GNYADA December 2014 Newsletter

Jaguar Land Rover’s New Export Policy

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INCREASING THE BURDEN AND PENALTIES FOR DEALERS

equipment eligible under Section 179 small business expensing to $500,000 for eligible new and used equipment purchased in 2014. Without this bill, the maximum eligi- ble for Section 179 expensing in 2014 would have been $25,000. The bill also includes an extension of the 50 percent bonus depreciation deduction for new business equip- ment acquired and placed in service in 2014. In addition to these changes, there is an extension of the additional $8,000 in first-year depreciation for certain business vehicles purchased in 2014. New York Franchise Law New York law does not impose upon dealers the obligation to investigate consumers. JLRNA is prohibited from issuing any chargebacks in New York unless: it first provides written notice to the dealer; and provides an opportunity to protest (which you should immediately discuss with your legal counsel upon receiving notice). NY law merely requires a dealer to have exercised due diligence as long as the sale was made in good faith and the dealer did not know of the buyer’s intention to export the vehi- cle. Therefore under the law, a dealer is not obligated to perform the tasks JLRNA “strongly recommends” in its New Export Policy. Additionally, under NY law, a dealer is “presumed to have exercised good faith and due diligence” if it registers the vehicle and remits the appropriate sales tax. n n

Audits JLRNA has also notified its dealers that it will “audit every exported VIN against the previous policy in effect until November 23, 2014.” It’s important to note that there is a one- year limitation on audits in New York when they relate to warranty pay- ments or sales, advertising, or mar- keting incentive payments. The penalties under the New Export Policy include a $3,500 “Warranty Fee” and a “chargeback of Variable Marketing programs and incentives.” While JLRNA, and other luxury dis- tributors, are becoming increasingly vigilant in preventing the export of new vehicles from the U.S., their policies must comply with NY law and dealers should consult with their lawyer prior to accepting any charge- back or other penalty.

GNYADA thanks Richard Sox, Esq., of Bass, Sox, Mercer for this article.

President Obama has signed a measure that increases small-business expensing and bonus depreciation, which allows car and truck dealers and their customers to expense a larger portion of equipment purchas- es for 2014. Dealers and their cus- This provision may provide sub- stantial potential savings for a dealership's business customers, but they must purchase qualifying vehicles before Dec. 31, 2014. First, the bill contains a retroactive increase of the limit on business JLRNA’s New Export Policy ignores the new amended protec- tions provided by the New York Franchise Law. Recently, Jaguar Land Rover North America, LLC (JLRNA) issued a new export policy. This policy greatly increases the bur- den on dealers to investigate whether prospective customers intend to export the vehicle, and also greatly increases the sanctions on dealers in the event they are duped by cus- tomers who later ship them overseas. JLRNA establishes a series of severe chargebacks and penalties, based on volume of sales, and does not permit a dealer to appeal or explain why they should not be penalized. New York Franchise Law provides some significant protections to dealers from the chargebacks and penalties JLRNA seeks to impose . tomers must act quickly to take advantage of these tax benefits.

This article is provided for educational purposes only and should not be interpreted as legal advice.

17 President Extends Tax Savings

The Senate on December 16 approved a House-passed bill, H.R. 5771, to renew several expired tax provisions to benefit car and truck dealers and their customers. Dealers and their customers are encouraged to consult their tax advisors to determine the exact amount of their potential tax savings, which depends on their own particu- lar tax situation and the provisions described above.

GNYADA thanks NADA for this article.

Greater New York Automobile Dealers Association • www.gnyada.com

The Newsletter • December 2014 9