Vermont Automobile Dealers Association

HOTWIRE

Volume 12, December 2005

Inside this Issue

Cash Reporting Notices for ‘05 Transactions Due January 31 2 2006 Tax Change Highlights 3 Records Review and Retention 3 NADA Directors Report 4-5 Lowering Fuel Costs & 2006 Fuel Economy Guides 5 Federal Court Prohibits Factory Surcharge For Warranty Reimbursements 5 Elements of a Good Pay Plan for Salespeople 6 Workers Comp Safety Corner 6 Federal Tax Credits for Alternative Fuel Vehicles 7 EPA Seeking To Ease Oil-Storage Burden On Dealers 7 Penalties for Van Violations Change Under Amended Law 7 Dealers Victimized by Credit Card Fraud 8 IRS Gives Leeway on “Use It Or Lose It” Section 125 Rules 9 VT Legislators “Who Do You Know?” 9 Company-Specific Do-Not-Call Responsibilities 10 2005 Year End Checklist 11

Route To: Dealer Office Manager Service Manager

VADA LEGISLATIVE BREAKFAST-JANUARY 24th MARK YOUR CALENDAR!!!

V ADA will host our annual Legislative Breakfast at the State House in Montpelier on Tuesday, January 24th, at 8 a.m. in the State House Cafeteria. It is important that we have good member participation since our # 1 legislative priority-financing of negative equity-is significant to all members. Please mark your calendar and plan to be with us on January 24th. This is your opportunity to meet with your local senators and representatives and help gain their support.

GOVERNOR PROPOSES VEHICLE FEE INCREASES

A s mentioned by Transportation Secretary Terrill at our convention last September, Governor Douglas plans to raise motor vehicle fees and possibly dip into the State Education Fund to raise $22 million to match an increase in federal highway money earmarked for the state in 2007. Details of the plan will be released next month. Ten million will come from fee increases; $12 million will come from existing programs that currently receive transportation-related money which includes the education fund.

CALIFORNIA GREENHOUSE GAS RULE UPDATE

A s reported last month, Vermont, New York and several other New England states are signing on to adopt the new California rule. The Alliance of Auto Manufacturers have filed suit on behalf of several dealers in Vermont to challenge the rule contending that regulation of tailpipe emissions is superseded by Washington's authority to regular fuel economy. Special thanks to Representative Sylvia Kennedy who called to express her concern about the impact of this Rule on Vermont's automobile dealers and offered her support should legislative efforts be considered. (You may recall Senator Phil Scott introduced a bill to relieve us of the California requirements which was defeated.)

VADA staff extends our warmest wishes during this holiday season to you, your family and employees for a healthy and prosperous 2006. It has been our privilege to serve you during the past year and we look forward to continuing our work together in the years to come. Thank you for your membership, good will and commitment to V ADA. May the happiness and good cheer of the holiday season be yours throughout the New Year.

CASH REPORTING NOTICES FOR ’05 TRANSACTIONS DUE JAN. 31

V ADA again reminds dealers that the IRS has been strictly enforcing the filing of Form 8300 cash reports on the new form "IRS Form 8300/Fin/CEN Form 8300," and continues -to conduct audits on dealers for compliance with Form 8300 requirements. A failure to report cash transactions over $10,000 could result in a minimum $25,000 fine.

Under IRS regulations, dealers must notify each person identified for transactions of $10,000 or more during 2005. The FinCEN Form 8300 general instructions and the IRS definition of "cash" are available on the IRS website at http://www.irs.gov/publications/p1544/ar02.html

Such notices must be in writing, furnished to the purchaser no later than Jan. 31, 2006.

The notification statement must include the name and address of the dealership, the total amount of cash reported to the IRS during 2005 for that person, and a statement that the informa-tion was reported to the IRS. The statement should go to the person's last known address. Dealers are encouraged to review 2005 transac-tions carefully to be certain that all affected customers are notified in writing and to record a copy of the notice furnished to the customer.

To soften the surprise that some customers may get from receiving this notice, it is recommended that dealerships

include a short letter along the following lines: Dear (customer name):

We are required by the Internal Revenue to report transactions involving more than $10,000 in cash and "cash equivalent" under the provi-sions of 26 U.S.C 60501. (Name of dealership) has filed a Form 8300 with the IRS on (month, day, year) indicating that you provided us ($ amount) in connection with the purchase of your (year, make, model). We wanted you to know that we have complied with this federal requirement. Again, thank you for your patron-age.

Sincerely, (dealership name)

The exact wording of the customer notifica-tion should be

2 DECEMBER

2006 Tax Change Highlights

Y es...groan...it's that time of year. Amongst all the good tidings of the season it's also time for all businesses and good citizens to turn their attention to tax changes and regulatory mandates for

the new year. Here are the highlights of rates on primary federal taxes that affect all businesses effective Jan. 1,2006. Social Security taxable wage base limit (FICA) is $94,200, up from $90,000 in 2005. The maximum

amount payable increases to $5,840, from $5,580 in 2005. The FICA tax rate, a combination of Social Security (6.2%) and Medicare (1.45%) rates, remains at 7.65%, and there continues to be no limit on the amount of wages subject to the Medicare portion of the tax.

Federal Unemployment Tax Act (FUTA) tax rate remains at 0.8% of the first $7,000 paid each employee as wages during the year.

Business mileage rate is 44.5 cents a mile for all business miles driven, up from 40.5 cents a mile in

2005, and down from the 48.5 cents for the last months of 2005. The rate for medical and moving deductions increases to 18 cents a mile, up from 15 cents a mile in 2005, and down from 22 cents for the last months of 2005. The per mile driven in service of charitable organizations is 14 cents (Katrina-related charitable driving rates are 32 cents per mile).

Federal minimum wage is unchanged at $5.15; minimum cash wage (tipped employee): $2.13; and

youth sub-minimum wage: $4.25.

A nother important New Year issue for dealerships is the review of old paperwork to determine what must be retained and what can be disposed of, as well as a careful review of local, state. and federal guidelines prior to disposing of any paperwork.

Every dealership (or business) should have written guidelines in regard to record retention. The majority of citations issued to dealers for violating federal laws involve improper or nonexistent recordkeeping or reporting. Before disposing of any records, you should review federal, state, local and other paperwork retention requirements.

To assist in sorting through paperwork, NADA offers Management Guide L3, A Dealer Guide to Federal Records Retention, which outlines federal retention requirements for seven major categories of records. Keep in mind, this list is not all-inclusive - dealers should contact their CPA firms and/or attorneys to obtain their opinion in addressing state, local and other requirements.

NADA members can obtain a complete copy of A Dealer Guide to Federal Records Retention and

Reporting by going to NADA's website at nada.org, or contact NADA Management Education at (703) 821-7227.

RECORDS REVIEW AND RETENTION

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NADA Director: Wade Walker

Strength in Numbers … and Unity

T he board of directors of the American International Automobile Dealers Association has voted to form a connected political action committee. If AIADA follows through with its plan, all dealers should be aware of considerations that could create legal risks for them. The Dealers Election Action Committee is a connected PAC – it is controlled by NADA and, under federal election law, can solicit donations only from association members. If AIADA creates a second connected PAC, they might ask dealers who are also NADA members to provide written permission to be solicited by the new PAC. Dealers can give permission to solicit to only one connected PAC each year, however. If NADA members who have given solicitation permission to DEAC sign and return AIADA’s permission form, they could inadvertently violate federal election law, whether or not they actually contribute to both PACs in one year. While we certainly hope that you continue to support DEAC, our primary concern is avoiding legal exposure for NADA members. If you have questions, please call DEAC at 703.821.7110. Of course, NADA’s success in Washington is not due solely to DEAC. The association’s Legislative Affairs and Regulatory Affairs staffs have been especially busy recently: NADA testified before the Senate Nov. 16 for improved vehicle title data and history information to be made public faster and more uniformly so that consumers and dealers might be protected from flooded and salvaged vehicle fraud. Don Hall, president of the Virginia Automobile Dealers Association, presented testimony on behalf of NADA to the Senate Consumer Affairs, Product Safety and Insurance Subcommittee. Complete coverage is at www.nada.org. In his testimony for NADA, Hall noted, “Any buyer should have pre-purchase access to information about significant vehicle damage that may affect safety, drivability, durability and market value.” He also pointed out that each state and the District of Columbia register vehicles differently, inviting fraud and making it easier for unscrupulous rebuilders to have damaged vehicle titles “washed” in these states. Even without enacting title branding legislation, NADA recommended to Congress that states should carry forward prior brands when issuing new titles; brand registrations; title motor vehicles electronically; work more closely with DMVs, insurance companies, salvage auctions and the information technology industry to speed total loss information to consumers; and enact penalties to prevent attempts at circumventing disclosure. In several recent speeches, chairman Jack Kain has called for the establishment of a national title branding database and for vehicle history and title information to be readily available so that dealers and their customers know what they are buying. “We will all benefit when complete title information gets to dealers and consumers more quickly,” he said. NADA and Experian Automotive have established a hotline and e-mail services (800.509.5489 and stormsupport@experian.com), to provide NADA members free branded title and other information to check vehicles for hurricane damage. In other testimony before Congress, NADA chief legislative counsel Robert Braziel told a House Energy and Commerce Committee subcommittee on Nov. 10 that proposed legislation to give the Federal Trade Commission the authority to make rules governing the flow of vehicle service, training and tool information is unnecessary. Braziel pointed out that automakers already make needed information readily available to aftermarket service providers as well as franchised dealers and the bill could encourage private rights of action against automakers under state laws and compromise intellectual property rights. In a letter to the Environmental Protection Agency, NADA expressed support for regulations that would control the purchase and use of automotive refinishing. EPA has been gathering information from various sources throughout the collision repair industry as it prepares to draft tougher emissions rules for the refinish industry and implement them in the next few years. NADA continues to work to educate consumers about car-buying and financing and ownership. The association’s “Smart Car Buyer’s Guide: Getting the Most from Your Dealership” appeared in the November 14 issue of Time magazine. It’s also

(Continued on page 5) 4

DECEMBER

available at www.nada.org. A copy will be included with the January 2006 issue of AutoExec. To order copies of the guide for your customers, contact Naxhieli Acosta at nacosta@nada.org; they’re available in packages of 100 for $39.95 each, plus tax, shipping and handling. Also on the consumer education front: To help consumers be more energy efficient, NADA created “8 Simple Steps to Lower Fuel Costs,” available for download

via www.nada.org. “Dealers are concerned about the impact of higher gas prices on their communities, and we hope these tips will help to ease the burden.”

Kain urged widespread certification of F&I employees, greater transparency in dealership financing and improved public understanding of auto financing in speeches to Detroit’s Automotive Press Association and the Detroit Automobile Dealers Association and at F&I magazine’s National Conference and Expo. Go to www.nada.org/nada-tv to view a video clip of the Detroit APA speech, which received extensive national media coverage.

As part of the AWARE coalition, NADA is educating consumers about vehicle financing and insurance options. The group has launched an awareness campaign and has posted F&I tips to its consumer Web site, www.autofinancing101.org. AWARE stands for Americans Well-informed About Automotive Retailing Economics, and members include the American Financial Services Association, a variety of automotive financing companies and large automotive retailers.

Dealers Continue to Aid Hurricane Victims There is still a need for hurricane relief for dealerships hit by Hurricane Wilma in Florida. The National Automobile Dealers Charitable Foundation has raised $3.4 million for its Emergency Relief Fund, with $3.3 million already distributed to

(Continued from page 4)

NADA "has developed a tip sheet to help customers reduce their fuel costs. “Eight Simple Steps to Lower Fuel Costs” can be downloaded from www.nada.org. The sheet suggests that drivers have their cars maintained on a regular basis by qualified technicians; use the recommended grade of motor oil; stick to the posted speed limit; and eliminate quick starts and aggressive driving. Dealers are urged to print out the tips and provide copies to customers. NADA's new tip sheet coincides with the release of the model year 2006 Fuel Economy Guide. Dealerships will soon receive a letter reminding them that the Department of Energy no longer automatically mails out paper copies of the guide. Instead, dealers can download and print the guide from www,fueleconomv.gov. Dealers may want to keep a display copy in the showroom and make copies for customers upon request. If you have difficulty accessing the Internet or downloading the guide, you can order printed copies by calling the Alternative Fuels Data Center at 800.423.1363 (9 a.m. to 6 p.m. Eastern time) or logging on to www.eere.enerav.gov/cleancities/afdc/feg_orderform.html. To receive a new model-year Fuel Economy Guide by e-mail every year, send your e-mail address to fueleconomv@ornl.gov. For further information about fuel economy, visit www.fueleconomv.gov or www.epa.gov/fueleconomy. Questions? E-mail NADA's reaulatorvaffairs@nada.ora or call (703) 821-7040.

LOWERING FUEL COSTS & 2006 FUEL ECONOMY GUIDES

FEDERAL COURT PROHIBITS FACTORY SURCHARGE FOR WARRANTY REIMBURSEMENTS

Auto manufacturers have been dealt a stunning blow to their plans to add a "warranty parity surcharge" to the wholesale price of motor vehicles in Maine. State law requires factories to reimburse dealers for parts and labor at reasonable retail rates for warranty repairs. It also prohibits the factories from recovering the costs of doing so. A federal appeals court has just upheld that prohibition. In its decision, the court recognized that, "The historic relationship between motor vehicle manufactur-ers and dealers is not a particularly congenial one." The court also described the challenge by the man-ufacturers as, "... the latest chapter in an epic struggle between the manufacturers and the dealers." The court recited that the franchise agreement, among other things, requires dealers to perform warranty repairs (whether they sold the vehi-cle needing repairs or not). The agreement (drafted by the manufac-turer) specifies how the factory will pay the dealer for those repairs. Maine law, like that in many states, required factories to pay reasonable rates for warranty repairs. In response to a surcharge added by factories to recoup those costs, the Maine legislature added a section prohibiting that recoupment. The court referred to that repair as a "device to ... restore the structural integrity of [the law's] warranty- reimbursement scheme." It was that prohibition that the appeals court has now upheld. VADA will evaluate this devel-opment, and will, as many other associations will, evaluate its appli-cability to

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ELEMENTS OF A GOOD PAY PLAN FOR SALESPEOPLE

T he first objective of any pay plan is to determine what the total compensation should be for the position. How much do salespeople earn in your area?

The next goal is to determine the responsibilities of the salesperson. Does the salesperson control the gross? Salespeople certainly control their volume and they have a major impact on customer satisfaction. The salesperson can also have an impact on whether he or she starts the month on the 1st, or doesn’t really get down to work until the 20th.

What bearing does the salesperson have on the success of other departments? One consultant suggests paying a salesperson a commission on customer-paid labor performed on vehicles he has sold, because the salesperson has a personal interest in making sure the customer returns for service work.

You are faced with answering many questions about various portions of a complete compensation package, including:

• Is a salary necessary to attract the quality of individual that you want to have working in your dealership?

• What percent of the total compensation package should be salary?

• Should you pay for longevity?

• Should you establish a bonus pool that everyone shares according to his or her volume or gross contribution?

• How many paid vacation, sick leave, and annual holidays should there be, and how do you calculate the compensation?

• Should you provide health and/or dental plans?

• Should you provide a paid maternity/paternity leave plan?

• What about access to a profit sharing/pension/401(k) plan?

• Do you provide sales contests? Are goals attainable? Does the same person win each time?

• Do you want to provide a “personal improvement allowance” that reimburses salespeople for participation in personal or professional improvement programs (such as improve sales/management skills, earn sales certification, lose weight, smoking cessation, learn a foreign or sign language, and so forth)?

• Do you provide demonstration vehicles and how do they figure into the compensation package?

This article was adapted from A Dealer Guide to Using Pay Plans to Motivate Your Sales Force (SL23). Check NADA Management Education’s catalog at www.nada.org/mecatalog for the full publication. See also Paying to Motivate, Update ’05: Regional Compensation Trends for Automobile and Truck Dealerships in 2004 (PF14), as well as NADA’s Salesperson Certification program. Happy holidays!

WORKERS’S COMP SAFETY CORNER “Slip and fall injuries increase dramatically during the winter months. To help prevent a nasty slip and fall, remember these pointers: 1) Keep sidewalks and walkways as clear as possible. 2) Keep tiled floors dry. Use clean floor mats inside doors. 3) Wear the proper footwear. Don’t wear shoes with leather soles on ice or snow. Wear your snow boots and carry your dress shoes. Change inside. 4) If you must walk on snow or ice, take your time. DON’T HURRY.

6 DECEMBER

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FEDERAL TAX CREDITS FOR ALTERNATIVE FUEL VEHICLES Starting in January 2006, a consumer or business that purchases a hybrid vehicle, advanced lean-bum vehicle, alternative fuel vehicle, or a fuel cell vehicle (all referred to as "alternative motor vehicles") may be eligible for a tax credit on their federal taxes. The amount of the credit varies by category: • Hybrid and advanced lean-bum vehicle: $3,400 • Alternative fuel vehicle: $4,000 • Fuel cell vehicle: $12,000

With regard to hybrid and advanced lean-bum vehicles, there are limitations based on the quantity of vehicles that each manufacturer sells. Once a man-ufacturer has sold 60,000 such vehicles, the credit will be phased out begin-ning in the next calendar quarter. Toyota and Honda, which began selling hybrids before other manufacturers, will probably reach the limitations sooner. Once a manufacturer reaches the 60,000 sales mark, the federal tax credit is limited to 50 percent of the allowable credit in the next two calendar quar-ters and 25 percent of the allowable credit in the subsequent two calendar quarters. One year after a manufacturer reaches the 60.000 limit. buyers of that make will not receive any federal tax credit. Limitations: To be eligible for the tax credit, the taxpayer must be the origi-nal purchaser of the vehicle(s) - used vehicles do not qualify for the credit. The amount of the credit may be subject to limitation. If a business pur-chases the vehicle, the credit is part of the general business credit and is subject to the general business credit limitation. 2005 tax treatment: Hybrid vehicles purchased in 2005 qualify for an "above-the-line" deduction of $2,000. To qualify for a tax credit, purchasers must wait until 2006 to place the vehicle in service.

EPA SEEKING TO EASE OIL-STORAGE BURDEN ON DEALERS The Environmental Protection Agency is proposing to reduce the burden on dealerships storing oil (fuels,

used or new oils, ATF, etc.) in aboveground tanks and drums. For the last two years NADA has spearheaded a push to exempt small facilities from having to develop a Spill, Prevention, Control, and Countermeasure (SPCC) Plan and have it certified by a professional engineer (PE).

EPA's existing rules cover all dealerships with an aboveground oil storage capacity above 1,320 gal-lons. The new proposal would still require dealerships with between 1,320 and 10,000 gallons of above-ground oil storage to have an SPCC Plan, but would allow them to self-certify, eliminating the costly expense of hiring a professional engineer PE.

EPA also has proposed to extend its SPCC compliance deadlines. Currently, regulated facilities need to amend their plans by February 17, 2006, and implement those changes by August 18, 2006. Under the proposal, covered dealerships would have until October 31, 2007, to both amend and comply with their SPCC plans.

Lastly, EPA has issued an inspector guidance document addressing several SPCC compliance issues faced by dealerships, including when secondary containment is necessary, oil water separators, and how to put together-a-model plan.

NADA suggests that dealerships with more than 1,320 gallons of aboveground oil storage consider holding off on amending their SPCC plans until EPA has finalized its regulatory relief proposal. Ques-tions on this matter can be directed to NADA Regulatory Affairs at (703) 821-7040 or regulatoryaf-fairs@nada.org.

PENALTIES FOR VAN VIOLATIONS CHANGE UNDER AMENDED LAW The National Traffic and Motor Vehicle Safety Act now prohibits schools and school systems from buying or

leasing new 15-passenger vans to transport students unless the vans comply with the standards for school buses or multifunction school activity buses. Prior to the law, only a dealership's sales of these vehicles were regulated; now both parties to the transaction are regulated. The new law also modi-fies the civil penalty for violations of these provisions. A single violation now carries a civil penalty of up to $10,000; the maximum civil penalty for a series of related violations is $15 million. For further information on restrictions governing the sale or lease of large vans or

FYI

DEALERS VICTIMIZED BY CREDIT CARD FRAUD

N ADA reports that dealers have described recent credit card fraud directed at their parts departments. Those reports underscore the importance of carefully scrutinizing telephone, fax, or e-mail credit card orders, especially those from unfamiliar sources. Here are a few measures dealers can take to reduce their risks: Take extra steps to validate each order. (For example, ask for the three-digit number imprinted on the signature panel of the credit card to verify that the customer actually has the card.) Be extra cautious with transactions involving any of the following: • different shipping and billing addresses • first -time shoppers • faxed or e-mailed orders • larger than normal orders • orders consisting of several of the same item • orders for "big-ticket" items • orders shipped "rush" or "overnight" orders shipped to an international address If you have the misfortune of being scammed by a credit card thief, contact your merchant processor immediately and inform the processor of the situa-tion. Some credit card companies offer a safeguards program to protect against this risk. If you are suspicious about an order, call your credit card authorization cen-ter. This is not an exhaustive list of credit card fraud prevention measures, but rather an alert and to reinforce the need for credit card fraud prevention in employee training programs.

ONLINE DATABASE

T he National Insurance Crime Bureau (NICB), a non-profit organization dedicated to fighting insurance fraud and vehicle theft, announced the launch of a special online database for the public listing of vehicles and boats damaged by Hurricanes Katrina and Rita. Already, 70,000 vehicles are listed in the database, with more added daily, according to a report by Automotive Retailing Today. The effort is expected to last six months to a year.

Working in close cooperation with law enforcement agencies in Louisiana, Mississippi, Alabama, and Texas, NICB teams are collecting all the VIN numbers of damaged vehicles, utilizing the latest techniques in the industry. "We don't know how many are 'total losses' as that information is unique to the individual insurance companies that insure the vehicles," said Frank Scafidi, of the NICB. The NICB said all VINs from hurricane-damaged vehicles gathered so far have been made available to law enforcement, state fraud bureaus, insurance companies, and state departments of motor vehicles to help prevent fraud, which could occur through title washing.

The public can now access the damaged

vehicles via their VINs in the public database by following the instructions on the NICB's website, www.nicb.org. To report fraud, call 800.835.6422.

In early October, Carfax estimated that up to

571,000 vehicles may have been destroyed following Hurricane Katrina. Carfax said it also is working with law enforcement state agencies and private companies to make sure all hurricane-damaged vehicles are properly branded.

Another avenue to identify hurricane -damaged

vehicles has been provided by Experian, in cooperation with NADA. NADA members can obtain free branded title information by calling 800.509.5489. This service offers NADA members damage information on up to 25 units per dealership through the end of the year.

8 DECEMBER

(Attn: General and Office Managers, and Controllers)

IRS GIVES LEEWAY ON "USE IT OR LOSE IT" SECTION 125 RULES Effective immediately, the IRS has extended the deadline for Health Flexible Spending Accounts under the Section 125 cafeteria plan. Participants now have an additional two-and-a-half-month grace period to incur and have eligible expenses reimbursed from the prior year's remaining unused benefits.

Previously, cafeteria plan contributions could only be used to pay for expenses incurred in the same plan year in which such contributions were made. Contributions that could not be applied to expenses incurred in the same plan year were forfeited under the IRS' "use it or lose it" rule.

2 1/2 Extra Months Added for Claims Under the new rules, participants have a total of 14-and-a-half months, rather than 12 months, to incur qualified expenses paid from cafeteria plan contributions. For example, a participant in a calendar year plan ending December 31, 2005 may pay for medical expenses incurred through March 15, 2006 with health care flexible spending account contributions made in 2005. Section 125 plans allow employees to defer pretax income to go towards medical, disability, vision, dental and group life insurance, as well as medical expense reimbursement and some dependent and day care expenses. Please note that the two-and-a-half-month grace period is for the health flexible spending account expenses only, not dependent day care. Section 125 cafeteria plan documents must be amended before the last day of the current plan year to establish the new grace period rules for participants. In that the grace period time frame can vary by plan, employers should check with their Human Resources Department for details on their particular plan.

VERMONT LEGISLATORS “WHO DO YOU KNOW?”

Name:________________________________

Dealership:____________________________ House Members You Know: Personally Well Slightly

______________________ ________ ____ _______

______________________ ________ ____ _______

______________________ ________ ____ _______

Senators You Know: Personally Well Slightly

______________________ ________ ____ _______

______________________ ________ ____ _______

______________________ ________ ____ _______

FAX OR MAIL TO VADA 802-229-5696 (Fax)

317 River Street, Suite 2 Montpelier, VT 05602

9

NADA has received reports of dealers being sued for violating the Federal Communications Commission's (FCC's) and the Federal Trade Commission's (FTC's) Company-Specific Do-Not-Call (DNC) rules. To help protect dealers against these lawsuits, NADA provides the following recap of the Company-Specific DNC rules: Both the FCC and the FTC administer and enforce similar Company-Specific DNC rules. The FCC rules

apply to intrastate and interstate telephone solicitations, whereas the FTC rules are limited to interstate telephone solicitations. In addition to agency enforcement, the Telephone Consumer Protection Act authorizes private lawsuits in state court, if permitted by the state, with damages of up to $500 per violation (which may be tripled if the violation is knowing or willful). .

The Company-Specific DNC rules predate, and are entirely separate from, the National DNC Registry rules that took effect in October 2003. Dealers must comply with both sets of rules.

The Company-Specific DNC rules require dealerships to:

1. Not initiate a telephone solicitation to any consumer who has asked the dea1ership not to call him or her,-

2. Develop a Company-Specific DNC List to record such requests and the time they were made, 3. Develop a written policy for maintaining the Company-Specific DNC List and train personnel

engaged in 4. any aspect of telemarketing on the dealership's Company-Specific DNC procedures, and 5. Ensure that, during any telephone solicitation, the caller identifies:

(i) himself or herself, (ii) the name of the dealership, and (iii) the address or telephone number where the dealership may be contacted (which may not be a 900 number or other number for which the consumer would incur charges that exceed his or her local or long-distance transmission charges).

Dealerships must honor a Company-Specific DNC request regardless of whether the consumer has registered his or her phone number on the National DNC List or whether an established business relationship exists with the consumer (in fact, a Company-Specific DNC request terminates an established business relationship). The request must be honored even if the consumer continues to do business with the dealership.

The dealership's written Company-Specific DNC policy must be "available upon demand." There is no requirement that the dealership send the consumer written confirmation that he or she has been placed on its Company-Specific DNC List.

Dealerships are reminded of the need to transmit their Caller ID information when conducting telephone solicitations. The phone number may be any number associated with the dealership that allows the consumer to identify it. This includes the number assigned by its carrier, the specific number from which its sales representative placed a call, the number of a party that made the telephone solicitation on its behalf, or its customer service number. The number must permit an individual to make a DNC request during regular business hours (9 a.m. - 5 p.m., Monday through Friday). The dealership (or a person placing a telephone solicitation on its behalf) must be able to record DNC requests at this number. Therefore, if the person answering calls at this number is not the same person who made the telephone solicitation, or if the dealership is using an automated system to answer calls, the dealership nevertheless must ensure that its Company-Specific DNC responsibilities are satisfied.

Keep in mind that your state law may be more restrictive. For additional information, see NADA's "A Dealer Guide to Federal Telemarketing Restrictions," which was

mailed to all NADA members in September 2003 (note: this publication does not address subsequent telemarketing developments, such as the enactment of the CAN-SPAM Act of 2003 and the Junk Fax Prevention Act of 2005).

COMPANY-SPECIFIC DO-NOT-CALL RESPONSIBILITIES

10 DECEMBER

2005 Year End Checklist

by Mironov, Sloan & Parziale - Associate Member

It is recommended that a checklist be kept when compiling financial information for the year end. The items below are guidelines for completing financials and preparing income tax returns:

1. Review all past due account receivable and write off uncollectible receivables. 2. Pay interest on shareholder loans to and from the dealership by year end. Also, issue an IRS Form 1099 for this

interest (where applicable). 3. If the dealer or the dealership owns stocks that have unrealized losses, consider selling them. 4. In order to report transactions in the proper period, try and keep the accounting records open at the end of December

for as long as possible: -Record December finance chargebacks in December. -To maximize LIFO deductions, record all new vehicles invoiced in 2005 as vehicles purchases in 2005 by keeping the new vehicle purchase journal open the first several days of 2006. -Keep the accounts payable journal open to record all 2005 expenses in 2005. -If any vehicle deal is not 100% complete in 2005, treat it as a 2006 vehicle sale. -Adjust all miscellaneous inventories to actual, including labor inventory, sublet, gas-oil-grease body shop materials, etc.

5. Complete any building repair or maintenance items by the end of 2005. 6. Compare actual parts inventory versus accounting parts inventory and make any appropriate adjustments. Have the

parts manager determine which parts are considered worthless. 7. Put a reasonable estimate of LIFO adjustment on all versions of the December statement. 8. If the dealership is not on LIFO for used vehicles, adjust all used vehicles to current wholesale market value as of the

end of the year; consider adopting Used Vehicle LIFO. 9. If the dealership is a "C" corporation, pay any salaries, commissions or bonuses to stockholders in December for the

2005 deduction. 10. Review bank reconciliations and reverse any checks that are not expected to clear. Be sure to report all uncashed

checks on your Unclaimed Property Report. 11. Review prepaid assets and expense all items that are not valid assets. 12. For federal tax purposes, businesses may deduct (rather than depreciate) the cost of certain assets, up to a maximum

of $105,000 for property placed in service in taxable years beginning in 2005 ($108,000 for 2006). The maximum deduction amount is:

-Reduced dollar for dollar where the taxpayer places in service qualified tangible personal property in excess of $420,000 for tax years beginning in 2005, and $430,000 for 2006, and; -Limited to the amount of taxable income from any of the taxpayer's active trades or businesses.

13. Ensure that payroll tax and sales tax payable accounts equal the actual amount of all taxes paid in 2006 for the 2005 fourth quarter and year-end tax returns.

14. Verify how much was spent on meals and entertainment in 2005, not including travel and the employee holiday party.

15. Have all demonstrator users sign a comprehensive demonstrator agreement and: -Sales department employees - Limit personal use or apply charge for non-deductible personal use. -Non-sales department employees who use a personal vehicle - Charge for personal usage of demonstrator, using the IRS lease table. -Stockholders and their family members/non-owner non-employee - Show this value as income on their W-2 or give them an IRS Form 1099 for the fair market value of their personal use of the vehicle.

16. Make sure IRS Form I099-MISC is issued to all non-incorporated entities that received $600 or more in 2005 for payment of services, awards, commissions or fees for services. Review these non-employees to see if they would really be considered employees for payroll tax purposes.

17. Make sure that all wages and commissions that are paid in 2006 for 2005 services have been accrued in 2005. Make sure the first payroll in 2006 is based on the date the payroll checks are handed out (pay date), even though some portion of the payroll was for 2005 services. Also, make sure that the first payroll in 2006 is not included on your W-2s for 2005, but will instead be on the W-2s for 2006.

18. Make any charitable contributions in 2005.

11

Vermont Automobile Dealers Association, Inc.

317 River Street, Suite 2 Montpelier, VT 05602 Tele : 802-223-6635 Fax: 802-229-5696

E-mail : vtada@adelphia.net

We’re on the web… www.

vermontada.org

WE NEED NEWS ABOUT YOUR DEALERSHIP!

TO: VADA PUBLIC RELATIONS COORDINATOR I hereby submit the following topics/individuals for consideration for the VADA Public Relations Media Campaign: Please contact the following person for follow-up and additional information: ______________________________________________________ Contact Person: Dealership Name ___________________________ Telephone:

PLEASE COMPLETE & FAX TO: 802-229-5696.

12 DECEMBER