Laws and regulations affecting dealerships

2020 — looking back and moving forward, Part 1

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Contributors

Due to the pandemic, the California legislature paired down the laws it adopted in 2020. Nonetheless, all dealers should be aware of the following changes to laws and regulations, and adopt appropriate changes as necessary.

AB 3254 – Foreign Language Translations and Co-Buyers

What the law currently requires

California law requires that dealerships, along with other businesses, provide translated and completed copies of certain contracts, such as vehicle sales or leases, if the terms of the contract were primarily negotiated in Spanish, Chinese, Tagalog, Vietnamese, and Korean.

How this bill changes the law

AB 3254 expands this requirement to include any person signing the contract. This means that if the contract was primarily negotiated in any of the above languages, any co-buyer must also receive a translated, completed copy of the contract.

ACTION ITEM

Ensure that both the buyer and co-buyer to any vehicle sale or lease receives completed, translated copies of all required contracts.

DMV Deal File Retention Regulations - California Code of Regulations, Title 13, Section 272.02

What the law currently requires

The DMV requires that dealers maintain all original business records related to the purchase, sale, rental, or lease of a vehicle at a dealership’s principal place of business or at its branch location, if the transaction took place there, for a period of 18 months.

How the regulation changes the law

The DMV has now adopted modified regulations that reduce the requirement to physically maintain the original business records to 90 days. After this initial period, dealers may store the documents electronically.

ACTION ITEM

Dealers should evaluate their deal file retention system and capacity to convert files to electronic format. If dealers are confident that they can make quality copies of deal files and maintain them in a searchable and easily accessible format, they may opt to convert files to an electronic format after 90 days and securely destroy the originals.

California Clean Fuel Reward Program California Code of Regulations, Title 17, Sections 95480-95503

The California Clean Fuel Reward provides a consumer incentive of up to $1,500 for the purchase or lease of eligible new battery electric or plug-in hybrid vehicles at participating dealers. This incentive is available at the point of sale statewide, regardless of customer utility area, and can be combined with existing local, state, and federal incentives that are applied post-sale. Dealers must enroll to participate in the program, and enrollment opened on October 27, 2020.

ACTION ITEM

Dealers should be evaluate the program to determine whether enrollment makes sense for their business and sign up to offer the rebate as an incentive to customers for the purchase of select battery electric and plug-in hybrid vehicles.

AB 82, 85 Used Car Dealer Sales Tax

What the law currently requires

Existing state sales and use tax laws impose a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state for storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state.

How this bill changes the law

This bill requires any licensed used car dealers to collect and remit to the Department of Motor Vehicles (DMV) applicable sales tax, measured by the sales price of the vehicle with the registration fee. The sales tax must be remitted along with the Report of Sale (ROS) and registration fees to DMV within 30 days from the date of sale. It further imposes upon a used vehicle dealer a penalty for failure to timely remit sales tax if that dealer is subject to the DMV penalty for failure to make a timely application for registration. Finally, it requires used vehicle dealers to continue to file sales tax returns with CDTFA and impose interest and penalties for sales tax not timely paid. The DMV may promulgate whatever regulations necessary to enact this law.

ACTION ITEM

Licensed used car dealers should adjust their ROS and sales tax collection to comply with these new requirements.

AB 2285 – Extends Pilot Program and ZEV Funding

What the law currently requires

Current law allows for an alternative license plate program. It also authorized funding for the California Clean Truck, Bus, and Off-Road Vehicle and Equipment Technology Program (Clean Truck Program). Both were set to expire in 2021.

How this bill changes the law

The bills extends the pilot program for alternative license plates and vehicle registrations issued by the DMV until January 1, 2023. It also extends by one year, until January 1, 2022, the requirement that the California Air Resources Board (ARB) dedicate 20% of the Clean Truck Program to support early commercial deployment of existing zero- and near-zero-emission heavy-duty trucks.

ACTION ITEM

Dealers who were participating in this program may continue to do so for an extended period.