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Uncertainty surrounds new DOC fee

November 17, 2010

On the eve of its Jan. 1 enactment, some Illinois dealerships expressed slight uncertainty about the state’s maximum documentary fee rising to $150, and where and how they must disclose it.

The Motor Vehicle Retail Installment Sales Act permits the seller in a retail installment contract to add a "documentary fee" for processing documents and performing services related to closing of a sale. The original base fee, established in 1992, was $40 and allowed for annual adjustments tied to the federal Consumer Price Index.

Legislation signed in August by Gov. Rod Blagojevich raises the 2008 maximum DOC fee to $150. The act stipulates that every retail installment contract shall contain the notice that appears at the end of this article. The notice is not required to appear on a Buyer’s Order or other forms.

The CATA in early December distributed DOC fee posters for dealers to display. The wording on the posters differs from the state act because the posters were created as response to a 1990 consent decree that spawned the DOC fee.

More than 300 Chicago area dealers signed the consent decree. The number still operating has dwindled to about 120. Dealers who didn’t sign the consent decree aren’t required to display the poster.

The DOC fee is a voluntary assessment; dealers don’t have to charge it and can charge different amounts up to $150 to different customers. However, it should not be systematically charged to one group but not to another—all females but no males—or cases of profiling could ensue.

Dealers are encouraged to explain to inquiring customers that the DOC fee represents reimbursement to the dealer for the cost of complying with the litany of federal and state mandates—OFAC, FACT Act, Regulations B, M and Z, among others—not for the cost of completing paperwork. The latest class action lawsuit craze is to allege that car dealers who charge a DOC fee are practicing law without a license.

The DOC fee is subject to Retailer’s Occupation Tax and must be included in the total price of the vehicle.

 

    "DOCUMENTARY FEE. A DOCUMENTARY FEE IS NOT AN OFFICIAL FEE. A DOCUMENTARY FEE IS NOT REQUIRED BY LAW, BUT MAY BE CHARGED TO BUYERS FOR HANDLING DOCUMENTS AND PERFORMING SERVICES RELATED TO CLOSING OF A SALE. THE BASE DOCUMENTARY FEE BEGINNING JANUARY 1, 2008, WAS $150. THE MAXIMUM AMOUNT THAT MAY BE CHARGED FOR A DOCUMENTARY FEE IS THE BASE DOCUMENTARY FEE OF $150, WHICH SHALL BE SUBJECT TO AN ANNUAL RATE ADJUSTMENT EQUAL TO THE PERCENTAGE OF CHANGE IN THE BUREAU OF LABOR STATISTICS CONSUMER PRICE INDEX. THIS NOTICE IS REQUIRED BY LAW."

 

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