NC DEALERS: NEW MVR-1 NOW AVAILABLE

the new MVR-1, title Application, is now available on NC DMV’s website: https://www.ncdot.gov/download/dmv/VR_MVR1.pdf
NC dealers should begin using this form 1/1/17, you have to use it by 2/1/17. If you use Dealer Solutions Software, it has already been programmed into the software.
The following question was added: “Joint applicants request this title to be issued with Joint Tenants with Rights of Survivorship?” You have to check Yes or No. Joint Tenants with Rights of Survivorship means that if one of the owners dies, the surviving owner can sell the vehicle (transfer ownership) with a copy of the death certificate rather than court documents. If joint applicants check yes, the title will have “JTW” printed on it.

NC SERVICE CONTRACTS EXEMPT FROM SALES TAX 1/1/17

As of 1/1/17, NC dealers who sell service contracts will no longer have to collect and pay sales tax on those service contracts! See the notice from the Department of Revenue below:

IMPORTANT NOTICE: MOTOR VEHICLE SERVICE CONTRACTS
The changes discussed herein are effective January 1, 2017 for sales made on or after that date, unless noted otherwise. The notice addresses the application of the sales and use tax laws for the following changes:
 The definition of the term “motor vehicle service contract.”
 The expansion of the exemption from sales and use tax to include contracts for one or more components, systems, or accessories of a motor vehicle sold by a motor vehicle dealer or by or on behalf of a motor vehicle service agreement company. Motor Vehicle Service Contract The sales price of or the gross receipts derived from a “motor vehicle service contract” is exempt from sales and use tax. N.C. Gen. Stat. § 105-164.4I(b)(6). The term “motor vehicle service contract” is defined as: A service contract sold by a motor vehicle dealer or by or on behalf of a motor vehicle service agreement company for a motor vehicle or for one or more components, systems, or accessories for a motor vehicle. For purposes of the definition of “motor vehicle service contract,” the term “motor vehicle dealer” has the same meaning as defined in N.C. Gen. Stat. § 20-286 and the term “motor vehicle service agreement company” has the same meaning as defined in N.C. Gen. Stat. § 66-370. N.C. Gen. Stat. § 105-164.3(23a). The definition of the term “service contract,” as amended, is as follows: A contract where the obligor under the contract agrees to maintain, monitor, inspect, or repair digital property or tangible personal property for a period of time or some other defined measure, regardless of whether the property becomes a part of or is applied to real property. The term does not include a single repair, maintenance, or installation service. The term includes a service contract for a pool, fish tank, or similar aquatic feature and a home warranty. Examples include a warranty agreement other than a manufacturer’s warranty or dealer’s warranty provided at no charge to the purchaser, an extended warranty agreement, a maintenance agreement, a repair contract, or a similar agreement or contract. N.C. Gen. Stat. § 105-164.3(38b). The sales price of or the gross receipts derived from “repair, maintenance, or installation services” sold at retail for a motor vehicle continue to be subject to tax at the general 4.75% State, applicable local (2.00% or 2.25%), and applicable transit (0.50%) rates of sales and use tax, no matter that the services are covered under a “motor vehicle service contract.” N.C. Gen. Stat. 105-164.4(a)(16). For the exemption from sales and use tax for a replacement item, a repair part, or repair, maintenance, and installation services to maintain or repair a motor vehicle pursuant to a manufacturer’s warranty or a dealer’s warranty, see N.C. Gen. Stat. § 105-164.13(62a) or review the important notices referenced at the end of this notice under the section “Prior Sales and Use Tax Law Application.”

Service Contracts that Qualify as Motor Vehicle Service Contracts
The failure of a retailer to keep records that establish that a sale is exempt from sales and use tax subjects the retailer to liability for tax due on the sale. The sales price of or the gross receipts derived from the retail sale of a service contract must meet one of the following requirements to be exempt from sales and use tax:
 A service contract sold by a “motor vehicle dealer” for a motor vehicle or for one or more components, systems, or accessories for a motor vehicle.
 A service contract sold by a “motor vehicle service agreement company” for a motor vehicle or for one or more components, systems, or accessories for a motor vehicle.
 A service contract sold on behalf of a “motor vehicle service agreement company” for a motor vehicle or for one or more components, systems, or accessories for a motor vehicle. A “service contract” that meets one of the above requirements and includes one or more of the following is a “motor vehicle service contract.” This list is not all-inclusive.
 A contract indemnifying the motor vehicle service contract holder (purchaser of contract) against loss caused by a motor vehicle failure that is listed in the contract.
 Repair or maintenance of a motor vehicle that is listed in the contract.
 Maintain, monitor, inspect, repair, or replace tires, wheels, or rims on a motor vehicle.
 Maintain, monitor, inspect, or repair chips or cracks in or the replacement of motor vehicle windshields.
 Maintain, monitor, inspect, repair, or replace individual components including the following: engine, transmission, drive axles, battery, alternator, turbo/supercharger, fuel tank, suspension, electrical system components, airbag electronics, air conditioning, seals and gaskets, transfer unit, and amenities (audio system, DVD, internet, Bluetooth/phone, GPS).
 Removal of dents, dings, or creases on a motor vehicle including the process of paintless dent removal without affecting the existing paint or finish and without replacing vehicle body panels, sanding, bonding, or painting.
 Maintain, monitor, inspect, repair, or replace the electrical, emissions, fuel, cooling, steering, or braking system of a motor vehicle.
 Lubrication of a motor vehicle.
 Maintain, monitor, inspect, repair or replace leather or other fabric.
 Maintain, monitor, inspect, repair, or replace paint.
 Maintain, monitor, inspect, repair, or replace a motor vehicle key or key fob. Motor Vehicle Dealer – A person who does any of the following:
 For commission, money, or other thing of value, buys, sells, or exchanges, whether outright or on conditional sale, bailment lease, chattel mortgage, or otherwise, five or more motor vehicles within any 12 consecutive months, regardless of who owns the motor vehicles.
 On behalf of another and for commission, money, or other thing of value, arranges, offers, attempts to solicit, or attempts to negotiate the sale, purchase, or exchange of an interest in five or more motor vehicles within any 12 consecutive months, regardless of who owns the motor vehicles.
 Engages, wholly or in part, in the business of selling new motor vehicles or new or used motor vehicles, or used motor vehicles only, whether or not the motor vehicles are owned by that person, and sells five or more motor vehicles within any 12 consecutive months.
 Offers to sell, displays, or permits the display for sale for any form of compensation five or more motor vehicles within any 12 consecutive months.
 Primarily engages in the leasing or renting of motor vehicles to others and sells or offers to sell those vehicles at retail. N.C. Gen. Stat. § 20-286(11). Motor Vehicle Service Agreement Company – Any person that issues motor vehicle service agreements and that is not a licensed insurer. N.C. Gen. Stat. § 66-370(b)(6). Example: A motor vehicle dealer engaged in business in North Carolina makes a retail sale to a North Carolina customer of a service contract sourced to this State for the powertrain and heating and air conditioning systems of a new motor vehicle. The sales price of the service contract is $3,200.00, in addition to the retail price of the motor vehicle. The service contract is a motor vehicle service contract and the sales price of $3,200.00 is not subject to sales and use tax. Example: A facilitator, other than a motor vehicle dealer for purposes of this example, engaged in business in North Carolina makes a retail sale to a North Carolina customer of a service contract sourced to this State for the steering and braking systems of a new motor vehicle. The service contract is sold on behalf of a motor vehicle service agreement company. The sales price of the service contract is $2,500.00, in addition to the retail price of the new motor vehicle. The service contract is a motor vehicle service contract sold on behalf of a motor vehicle service agreement company; therefore, the sales price of $2,500.00 for the motor vehicle service contract sold at retail is not subject to sales and use tax. Example: A recreational vehicle dealer sells a motor home for a retail price of $100,000.00. In addition, the recreational vehicle dealer sells a service contract for $10,000.00 that includes the repair or replacement of any component of the motor home including the engine, transmission, toilet, or refrigerator. The service contract is a motor vehicle service contract and the sales price of $10,000.00 is not subject to sales and use tax. Motor Vehicle Definition For purposes of the sales and use tax laws discussed herein, the term “motor vehicle” is defined, in part, as “[a] vehicle that is designed primarily for use upon the highways and is either self-propelled or propelled by a self-propelled vehicle.” A motor vehicle includes but is not limited to:
 Private passenger vehicle.
 Motorcycle.
 Recreational vehicle including a motor home, travel trailer, fifth wheel trailer, camping trailer, and truck camper as the terms are defined in N.C. Gen. Stat. § 20-4.01(32b).
 Park model RV as defined in N.C. Gen. Stat. § 105-187.1(4).
 A commercial motor vehicle used to transport passengers or property. The term “motor vehicle” does not include a moped; special mobile equipment; a tow dolly that is exempt from motor vehicle title and registration requirements under N.C. Gen. Stat. §§ 20-51(10) or (11); a farm tractor or other implement of husbandry; a manufactured home, a mobile office, or a mobile classroom; or road construction or road maintenance machinery or equipment. N.C. Gen. Stat. § 105-164.3(23). Application of the Effective Date for the Exemption for Motor Vehicle Service Contracts For purposes of the changes effective January 1, 2017 for sales made on or after that date, the following apply to the sales price of or the gross receipts derived from a service contract provided such are sold by a motor vehicle dealer or by or on behalf of a motor vehicle service agreement company:
 The sales price of or gross receipts derived from the sale of a “motor vehicle service contract” entered into on or after January 1, 2017, is exempt from sales and use tax.
 The sales price of or the gross receipts derived from the renewal of a service contract that meets the definition of “motor vehicle service contract” on or after January 1, 2017 at the time of the renewal, that was exempt from sales and use tax prior to January 1, 2017 as a service contract for a motor vehicle that covered the entire motor vehicle, except for exclusions for normal wear and tear for certain items or regular maintenance items, is exempt from sales and use tax.
 The sales price of or the gross receipts derived from the renewal of a service contract that meets the definition of “motor vehicle service contract” on or after January 1, 2017 at the time of the renewal, that was subject to sales and use tax on or after March 1, 2016 as a service contract for one or more components, systems, or accessories for a motor vehicle, is exempt from sales and use tax.
 The sales price of or the gross receipts derived from the renewal of a service contract that meets the definition of “motor vehicle service contract” on or after January 1, 2017 at the time of the renewal, that was subject to sales and use tax prior to March 1, 2016 as a service contract for a motor vehicle, is exempt from sales and use tax. Prior Sales and Use Tax Law Application For more detailed information concerning the application of the sales and use tax laws to the sales price of or the gross receipts derived from a service contract for a motor vehicle sold on or after March 1, 2016 and prior to January 1, 2017, see the Important Notice: Motor Vehicles (Installation Charges; Repair, Maintenance, and Installation Services; and Service Contracts) issued February 11, 2016 and the Important Notice: Service Contract for One or More Components, Systems, or Accessories for a Motor Vehicle – Taxable issued February 19, 2016. Assistance General questions regarding this notice should be directed to the Taxpayer Assistance and Collection Center at telephone number 1-877-252-3052 (toll-free). To the extent there is any change in the rate or amount of tax, change to a statute or regulation, or new case law subsequent to the date of this notice, the provisions in this important notice may be superseded or voided. To the extent that any provisions in any other notice, directive, technical bulletin, or published guidance issued prior to the date of this notice conflicts with this important notice, the provisions contained in this important notice supersede.

FTC Approves Final Changes to Used Car Rule

November 10, 2016

The Federal Trade Commission has announced final amendments to its Used Car Rule. The FTC has sought public comments on a series of proposed changes to the Rule (formally known as the Used Motor Vehicle Trade Regulation Rule), which requires car dealers to display a window sticker, or “Buyers Guide,” on used cars offered for sale. The Guide discloses whether the dealer is offering to sell a used car “as is” (without a warranty), or with a warranty. If the sale is with a warranty, the Guide discloses the terms and conditions, including the duration of coverage, the percentage of total repair costs the dealer will pay, and the vehicle systems the warranty covers. In states that do not permit “as is” used car sales, dealers must use an alternative Guide that discloses whether the sale is with a warranty or with implied warranties only. In December 2012, the FTC sought public comments on proposed changes to the Buyers Guide as part of its systematic review of all of the agency’s rules and guides. In response to comments received, the agency sought comments on additional proposed changes to the Used Car Rule and invited comments on alternative approaches that public commenters proposed for the vehicle history disclosure and the “As Is” statement.
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. For more information about the Used Car Rule, read Buying a Used Car. For used car dealers, the FTC offers A Dealer’s Guide to the Used Car Rule. “Fillable” versions of the Buyers Guide in English and Spanish are available at FTC.gov. The Commission vote to publish the Notice of Final Rule in the Federal Register was 3-0. The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about consumer topics and file a consumer complaint online or by calling 1-877-FTC-HELP (382-4357).

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CONTACT INFORMATION
MEDIA CONTACT: Frank Dorman Office of Public Affairs 202-326-2674
STAFF CONTACT: John C. Hallerud FTC’s Midwest Region 312-960-5634

NEW NC STATUTES

Two bills were signed into law by Gov. McCrory in the last couple weeks. Both are effective immediately.
The first one changes the language regarding dealer tags, to include independent dealers in the provision that previously only allowed franchised dealers general use of a dealer plate. you might want to print this out and have it in the car with you or your family member in case you get pulled over:

ALLOW DEALER PLATES FOR EMPLOYEES OF INDEPENDENT DEALERS AND FAMILY MEMBERS SECTION 13.5. G.S. 20-79(d)(5)f. reads as rewritten: “(d) Restrictions on Use. – A dealer license plate may be displayed only on a motor vehicle that meets all of the following requirements: … (5) Is driven on a highway by a person who meets one of the following descriptions: … f. Is an officer, sales representative, or other employee of a an independent or franchised motor vehicle dealer or is an immediate family member of an officer, sales representative, or other employee of a an independent or franchised motor vehicle dealer.”

The second one addresses record storage and retention, and may need a bit of interpretation by DMV:

AN ACT TO MODIFY THE REQUIREMENTS FOR MOTOR VEHICLE DEALER RECORDS RETENTION, AVAILABILITY FOR INSPECTION BY THE DIVISION OF MOTOR VEHICLES, AND FORMAT. The General Assembly of North Carolina enacts: SECTION 1. G.S. 20-297 reads as rewritten: “§ 20-297. Retention and inspection of certain records. (a) Vehicles. – A dealer must keep a record of all vehicles received by the dealer and all vehicles sold by the dealer. The records must contain the information that the Division requires. requires and be made available for inspection by the Division within a reasonable period of time after being requested by the Division. A dealer may keep satisfy the record-keeping requirements contained in this subsection either by (i) keeping and maintain maintaining written or paper records at the dealership facility where the vehicles were sold or at another established office located site within this State provided that the location and the name of a designated contact agent are provided to the Division and the records can be made available for inspection by the Division within a reasonable period of time after being requested by the Division. Division or (ii) maintaining electronic copies of the records required by this subsection, provided that the Division shall have access to these electronic records from a location within this State. For purposes of this section, the location where dealership written or electronic records are kept and maintained may be owned and operated by a party other than the dealer. (b) Inspection. – The Division may inspect the pertinent books, records, letters, and contracts of a licensee relating to any written complaint made to the Division against the licensee. (c) Records Format. – Any record required to be kept and maintained under this section may be converted to electronic form and retained by a dealer in electronic form without retention of the original or any copies of the record in paper or other nonelectronic form.” SECTION 2. The Department of Transportation, Division of Motor Vehicles, shall adopt rules consistent with the provisions of this act. Rules adopted pursuant to this section shall not be subject to G.S. 150B-19.1(e), 150B-19.1(f), and 150B-21.4.