Florida Hope Scholarship Program

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.

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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.

DR-HS1

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).

 

DR-15 1
DR-15 2

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.

Hope Scholarship Program Dealer Contribution Collection Report

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: tmyers@floridaautodealerschool.com. 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

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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-HS2 Hope Scholarship Program - Dealer Collection Report 

·        DR-HS3 Hope Scholarship Program - Contributions Received by an Eligible Nonprofit Scholarship-Funding Organization

·        DR-7 Consolidated Sales and Use Tax Return AND DR-15CON Consolidated Summary Sales and Use Tax Return

·        DR-7N Instructions for Consolidated Sales and Use Tax Return

·        DR-15 Sales and Use Tax Return

·        DR-15N Instructions for DR-15 Sales and Use Tax Return

·        DR-95B Schedule of Tax Credits Claimed on Repossessed Tangible Personal Property.

Buy Here Pay Here Training - Sarasota, Florida

I am often asked by dealers about buy here pay here. What is it? How do I get into it? Do I need a lot of money? What is "normal" with delinquencies? It goes on and on...  and all are great questions. 

While I often cover many of these topics when teaching the Wayne Reaves Software Training Classes, I'd also highly recommend the NIADA training to get focused information on this topic. Consider it an investment in your future and success.

 

  • When:  JUNE 7 - 8, 2018
  • Where:  NIADA Office; Sarasota Florida
  • Who:  If you are new to the BHPH business, or you are considering entering the BHPH business, this program was designed for you!
  • What:  Learn the key drivers to success in BHPH financing; sales, marketing, deal structure, underwriting, cash flow and more!
  • Why:  Learning through mistakes is a very expensive education in the BHPH business. 
  • This Start-up trainingschool will provide the blueprint for success for your BHPH business.
  • How:  Click on this LINK to register for the Start-up training School.  Details on preferred hotel room rates are available.  Call for details 888.906.8283
  • Register today.  Class size is limited.
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Military Lending Act

If you are not familiar with the Military Lending Act and especially if you offer a GAP Waiver, this is a good article to get you up to speed on where we are as of now.

F&I Showroom Article on the Military Lending Act dated February 22nd, 2018.

The actual MLA website can be found at the following link. MLA Website.

Many dealers have started having customers sign a form stating if they fall under these protections or not. In addition, the MLA website has a search feature.

I'd recommend you stay up to date on this topic.

"County Tax" Rate Changes For 2017

There are a number of changes to the "County Tax" rates for 2017. Technically, these are called a "Discretionary Sales Surtax", but most dealers simply refer to them as the "County Tax" or "County Tax Rate." 

A few reminders on these: 

1. "The rate for motor vehicles is determined by the residence address of the purchaser (buyer) shown on the registration or title document" (See DOR GT400400, section 6). In other words, the county of the buyer determines tax rate, NOT the county where the dealership is located.

2. There is a taxable cap that is applied only to the first $5,000 of each sale. 

These new rates take effect Januray 1st, 2017. If you have a dealer management system that computes state and discretionary taxes, make sure they are updated (or you update them) on that date! Put a reminder on your calendar if you need to, but don't forget!

Here is a link to the Florida Department of Revenue form DR-15DSS for 2017
http://floridarevenue.com/Forms_library/current/dr15dssyear2017.pdf

Changes to Discretionary Sales Surtax 2017

Changes to the FTC Used Car Rule

If you sell qualified used Motor Vehicles, then you are familiar with the Buyer's Guide. It has been around since 1985 and the FTC started looking for comments on a number of proposed changes back in 2012. They have now released the revised guide.

The short version of the changes are listed below. For further reading, check out the FTC Press Release HERE.  More here at the FTC Business Blog. 

From their website on November 10, 2016:
As announced today, the Commission is revising the Buyers Guide by:

  • changing the description of an “As Is” sale;
  • placing boxes on the face of the Buyers Guide that dealers can check to indicate whether a vehicle is covered by a third-party warranty and whether a service contract may be available;
  • providing a box that dealers can check to indicate that an unexpired manufacturer’s warranty applies;
  • adding air bags and catalytic converters to the Buyers Guide’s list of major defects that may occur in used vehicles;
  • adding a statement that directs consumers to obtain a vehicle history report and to check for open recalls.  The statement also instructs consumers to:
    • visit ftc.gov/usedcars for information on how to obtain a vehicle history report; and
    • visit safercar.gov to check for open safety recalls;
  • adding a statement, in Spanish, to the English-language Buyers Guide, advising Spanish-speaking consumers to ask for the Buyers Guide in Spanish if the dealer is conducting the sale in Spanish; and
  • providing a Spanish translation of the statement that dealers may use to obtain a consumer’s acknowledgement of receipt of the Buyers Guide.

The amended Rule permits dealers to use their remaining stock of Buyers Guides for one year after the effective date of the amended Rule. 
 

The effective date is January 27th, 2017, so you technically have a full year from that date in which to use up remaining stock that you may have. However, why procrastinate? Switch to the updated version in a timely manner and if you use dealer management software, check to see when you can expect the new version to be released by them.

It's That Time Again....

For those of you who hold a Motor Vehicle Retail Installment Seller License, it expires on December 31st of even numbered years (regardless of when you received the license). With 2016 being an even number, you will need to renew your license by the end of this year. Today I was told by the Department of Financial Services that the renewals will open sometime in the first week of November. You should receive several automated emails as a reminder but those could be missed if your email isn't up to date or ends up in your spam folder. 

I have spoken to countless dealers over the years who have forgotten to renew it and have been fined.

You can find out more and renew your license HERE.

Also, don't forget that if you have an additional location in another county, you will need a branch office license. "In addition to the main location license, any subsequent location in another county other than the main office must be filed as a MVB: Motor Vehicle Retail Installment Branch Office by way of online."

If by some chance, you have been hiding under a rock and aren't aware of this license, I'd suggest you hop over to this page to find out more. 

 

FLHSMV Procedure Update (RE: Sales and Use Tax)

Some dealers are not aware that the State of Florida has a Procedures Manual that address many things that are handled at the tax collectors office (tag office). Most of these pertain to Title & Lien or Registration information. However, they also have one regarding Sales and Use Tax that has some helpful links and a good FAQ at the end. If you sign up for the email notifications then when there is a change, you receive an email alert. In the small box on the bottom of the first page there will be a description of what has been updated. Here's the one I received this morning regarding Sales and Use Tax.

BHPH Training Workshop

Dealer Performance and Consulting is holding a Buy Here Pay Here Training Workshop January 12th-13th, in Tampa, FL. Mark Dubois has a long history in the business and is a twenty group moderator. Those of you who are users of Wayne Reaves Software should also be aware that there is an export feature specifically for Mark's twenty group. This makes it easier for you to participate in them and know more about your business.

You can find out more and register for the workshop by clicking the link below. DEALER PERFORMANCE BHPH WORKSHOP

Mark's site is DealerPerformanceAndConsulting.com

What you don't see at your dealership

Have you ever noticed that if you see something day after day, you no longer really see it? This is a truism with many things. We are made to work like this. An example is that ache in your right knee. You remember when you first injured it the pain was there all the time. But, over time your brain does a good job of tuning it out until you actually think about it, like now. Then you notice it once again. This happens around dealerships all the time. However, to your prospective customer that comes to your dealership for the very first time, things stand out like a sore thumb. You know, that customer that you spent X number of dollars just to get them to call you, which took you time and effort on the phone to get them to make the trip to your dealership. THAT customer. (we will discuss that X number of dollars in another post)

To see these things from your customers’ perspective you must make a conscious effort to see and do things through your customers’ eyes. The best way I know to do this is to schedule it. That’s right, on your electronic calendar (you do have an electronic calendar, don’t you?) make a recurring reminder once a month to put on your customers “eyes” and to view your dealership.

So, what kind of things am I talking about? Well, I bet when you first opened the paint on the building and on the porch area was fresh and nice. The windows were clean, especially those glass front doors! The carpeted areas were like new, the shrubs were well maintained, etc. You get the idea. However, after walking in and out of the same place day after day, you don’t notice that the paint has faded and is now chipping, the front doors have hand prints all over them, the carpet has a big stain (you did notice that for the first 3 days) and the shrubs are sprouting in all directions!

You need to make an effort to see these things or you won’t see them until they are in really bad shape. Here’s a short list of things to check. It obviously is not a one-size-fits-all. Use it as a starting point and create your own.

 

  1. Put your dealerships address into a GPS, an android phone, an Apple phone… Does it take your customer to your location? If not, can you get this corrected or make sure you tell customers a reference point or what the issue is.
  2. Drive down the road to your dealership from both directions. How does it look? Are there trees or shrubs blocking the view? I have paid to have the neighbor’s trees cut down, shrubs cut back, etc., just so that the people driving down the four lane could see the front line of cars from further away.
  3. Speaking of that front line, I hope you are lining up the front of those cars at least once a week so that they are in a perfectly straight line.
  4. When was the last time you looked at your dealership at night? Do all the lights work?
  5. How is the “lawn maintenance”?
  6. How is the asphalt/concrete, etc?
  7. How is the paint on the outside?
  8. Is all of the glass clean?
  9. How does the shop look? Don’t just say, “It’s a shop, it’s supposed to be greasy.” Take a look at a Mercedes or BMW shop sometime. Why can’t yours look the same way? I guarantee you that if you have a shop that is nearly spotless, you will sell cars because of it.
  10. Look at everything around your office/shop/dealership. Does it need to be there? That part has been sitting on the shop desk for 3 weeks. Is it waiting on a customer? To be returned? Or is it just waiting on someone to notice it and make a decision?
  11. Now, walk in your front door. What is your “impression”? Do you get the feeling it’s organized? Welcoming? Or might it look like a paper grenade went off?

So, start the new year off by making yourself some appointments to view your dealership through your customers' eyes.