust it when the customer reaches the F&I process, as a way to sell F&I products.

Many dealers are joining the F&I Menu selling parade, and with good reason. Early returns indicate that when every customer is offered every product and permitted to make an informed decision about the features and benefits of the products, as well as the effect on his or her monthly payment, three things happen. Product penetration increases, customer satisfaction improves and less time is spent closing the deal.

Can you tell me about taxation on goodwill warranty claims.

Many dealers provide "goodwill" repair services on vehicles that are out of warranty. However, not all of those dealers are aware—according to recent Illinois Revenue Department audits—that the parts used in goodwill repairs are subject to the state’s 6.25 percent use tax, even though the customer does not pay for the repair.

In cases of warranty and recall repairs, sales tax is not charged on parts because the tax originally paid (when the vehicle was purchased) is deemed to cover all parts used in the repairs. Likewise, any parts used to repair or enhance new or used vehicles held in inventory are covered by the sales tax collected on the eventual sale of the vehicle.

But goodwill repairs are provided at no charge to the customer, at the option of dealer and/or the factory. Because no legal obligation exists to compel the dealer to provide the goodwill repair, the state revenue department considers the repair to be a gift.

Illinois use tax applies to parts purchased tax-free for resale which are used or consumed by the dealership in its use, including as a gift to a customer. The CATA board of directors is considering a challenge to the Revenue Department statute, in an attempt to exclude taxes on parts used in goodwill repairs.

If you have other questions, please direct them to my phone or email below.

My customer wants to trade in a car he holds clear title to. Can he use the trade as a tax credit against the selling price and have the same amount sent back to him as a payoff ?

Any time you pull money out of the transaction, in terms of cash back, it reduces the value of the trade-in. Can't have your cake and eat it too. If the trade-in is worth $10K but you pocket $2K, then trade-in now is worth $8K. Make sense?

If a customer asks for a copy of there credit report Is it ok to give to them?

You ought to give them the score but not the entire report. For one thing, the report a business receives is most often coded for computer processing, abbreviates lender names, and organizes the information according to the dealer’s or lender’s specifications. It actually has less information in it than the report consumers can obtain free every 12 months.

You would indicate the score on the Credit Score Disclosure notice that provides the credit score and other important related information. The CSD notice is one of two types of disclosures designed to increase awareness that a consusmer’s credit history is being used by a lender to make a decision to extend credit. This type of notice is sent to all approved applicants. Lenders can use the Risk-Based Pricing (RBP) notice instead of a CSD notice as an alternative method of complying with the regulation.

The Risk-Based Pricing rule went into effect on January 1, 2011. Risk-based pricing reflects the common practice of setting credit terms, such as interest rate or credit limit, according to a consumer's credit risk. Lenders that employ risk-based pricing generally offer more favorable terms to consumers who have credit histories that reflect lower risk and less favorable terms to those whose credit histories reflect higher risk.

Do tax trades have to come from Illinois?

A tax trade that is granted by another state cannot be used to reduce tax obligations in Illinois. Those things don’t cross state lines.

Can I sell a car to a person with a Matrícula Consular de Alta Seguridad. We do run a OFAC report.Thanks,Tim Bernard

Yes, you can accept the card as an ID. A U.S. House committee in 2003 proposed disallowing their acceptance, but on Sept. 14, 2004, the U.S. Congress voted down a motion to prevent financial institutions from accepting consular IDs.

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