This is a guest post by Mr Terry Myers of Florida Auto Dealer School. This article will be appearing soon in the Florida Independent Automobile Dealers Association magazine.
NEW MANDATORY DEALER SALES TAX REPORTING REQUIREMENT STARTS OCT. 1, 2018
HOPE SCHOLARSHIP [RULE TITLE: 12AER18-07 Hope Scholarship Program]
[The purpose of the new HOPE SCHOLARSHIP program is to generate funds to help children trapped in a bullying, etc., situation. These funds will be used to help relocate these children to a different school. Funding comes from the sales tax applied on sale of *’qualified’ vehicles.]
The Department of Revenue was tasked with overseeing the program in addition to creating and implementing the new process. Stay alert for upcoming ‘TIPS’, Taxpayer Information Publications. If you are not on the update list with the DOR, go online and register now, http://floridarevenue.com/Pages/subscribe.aspx.
How might the dealer approach and fulfill these obligations?
FIRST: DR-HS1 Dealerships must offer (as in not optional) customers the opportunity to redirect some of their sales tax dollars on a *’qualified’ vehicle, to a special account that will manage HOPE SCHOLARSHIP funds. Should the total sales tax due a *‘qualified’ vehicle exceed $105.00, the dealer must offer the customer the option to redirect $105.00 only, to the HOPE SCHOLARSHIP fund. If the sales tax amount on a ‘qualified’ vehicle is less than $105.00, the lesser amount may be redirected. This is done on FORM DR-HS1 Hope Scholarship Program - Contribution Election.
The dealer will file this completed form in the deal jacket.
NOTE: There is no requirement to obtain or keep form DR-HS1 if the customer elects to NOT redirect funds. We will address a **potential pitfall about this toward the end of this article.
SECOND: Form DR-15R The dealer must enter the chosen amount into Line 6 Less Lawful Deductions. This amount must also be entered in Line 16 Hope Scholarship Credits(Included in Line 6).
THIRD: Form DR-HS2 In addition to current reporting requirements, the dealer must also complete DR-HS2 Hope Scholarship Program - Dealer Collection Report.
DR-HS2 is a three-part form for reporting the reallocated amounts for each collection period. It is the dealer’s responsibility to send funds with Copy A to the chosen Eligible Nonprofit Scholarship-Funding Organization. Copy B is to go to the Department of Revenue. Copy C is for the dealer’s records.
Let us take a closer look at a couple more items:
*‘qualified’ vehicle:12AER18-07 Hope Scholarship Program.
(1) Definitions. For purpose of this rule, the following terms mean:
(d) “Motor vehicle” means any automobile, truck with a net vehicle weight of 5,000 pounds or less and any other vehicle operated on the roads of Florida, used to transport persons or property, and propelled by power other than muscular power. Heavy trucks, truck tractors, trailers, motorcycles, and mopeds are not “motor vehicles” for purposes of the Program.
(2) Contributing to the Program.
(d) A contribution may not be made for any of the following:
1. Any tax other than the state sales tax imposed by s. 212.05, F.S.
2. Any tax due on a warranty or other taxable item sold in conjunction with a motor vehicle.
3. Any tax due on the lease or rental of a motor vehicle.
Caution: Funds may only come from the sale of a ‘qualified motor vehicle’. DO NOT REDIRECT SALES TAX FUNDS FROM ANY OTHER TYPE OF TRANSACTION, such as Warranty, etc. If misdirected funds are discovered in an audit, the dealer must reimburse the DOR. There are currently no refunding processes in place to reimburse the dealer.
Also, there is no DR-95B Repossession credit allowance.
**potential pitfall: To err on the side of caution, the dealer might be best advised to establish a Vehicle Check List to review with the customer as part of the closing process. Features and benefits available to the customer would be offered in list fashion with a Yes [ ] No [ ] choice to help minimize a future charge of discrimination by a customer claiming they were not offered an option due to discrimination. The HOPE SCHOLARSHIP choice would be my first option where they may choose to participate or not.
Additional choices would follow. This allows the customer to acknowledge they had the opportunity to say yes or no, and/or ask for clarification. This also creates additional sales opportunities while building a trust relationship.
Be certain to have competent legal counsel review such a form.
Many questions are currently being asked and answers are coming, as they become available. Expect future articles in a Q&A format, to help with the ongoing, fine-tuning, learning process.
HOPE_ingthis proves helpful. Expect to see updates from the Department of Revenue and future articles.
“What you know makes you money. What you don’t know costs you a fortune.”
Articles are the opinion of the author and are not intended to be legal or accounting advice. The intent is to share thoughts and concepts that help the business owner(s) find new and perhaps revisit, ways to be as successful as they are capable of being. Terry can be reached at (727) 804-7375. Email: firstname.lastname@example.org. Feedback is appreciated and encouraged. Terry LB Myers, author, lecturer, FIADA instructor, FADS owner/instructor.
TO LEARN MORE ABOUT CLASSES AND SERVICES OFFERED BY THE FLORIDA AUTO DEALER SCHOOL, PLEASE VISIT www.FloridaAutoDealerSchool.com
Here are links to some of the forms that have changed as a result.
· DR-HS1 Hope Scholarship Program – Contribution Election Hope Scholarship Program - Contribution Election
· DR-15 Sales and Use Tax Return