NewsJanuary 2016

insideIRS Extension for ACA Reporting

Changes to DVS Dealer Web Access Agreements

Dealer Gains in Federal Tax Bill

Scott Lambert, Executive Vice President • 200 Lothenbach Ave. • West St. Paul, MN 55118 • (651) 291-2400 • 1-800-652-9029 • FAX (651) 291-2894

visit www.mada.org

for details, registration and a complete list of Upcoming Events and

Training

MADA News

2016 NextGen Program Kicks off in March

Apply Now! Deadline February 12

upcoming events

After an extremely successful inaugural year, MADA is pleased to announce it is accepting applications for its 2016 NextGen class. Candidates who should consider applying are up-and-coming dealership employees who are on a path to become future industry leaders as general managers or dealer-principals. The NextGen program will offer these dynamic individuals unique educational and networking opportunities to learn more about the industry and the external factors that can shape the environment for dealerships.

The program will kick-off in St. Paul on March 1-2, where participants will get acquainted with MADA and one another through a series of interactive sessions. Over the course of the year, NextGeners will gather three more times to grow their understanding of the challenges and opportunities the automotive retail industry faces while making lifelong connections with their peers from around the state.

2015 participants appreciated the opportunity to meet other young leaders in the business through this “awesome” and “eye-opening” experience. Don’t miss your chance to become part of the next generation of industry leaders. Applications can be found online at http://bit.ly/NextGen_2016 or call Amber Backhaus at 651-789-2949 for more information.

Title BasicsMinneapolis

Certified TitleMinneapolis

Twin Cities Auto ShowMinneapolis

8mar

12-20mar

8mar

The 2015 NextGen class in Washington, D.C.

January 2016 / Page 2

The Minnesota Automobile Dealers Association is a non-profit trade association dedicated to the progress of the retail auto

industry in Minnesota.President Mike Saxon, Inver Grove Ford Lincoln, Inver Grove Heights President-Elect Rick Jensen, Jensen Motors, Inc., New Ulm Treasurer Michael Stanzak, Key Cadillac, Inc., Edina Secretary Peter Kolar, Kolar Toyota Scion, Duluth Executive Vice President Scott Lambert, MADA Executive Vice President

200 Lothenbach Avenue • West St. Paul, MN 55118Metro: 651-291-2400 • Toll Free: 800-652-9029

FAX: 651-291-2894 • Web site: http://www.mada.org

The Internal Revenue Service (IRS) has extended the due dates for the 2015 information reporting requirements, both for furnishing statements to individuals and for filing with the IRS, under I.R.C. §6055 for insurers and small self-insuring employers and under I.R.C. §6056 for applicable large employers (50 or more full time equivalent employees.)

Furnishing statements to individuals: The due date is extended to March 31, 2016 (originally due February 1, 2016) and applies to the following forms:

• 2015 Form 1095-B, Health Coverage (to be prepared by insurance companies for insured employer-sponsored health plans, and by small employers with self-insured health plans)

• 2015 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage (to be prepared by applicable large employers with either fully-insured or self-insured health plans)

Filing returns with the IRS: The due date is extended to May 31, 2016 if filing on paper (originally due February 29, 2016.) The due date is extended to June 30, 2016 if filing electronically (originally due March 31, 2016.) This extension applies to the following forms:

• 2015 Form 1094-B, Transmittal of Health Coverage Information Returns• 2015 Form 1095-B, Health Coverage• 2015 Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage

Information Returns• 2015 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage

PenaltiesEmployers or other coverage providers that do not comply with these extended due dates are subject to penalties under section 6722 or 6721 for failure to timely furnish and file. However, employers and other coverage providers that do not meet the extended due dates are still encouraged to furnish and file, and the Service will take such furnishing and filing into consideration when determining whether to abate penalties for reasonable cause.

Insurance News

IRS Extends Due Dates for ACA Information Reporting Under Sections 6055 and 6056

visit us online at www.mada.org

January 2016 / Page 3

The highest court in South Carolina recently upheld a $1.4 million judgment against a dealership for imposing excessive “closing” (document) fees on its customers over a period of several years. This case involved the application of South Carolina state law that allows dealers to charge customers “closing fees” which operates similar to the Minnesota law that allows dealers

to charge a “document fee.” In this case, the dealership was charging customers as much as a $399 closing fee. The state supreme court agreed with the lower court’s ruling that the amount charged for the closing fee “must bear some relation to the actual expenses incurred for the closing.”

Doc Fee Litigation

Driver & Vehicle Services (DVS) has added two new provisions to the Dealer Web Access Agreement. One requires dealers to maintain an information security

program to protect data obtained from the DVS database. The other requires dealers to maintain a record of inquiries which must be available in the case of a DVS audit.

Background. MADA members have been looking up customers and vehicles on the DVS database for many years. One or more of your employees - typically your title and office staff - have a login credential to allow them access to the DVS secure website. These employees may do lookups to verify customer or vehicle information. They may also update the DVS record with held-for-resale flags. In order to obtain this access, dealers have all signed a “Dealership Access Agreement.”

Some dealers may already be aware of the changes to the Access Agreement. DVS is phasing in the new agreement in stages. If a dealer makes a change of some sort or their Esupport access is no longer active, DVS is looking for an updated agreement.

The new agreement is on the DVS Web Site at http://bit.ly/MADAdvs.

Information Security. Dealers already have an Information Security program in place to comply with the Federal Gramm Leach Safeguards Rule to protect financial information of credit applicants. DVS is looking for dealers to answer four questions:

1. How will electronic/paper copies of records be securely stored?2. What type of security do you use for your online computer terminals?3. How will you audit and manage the access to and dissemination of the requested information?4. What is the authentication method used to access online computer terminal(s)?

Record of Inquiries. The new contract also requires dealers to “maintain a record to verify work-related queries.” DVS has not been very specific as to what it wants. One suggestion is for each user to record their own queries on a spreadsheet. The spreadsheet line for each inquiry might show a date and input data, such as VIN, name, plate or title number, a brief statement of the purpose of the lookup, and perhaps a comments field to explain mistaken lookups..

Does the Dealer License Division have your correct Email? DVS notifies dealers about dealer license renewals via email. Your renewal contact person may be an office manager, controller, GM or dealer-principal. If you have any reason to believe that your dealership’s email contact information is not correct, please email dvs.dealerquestion@state.mn.us.

Legal News

DVS Tightens Dealer Web Access Agreements

Page 1 of 2 Rev. 9/29/15

Where to renew your dealer license online: 1. To access the dealer renewal website, use any one of the links listed below and bookmark all three for

future reference. • https://www.dvsesupport.org • https://www.mndvsesupport.org • https://esupport.mndriveinfo.org/

Important: Be sure to delete any bookmarks you’ve created for DVS websites that include “dutchelm” in the link (e.g. https://dutchelm.dps.state.mn.us), as those sites no longer exist.

2. Select “Dealer” from the left hand menu on the ESupport website or click the “Dealers” icon on the roadmap image

3. Click “Log In” 4. Enter your ESupport username and password (visit the DVS Motor Vehicle Dealer – Request Online Access

page for additional information on ESupport access)

Troubleshooting Tips If you have trouble accessing one of the three websites listed above, please follow the Compatibility settings and delete browsing history instructions listed below.

How to Change Compatibility View Settings 1. Open Internet Explorer 2. Go to Tools in Menu bar 3. Select Compatibility View Settings from the list 4. Add the three sites listed below to the “Add this website:” field

• https://www.dvsesupport.org • https://www.mndvsesupport.org • https://esupport.mndriveinfo.org/

5. If not checked already, check the box next to “Use Microsoft compatibility lists”

Screenshot: Add three links to Compatibility View and check the User Microsoft compatibility lists box

Doc Fee Litigation.. continued on page 7

January 2016 / Page 4

Before the close of 2015, President Obama signed into law a $622 billion tax bill that will allow dealers and their customers to expense a larger portion of business equipment purchases. The “Protecting Americans from Tax Hikes Act of 2015” lowers taxes and gives automobile and truck dealers and their customers certainty to make business decisions with these important tax provisions. These provisions will be of interest to those purchasing passenger cars and trucks for business purposes, but those vehicles are subject to limits on the amount that can be deducted under Section 179 expensing and bonus depreciation allowances.

Extension and modification of increased expensing limitations and treatment of certain real property as section 179 property. The provision permanently extends the small business expensing limitation and phase-out amounts in effect from 2010 to 2014 ($500,000 and $2 million, respectively). These amounts currently are $25,000 and $200,000, respectively. The special rules that allow expensing for computer software and qualified retail improvement property also are permanently extended. The provision modifies the expensing limitation by indexing both the $500,000 and $2 million limits for inflation beginning in 2016 and by treating air conditioning and heating units placed in service in tax years beginning after 2015 as eligible for expensing. The provision modifies the expensing limitation for

qualified real property by eliminating the $250,000 cap beginning in 2016.

Extension and modification of bonus depreciation. The provision extends bonus depreciation for property acquired and placed in service during 2015 through 2019 (with an additional year for certain property with a longer production period). The bonus depreciation percentage is 50% for property placed in service during 2015, 2016 and 2017 and phases down to 40% in 2018 and 30% in 2019. The provision continues to allow taxpayers to elect to accelerate the use of AMT credits in lieu of bonus depreciation under special rules for property placed in service during 2015. The provision modifies the AMT rules beginning in 2016 by increasing the amount of unused AMT credits that may be claimed in lieu of bonus depreciation. The provision also modifies bonus depreciation to include qualified improvement property.

The law also extends an additional $8,000 in first-year depreciation for certain business vehicles purchased in 2016 and 2017, providing a substantial potential savings for a dealership’s business customers.

Dealers are encouraged to consult their tax advisors to determine how to best maximize their potential tax savings.

NADA News

Federal Tax Bill with Significant Provisions to Dealers Signed into Law

You should have received your 2016 dues statements. Your membership dues are very important to the work that MADA conducts on your behalf.

We thank you for your continued support and your trust in our Association.

MADA News

2016 Membership dues

January 2016 / Page 5

Minnesota New Retail Car and Light Truck RegistrationsMost Recent Two Months YTD thru Nov.* YTD Market share (thru Nov.*)

10/14 &11/14

10/15 &11/15*

%change 2014 2015

%change 2014 2015 change

Industry Total 35,531 38,465 8.3% 194,437 196,052 0.8%Cars 11,679 11,428 -2.1% 71,731 65,686 -8.4% 36.9 33.5 -3.4Light Trucks 23,852 27,037 13.4% 122,706 130,366 6.2% 63.1 66.5 3.4

Japanese Brands 12,509 13,081 4.6% 68,194 67,280 -1.3% 35.1 34.3 -0.8Toyota 4,194 4,407 5.1% 24,435 23,643 -3.2% 12.6 12.1 -0.5Honda 3,480 3,420 -1.7% 18,167 17,552 -3.4% 9.3 9.0 -0.3Nissan 1,939 2,069 6.7% 10,389 10,647 2.5% 5.3 5.4 0.1Other 2,896 3,185 10.0% 15,203 15,438 1.5% 7.8 7.9 0.1

Domestic Brands 18,796 20,585 9.5% 102,148 105,232 3.0% 52.5 53.7 1.2General Motors 7,656 8,320 8.7% 41,293 43,912 6.3% 21.2 22.4 1.2Ford 6,356 7,026 10.5% 35,255 35,644 1.1% 18.1 18.2 0.1Chrysler 4,752 5,205 9.5% 25,427 25,454 0.1% 13.1 13.0 -0.1Other 32 34 6.3% 173 222 28.3% 0.1 0.1 0.0

European Brands 2,207 2,379 7.8% 11,815 11,421 -3.3% 6.1 5.8 -0.3Volkswagen 1,031 1,073 4.1% 5,693 5,408 -5.0% 2.9 2.8 -0.1BMW 515 586 13.8% 2,900 2,620 -9.7% 1.5 1.3 -0.2Mercedes 406 312 -23.2% 1,956 1,813 -7.3% 1.0 0.9 -0.1Other 255 408 60.0% 1,266 1,580 24.8% 0.7 0.8 0.1

Korean Brands 2,019 2,420 19.9% 12,280 12,119 -1.3% 6.3 6.2 -0.1

8.6%

11.7%

7.2%

3.2%

-1.2% -2.8%

-5.5% -6.8% -6.2%

0.5%

7.2% 6.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15*

% c

hang

e vs

. yea

r ear

lier

Last month in period

12.5%

6.2%

-4.1%

-8.4%

-15.0% -5.0% 5.0% 15.0% 25.0%

U.S.

State

Cars

Trucks

Minnesota Auto OutlookCovering the Minnesota automotive market Data thru November 2015

Released by:Minnesota AutomobileDealers Association

Data InformationAll data represents new vehicle retail registrations in Minnesota and excludes fleet and wholesale transactions. Please keep in mind that monthly registration figures can occasionally be subject to fluctuations, resulting in over or under estimation of actual results. This usually occurs due to processing delays by governmental agencies. For this reason, the year-to-date figures will typically be more reflective of market results. Data Source: IHS Automotive.

Percent Change in Three Month Moving Average of New Retail Registrations versus Same Period Year Earlier

The graph above provides a clear picture of the trending direction of the state market. It shows the year-over-year percent change in the three month moving average of new retail light vehicle registrations. The three month moving average is less erratic than monthly registrations, which can fluctuate due to such factors as the timing of manufacturer incentive programs, weather and title processing delays by governmental agencies.*Figures for November 2015 were estimated by Auto Outlook. Data Source: IHS Automotive.

Percent Change in State and U.S. New Retail Light Vehicle Markets

YTD ‘15 thru November* vs. YTD 14

Brands included above: Domestic Brands: GM (Buick, Cadillac, Chevrolet, and GMC), Ford (Ford and Lincoln), Chrysler (Chrysler, Dodge, Jeep, and Ram). Japanese: Toyota (Toyota, Lexus, and Scion), Honda (Honda and Acura), Nissan (Nissan and Infiniti), Other (Mazda, Mitsubishi, and Subaru). European: VW (Audi, Bentley, Porsche, and Volkswagen), BMW (BMW, Rolls Royce, and MINI), MB (Mercedes Benz and smart), Other (Alfa Romeo, Aston Martin, Ferrari, Fiat, Jaguar, Land Rover, Lotus, Maserati, and Volvo). Korean: Hyundai and Kia.*Figures for November 2015 were estimated by Auto Outlook. Data Source: IHS Automotive.

The graph above compares the change in new retail car and light truck registrations in both the state and U.S. markets. *Figures for November 2015 were estimated by Auto Outlook.Data Source: IHS Automotive.

January 2016 / Page 6

MinnesotaNew Retail Light Vehicle Registrations

Registrations Market share

YTD '14thru Nov.

YTD '15thru Nov.* % change

YTD '14thru Nov.

YTD '15thru Nov.*

TOTAL 194,437 196,052 1%Acura 1,516 1,359 -10% 0.8% 0.7%Audi 1,582 1,486 -6% 0.8% 0.8%BMW 2,411 2,194 -9% 1.2% 1.1%Buick 3,718 3,591 -3% 1.9% 1.8%Cadillac 1,323 1,176 -11% 0.7% 0.6%Chevrolet 28,934 31,110 8% 14.9% 15.9%Chrysler 3,284 3,646 11% 1.7% 1.9%Dodge 6,480 5,212 -20% 3.3% 2.7%FIAT 242 214 -12% 0.1% 0.1%Ford 34,227 34,591 1% 17.6% 17.6%GMC 7,318 8,021 10% 3.8% 4.1%Honda 16,651 16,195 -3% 8.6% 8.3%Hyundai 5,672 5,604 -1% 2.9% 2.9%Infiniti 813 745 -8% 0.4% 0.4%Jaguar 61 61 0% 0.0% 0.0%Jeep 8,628 9,290 8% 4.4% 4.7%Kia 6,608 6,479 -2% 3.4% 3.3%Land Rover 303 482 59% 0.2% 0.2%Lexus 2,105 2,232 6% 1.1% 1.1%Lincoln 1,028 1,036 1% 0.5% 0.5%Mazda 4,128 4,145 0% 2.1% 2.1%Mercedes 1,929 1,844 -4% 1.0% 0.9%MINI 489 426 -13% 0.3% 0.2%Mitsubishi 1,982 1,776 -10% 1.0% 0.9%Nissan 9,576 9,888 3% 4.9% 5.0%Other 188 159 -15% 0.1% 0.1%Porsche 262 258 -2% 0.1% 0.1%Ram 7,035 7,333 4% 3.6% 3.7%Subaru 9,084 9,517 5% 4.7% 4.9%Tesla 84 167 99% 0.0% 0.1%Toyota 22,330 21,388 -4% 11.5% 10.9%Volkswagen 3,849 3,692 -4% 2.0% 1.9%Volvo 597 735 23% 0.3% 0.4%

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0

Chrysler

Volkswagen

Mazda

Dodge

Hyundai

Kia

Ram

GMC

Jeep

Subaru

Nissan

Honda

Toyota

Chevrolet

Ford

1.7

2.0

2.1

3.3

2.9

3.4

3.6

3.8

4.4

4.7

4.9

8.6

11.5

14.9

17.6

1.9

1.9

2.1

2.7

2.9

3.3

3.7

4.1

4.7

4.9

5.0

8.3

10.9

15.9

17.6

Market Share

YTD '15 thru Nov.*

YTD '14 thru Nov.

Minnesota Auto Outlook Data thru November 2015

This report is sponsored by the Minnesota Automobile Dealers Association and produced by Auto Outlook (800-206-0102).

Auto Outlook, Inc. is not responsible for management decisions based on the content of Minnesota Auto Outlook. Copyright Auto Outlook, December 2015.

Reproduction, including photocopying of this publication in whole or in part, is prohibited without the express permission of Auto Outlook, Inc. Any material quoted must be attributed to Minnesota Auto Outlook, pub-lished by Auto Outlook, Inc. on behalf of the Minnesota Automobile Deal-ers Association and must also include the statement: “Data Source: IHS Automotive.”

State Market Share for Top 15 Selling Brands YTD ‘15 thru November* vs. YTD 14

Data source: IHS Automotive.

Top ten ranked brands in each percent change category are shaded green.

*Figures for November 2015 were estimated by Auto Outlook.

Data source: IHS Automotive.

*Figures for November 2015 were estimated by Auto Outlook.

January 2016 / Page 7

Endorsed Service & Vendors

MADA Services sells a wide variety of products directly to the dealers including business forms, clothing and promotional items. For a full review of options, contact your sales representative at 651-291-2400 or go to www.mada.org

Check Guarantee/Credit Card Processing FIS / Certegy

Collections Springer CollectionsComputerized Vehicle Registration CVR

Dealer Bond Program Ensure Agency

Disability Income Insurance & Section 125 Cafeteria Plans American Fidelity Assurance

F&I Products Protective

Fleet Fueling Program SuperAmerica

Group Health Insurance Blue Cross Blue Shield of MN Delta Dental ReliaStar Life

Hole-In-One Insurance Hole-In-One-USA

Lighting LED Supply Company

Office Supplies InnovativeOfficeSolutions

OSHA, EPA & DOT Compliance/Training ComplyNet CorporationPre-Paid Legal, Jim Gavin Identity Theft Shield & Pre-Paid Legal Services Uniforms and Linen Services AmeriPride Linen & Apparel Services

Workers Compensation Ensure Agency

Member News Retraction: An error was made in the November MADA Newsletter. Kade Vershey is a partner at Houston Ford. We apologize for this mistake.

FAQ

Q: I have another question about the new DVS insurance information requirement. What do we do on leases? The title application is in the name of a leasing company. Does DVS want the leasing company’s insurance information?

A: No. DVS wants insurance company name, policy number and expiration date for the insurance covering the vehicle. For long term motor vehicle leases - six months or longer term - Minnesota Statutes provides that the “owner” of the leased vehicle for insurance purposes is the lessee-customer. Therefore, use the lessee’s insurance information to complete the Minnesota title application.

Minnesota law similarly requires that the document fee be for “services actually rendered.” Unlike South Carolina law, Minnesota law expressly imposes a limit of $75.00 per vehicle purchase. The law establishes a ceiling and therefore dealers may charge up to $75.00 for closing fees per transaction if the dealer can show that the fee is for “services actually rendered . . . in preparing, handling, and processing documents relating to the motor vehicle and the closing of the retail sale.”

What is the take home point? Minnesota law says dealers may charge up to $75.00 in document fees; the law does not say dealers may impose the full $75.00 for each vehicle purchase simply as a matter of course. Accordingly, dealers should evaluate their own internal practices to determine if the document fees they charge bear some reasonable relationship to the cost for services actually rendered for each vehicle purchase. Bottom line: dealers should be able to justify their doc. fees.

MADA members with questions about doc fees should contact Dan Louismet or Jim Schutjer at your MADA office.

Doc Fee Litigation...... continued from page 3

Scott Lambert, Executive Vice President • 200 Lothenbach Ave. • West St. Paul, MN 55118 • (651) 291-2400 • 1-800-652-9029 • FAX (651) 291-2894

200 Lothenbach AvenueWest St. Paul, MN 55118

ADVOCACY • EXPERTISE • EDUCATION • COMMUNICATIONMADA NEWS • January 2016

Start out your NADA Convention experience by joining your Minnesota peers at the premier “Ultra-lounge” at the Bellagio. This is a change of pace for our member gathering at the Convention. Due to NADA’s reformatting of the Convention schedule, MADA’s usual Sunday brunch is now an evening celebration. Please put this event on your calendar and join us for an unique evening at this beautiful location.

MADA News

Reception at NADA You’re Invitedto ’s

COCKTAIL RECEPTION THURSDAY, MARCH 31, 2016

7pm-9pm at the

in theBELLAGIO

LAS VEGAS

B A R & L O U N G E

Thank you to our sponsor:

EducationFax Registration

For Information on these classes or to register online go to www.mada.org/training

FAX REGISTRATION TO: 651-291-2894Denise Anderson denise@mada.org

The Certified Title & Registration Program*

Class Options Circle Preferred Date LocationSales Tax9:00 a.m. - 10:00 a.m. $129 March 8, 2016

Doubletree by Hilton - Park Place1500 Park Place BlvdMinneapolis, MN 55416

New to Fleet 10:30 a.m. - 12:30 p.m. $129 March 8, 2016

Minnesota Titles and Transfers1:00 p.m. – 3:00 p.m. $129 March 8, 2016

Name__________________________________________ Title____________________________

Name__________________________________________ Title____________________________

Dealership______________________________________ Customer ID #____________________

Address________________________________________________________________________

Phone______________________________ E-mail______________________________________

Title Basics

Class Options Circle Preferred Date Location

Title Basics – Minneapolis9:30 a.m. - 11:30 a.m. $199 March 8, 2016

Doubletree by Hilton - Park Place1500 Park Place BlvdMinneapolis, MN 55416

*Lunch is included, sponsored by CVR.

faxregistration.indd 1 1/20/16 10:33 AM