MSADA, One McKinley Square, Sixth Floor, Boston, MA 02109
auto M a s s a c h u s e t t s
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FIRST CLASS MAIL US POSTAGE PAID BOSTON, MA PERMIT NO. 216
August 2018 • Vol. 30 No. 8
The official publication of the Massachusetts State Automobile Dealers Association, Inc
MSADA a l r C u l g as u a s In FULLER
BALISE
BOCH
CONNOLLY
CICCOLO
Ma s s a c h u s e t t s
auto D
S ta f f D i r e c t o r y Robert O’Koniewski, Esq. Executive Vice President rokoniewski@msada.org Jean Fabrizio Director of Administration jfabrizio@msada.org Peter Brennan, Esq. Staff Attorney pbrennan@msada.org Jean Harris Administrative Assistant/ Membership Coordinator jharris@msada.org Auto Dealer MAgazine Robert O’Koniewski, Esq. Executive Editor Tom Nash Editorial Coordinator nashtc@gmail.com Subscriptions provided annually to Massachusetts member dealers. All address changes should be submitted to MSADA by e-mail: jharris@msada.org. Postmaster: Send address change to: One McKinley Square, Sixth Floor Boston, MA 02109 Auto Dealer is published by the Massachusetts State Automobile Dealers Association, Inc. to provide information about the Bay State auto retail industry and news of MSADA and its membership.
Ad Directory Bellavia Blatt & Crossett, P.C., 22 BlumShapiro, 23 Boston Herald, 32 Ethos Group, 2 Lynnway Auto Auction, 24 O’Connor & Drew, P.C., 31 R.E.D Alert, 20 Southern Auto Auction, 21 ADVERTISING RATES Inquire for multiple-insertion discounts or full Media Kit. E-mail jfabrizio@msada.org Quarter Page: $450 Half Page: $700 Full Page: $1,400
Back Cover: $1,800 Inside Front: $1,700 Inside Back: $1,600
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The official publication of the Massachusetts State Automobile Dealers Association, Inc
Table of Contents
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From the President: Honoring our Legacy ASSOCIATE MEMBERS DIRECTORY THE ROUNDUP: Frenzied End to Legislature’s Formal Sessions Internet Technology: Should Automobiles Have Antivirus Software? legislative scorecard TROUBLESHOOTNG: FTC Charges Dealer Group in First Ever Case LEGAL: Four Ways to Increase Litigation Risks and Costs AUTO OUTLOOK
16 Cover Story: The Inaugural Class
19 20 25 26 28 29
Sound Off: Turn Your Roof or Parking Lot into a Solar Profit Center NEWS From Around the Horn ACCOUNTING: A Look at the New Pass-Through Deduction nada Market Beat TRUCK CORNER: Never Stop Learning nada update: Convening in Washington
Join us on Twitter at @MassAutoDealers www.msada.org
Massachusetts Auto Dealer
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From the President
MSADA
Honoring our Legacy Join us for the first Massachusetts Auto Dealers Hall of Fame Induction Ceremony in October
By Chris Connolly, MSADA President
Msada Board Barnstable County
As NADA turned 100 last year, MSADA began taking a long simmering idea to honor the legacy of our forebears from inspiration to action. I hope you will join me October 3-5 at the Chatham Bars Inn on Cape Cod for our inaugural induction ceremony of the Massachusetts Auto Dealers Hall of Fame. It is humbling, of course, that my family’s efforts have been included in this first slate of recognition. So many of us come from backgrounds that reach deep into the last century, when the automobile was still unproven. Those early efforts set the groundwork for the careers we know and love today, and which MSADA strives tirelessly to protect. I should make special note that we have included Ray Ciccolo among our inaugural class of Hall of Famers. Many of us have stood out for our hard, and good, work in our communities as dealers and philanthropists. Ray’s story is a testament not only to his entrepreneurial spirit, but the potential for anyone to succeed with the right combination of opportunity and effort. The fact that he has spent so much of the dividends of his success on others’ well-being is further proof that he is more than worthy of this honor. MSADA hopes you will take this opportunity in October to gather among friends and colleagues to celebrate these kinds of stories. As we face constant uncertainty in our industry, we can always look back to the efforts of those like this inaugural hall of fame class to know these challenges have been seen before and overcome. I look forward to seeing you there.
Jack Madden, Jr., Jack Madden Ford Charles Tufankjian, Toyota Scion of Braintree
NADA Washington Conference Approaches
Christine Alicandro, Marty’s Buick GMC Isuzu
t Massachusetts Auto Dealer www.msada.org
Berkshire County
Brian Bedard, Bedard Brothers Auto Sales
Bristol County
Richard Mastria, Mastria Auto Group
Essex County
William DeLuca III, Woodworth Motors Don Sudbay, Sudbay Motors
Franklin County
Jay Dillon, Dillon Chevrolet
Hampden County
Jeb Balise, Balise Auto Group
Hampshire County
Bryan Burke, Burke Chevrolet
Middlesex County
Chris Connolly, Jr., Herb Connolly Motors Frank Hanenberger, MetroWest Subaru
Norfolk County
Plymouth County
As MSADA prepares for our big October event, we should remind you as often as we can that NADA will be hosting its annual Washington Conference on Capitol Hill from September 25-26. We speak often on the importance of dealers participating in grassroots action, and this is a time built into every year when we can converge on our Congress as a large group from across the nation. You also know that we are always stressing that our representatives may not agree with us all the time, but that the surest way to lose out is to not show up. Our lobbying event is one of the largest the Capitol sees each year, and the importance of that physical presence cannot be discounted. But it is also your specific story that matters. They need to hear from the Main Street in their district to know that these possibly obscure (to them) tax issues or tariff issues have impacts right at their doorstep. We need your presence to make that happen. If you have not ever taken part, it is a truly rewarding experience, and I encourage you to ask me, Robert O’Koniewski, or NADA Director Scott Dube about the logistics. More general information is available at https://www.nada.org/WashConf/.
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Brad Tracy, Tracy Volkswagen
Suffolk County
Robert Boch, Expressway Toyota
Worcester County
Steven Sewell, Westboro Mitsubishi Steve Salvadore, Salvadore Auto
Medium/Heavy-Duty Truck Dealer Director-at-Large [Open]
Immediate Past President [Open]
NADA Director
Scott Dube, Bill Dube Hyundai
Officers
President, Chris Connolly, Jr. Vice President, Charles Tufankjian Treasurer, Jack Madden, Jr. Clerk, Steve Sewell
Associate Members MSADA A ssociate M ember D irectory ACV Auctions Will Morris (860) 670-7867 ADESA Jack Neshe (508) 626-7000 Albin, Randall & Bennett Barton D. Haag (207) 772-1981 American Fidelity Assurance Co. Dan Clements (616) 450-1871 American Tire Distributors Pamela LaFleur (774) 307-0707 Armatus Dealer Uplift Joe Jankowski (410) 391-5701 AutoAlert Jessica Gates (816) 506-0515 Auto Auction of New England Steven DeLuca (603) 437-5700 Auto/Mate Dealership Systems Troy Potter (877) 340-2677 Automotive Search Group Howard Weisberg (508) 620-6300 Bank of America Merrill Lynch Dan Duda and Nancy Price (781) 534-8543 Bellavia Blatt & Crossett, PC Leonard A. Bellavia, Esq (516) 873-3000 Bernstein Shur PA Ned Sackman (603) 623-8700 Blum Shapiro John D. Spatcher (860) 561-4000 BMO Harris Bank Chris Peck (508) 314-1283 Boston Globe Anthony Merullo (617) 929-2337 Broadway Equipment Company Fred Bauer (860) 798-5869 Burns & Levinson LLP Paul Marshall Harris (617) 345-3854 C-4 Analytics LLC Rob Stoesser (617) 250-8888 Capital Automotive Real Estate Services Daniel Garces (703) 394-1313 CDK Global Chris Wong (847) 407-3187 Construction Management & Builders, Inc. Nicole Mitsakis (781) 246-9400 Cox Automotive Ernest Lattimer (516) 547-2242 CVR John Alviggi (267) 419-3261 Dealer Creative Mike Otis (315) 382-3675 Dealerdocx Brad Bass (978) 766-9000 Dealermine Inc. Jane Webb (800) 304-3341
DealerSocket Shelly Del Rosario (949) 900-0300 Downey & Company Paul McGovern (781) 849-3100 Eastern Bank David Sawyer (617) 897-1125 Eastern Insurance Group William Gross (508) 620-3349 EasyCare New England Greg Gomer (617) 967-0303 Ethos Group, Inc. Drew Spring (617) 694-9761 F & I Resources Jason Bayko (508) 624-4344 Federated Insurance Matt Johnson (606) 923-6350 First Citizens Federal Credit Union Joe Ender (508) 979-4728 Fisher Phillips LLP John Donovan (404) 240-4236 Joe Ambash (617) 532-9320 Gatehouse Auto Jay Pelland (508) 626-4334 Gulf State Financial Services Tom Foster (832) 628-1916 GW Marketing Services Gordon Wisbach (857) 404-0226 Hireology Kevin Baumgart (773) 220-6035 Hub International Insurance Brokerage Jim Walsh (603) 494-9016 Huntington National Bank John J. Marchand (781) 326-0823 JM&A Group Jose Ruiz (617) 259-0527 John W. Furrh Associates Inc. Kristin Perkins (508) 824-4939 JP Morgan Chase Bank Alex Khademi (404) 375-4504 Key Bank Mark Flibotte (617) 385-6232 KPA Tim Whelan (303) 802-3019 Leader Auto Resources, Inc. Curt Murray (978) 201-4797 Lynnway Auto Auction Jim Lamb (781) 596-8500 M & T Bank John Federici (508) 699-3576 Management Developers, Inc. Dale Boch (617) 312-2100 Micorp Dealer Services Robert Calhoun 617-285-4833 Mid-State Insurance Agency James Pietro (508) 791-5566
www.msada.org
Mintz Levin Kurt Steinkrauss (617) 542-6000 Murtha Cullina Thomas Vangel (617) 457-4000 Nancy Phillips Associates, Inc. Nancy Phillips (603) 658-0004 Northeast Dealer Services Jim Schaffer (781) 255-6399 O’Connor & Drew, P.C. Kevin Carnes (617) 471-1120 Performance Management Group, Inc. Mark Puccio (508) 393-1400 PreOwned Auto Logistics Anthony Parente (877) 542-1955 R.L. Tennant Insurance Agency, Inc. Walter F. Tennant (617) 969-1300 Reflex Lighting Daryl Swanson (617) 269-4510 Resources Management Group J. Gregory Hoffman (800) 761-4546 Reynolds & Reynolds Mike O’Connor (860) 462-7958 Robinson Donovan Madden & Barry, P.C. James F. Martin, Esq. (413) 732-2301 Samet & Company John J. Czyzewski (617) 731-1222 Santander Bank Richard Anderson (401) 432-0749 Schlossberg & Associates, LLC Michael O’Neil, Esq. (781) 848-5028 Sentry Insurance Company Eric Stiles (715) 346-7096 Shepherd & Goldstein CPA Ron Masiello (508) 757-3311 Southern Auto Auction Joe Derohanian (860) 292-7500 Sprague Energy Robert Savary (603) 430-7254 SunPower Christie McCarthy (408) 457-2357 Kristin Hodges (707) 694-7759 SunTrust Bank Michael Walsh (617) 345-6567 Target Dealer Services Andrew Boli (508) 564-5050 TD Auto Finance Marc Gerhart (781) 697-1525 TrueCar Pat Watson (803) 360-6094 US Bank Vincent Gaglia (716) 649-0581 Wells Fargo Dealer Services Deb Hogan (508) 951-8334 Zurich American Insurance Company Steven Megee (774) 210-0092
Massachusetts Auto Dealer
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The Roundup
Frenzied End to Legislature’s Formal Sessions By Robert O’Koniewski, Esq. MSADA Executive Vice President rokoniewski@msada.org Follow us on Twitter • @MassAutoDealers
Although they needed to go past midnight into Wednesday, August 1, to do it, the House and Senate completed their scheduled final formal session on July 31 amid a flurry of last minute votes, approving most of the eleven major bills awaiting action and overriding most of Governor Baker’s budget vetoes, thereby adding millions of dollars back into the FY2019 spending plan. With the completion of formal sessions, legislators will be forced to get their legislative wants passed in the informal sessions, which will continue until Tuesday, January 1, 2019, when only matters receiving unanimous consent can be approved. As the Legislature approached the final week of the session, Governor Baker had just delivered a signed FY2019 budget, albeit three weeks late due to legislative tardiness, with only about 75 line-item vetoes, a small number designed not to rock the political boat as he heads towards re-election in the Fall. At the same time, there were more than ten major matters still lingering in conference committees that needed to be resolved before being sent to legislators for a final vote, but not all of them got done: • In the “get the champagne, we made it” pile: bills regarding economic development initiatives; civics education; environmental bond spending; expanded veterans’ benefits; voter enrollment reforms; expansion of animal welfare protections; clean energy promotion; and limiting the use of employee non-compete agreements. • In the “better luck next time” pile: bills dealing with increased consumer data protections – deAUGUST 2018
Massachusetts Auto Dealer www.msada.org
layed with gubernatorial amendments; shortterm rental (AirBnB) regulation – delayed with gubernatorial amendment; health care financing and reforms; education funding formula reforms; and promotion of housing development expansion. As legislators and staff prepared to wrap up, several certainties were evident: no one anticipated the Senate settling on its third president to lead the chamber during the two-year term; 15 retiring legislators cast their final roll call votes; on August 4 Speaker Robert DeLeo became the longest continually serving speaker in the history of Massachusetts (and vows to run again in January); and Gov. Baker committed no legislative or political faux pas that would threaten his re-election bid in November once he gets through the September 4 primary. The business community will remember 2018 as the year the legislature put an exclamation point on increasing business costs by passing in June the “Grand Bargain”, which the governor signed into law. As we have written previously, the key components of the law are: • Minimum Wage: The state hourly minimum wage will increase to $15 over five years in the following increments: Current - $11; 1/1/2019 - $12; 1/1/2020 - $12.75; 1/1/2021 - $13.50; 1/1/2022 - $14.25; 1/1/2023 - $15. The tipped hourly minimum wage will also increase from the current rate of $3.75 to $6.75 over five years. • Sunday/Holiday Premium Pay Requirement: The state requirement that businesses pay most retail workers at 150% of their regular hourly
MSADA rate for hours worked on Sundays and certain holidays will be eliminated gradually over five years in the following increments: Current – 150%; 1/1/2019 – 140%; 1/1/2020 – 130%; 1/1/2021 – 120%; 1/1/2022 – 110%; 1/1/2023 – 100%. • Paid Family and Medical Leave: Most workers in Massachusetts will be eligible to receive job-protected paid family and medical leave beginning in 2021. The benefits to employees will include 12 weeks available for family leave and 20 weeks available for medical leave, for a maximum of 26 weeks in aggregate. The complicated benefit structure will be capped at $850 per week, adjusted annually to remain at 64% of the State Average Weekly Wage (currently $1,338.05). To fund this new paid leave requirement, a payroll tax of 0.63% (which will be adjusted annually) will be paid into two trusts overseen by a new department within state government – the department of family and medical leave. Employees will be required to cover 100% of the family leave contribution and 40% of the medical leave contribution, while employers will be responsible for 60% of the contribution to the trust fund for medical leave. Employers with 25 of fewer employees will not be required to cover the employer portion of contributions but will be required to remit the employee portion of contributions. Contributions to the paid medical leave and paid family leave trusts will begin on July 1, 2019, with benefit payments beginning on January 1, 2021. Employers will be allowed to opt out of the paid family and medical leave program if they provide benefits through a private program that are the same or better than the state plan. • Sales Tax Holiday: Beginning in 2019 there will be an annual sales tax holiday for a weekend in August. Sales of motor vehicles will remain excluded from this holiday. Finally, we will continue to work on
two bills which the Legislature pushed off until the informal sessions: • Used Vehicle Record Book (Senate 2269). This bill would allow new car dealers to maintain in a dealer’s DMS the information demanded of the used vehicle record book without having to duplicate the recording of the info into a hand-kept book or the electronic version of the book. The Senate passed the legislation earlier this year; it is in the House Ways and Means Committee. Our next steps are to get it out of this committee and approved by the full House. • Inspection Station Licensure (Senate 2261). We have been working with the Baker Administration and the Registry of Motor Vehicles to address the problem of new dealerships not being able to be licensed as vehicle inspection facilities. As a result of the intransigence of the RMV to recognize that a problem exists and that dealerships need to be able to inspect vehicles they are selling in order to maintain high customer satisfaction scores, your association asked legislators to file legislation to grant franchised dealerships a license upon request. Senate 1911, filed by Sen Vinny deMacedo (R-Plymouth), and House 3433, filed by Rep Chris Markey (D-Dartmouth), received favorable reports from the Joint Committee on Transportation and referred to each’s respective committee on ways and means. The Senate subsequently approved Senate 2261, while the House referred the Markey bill to the Ways and Means Committee. Our next steps are to get the Senate-passed bill out of this committee and approved by the full House.
MSADA Dealers Hall of Fame, October 3-5 Your Association cordially invites you to attend the inaugural induction of our honorees for the Massachusetts Auto Dealers Hall of Fame, October 3-5, 2018, at the Chatham Bars Inn on Cape Cod. At its June Board meeting, based on www.msada.org
nominations made by you – our member dealers – the directors selected the following five individuals to represent our first class in the Hall: Paul Balise; Ernie Boch, Sr.; Raymond Ciccolo; Herb Connolly, Jr.; and Alvan Fuller. Over the 78-year existence of our Association, thousands of individuals and their families have contributed to build what our industry is here today in the Commonwealth – economic activity at franchised dealerships represents almost 20% of the retail economy in our state, while employing over 25,000 men and women at your stores from the Berkshires to the outer tip of Cape Cod, on up to the Merrimack Valley. A successful, substantial industry just does not pop up overnight. It takes commitment, imagination, dedication, and a certain amount of luck and pluck. At the same time, dealers across this great country have been known to be the most giving benefactors to charitable causes of all stripes – from the local Little Leagues and soup kitchens and food pantries, on up to building orphanages and hospital wings. To celebrate the success of our industry in Massachusetts, your Association is excited to announce the unveiling of the inaugural class of the Massachusetts Auto Dealers Hall of Fame. To help celebrate this ceremony with our honorees and their families, we invite you to attend the events at the Inn. Please use the registration materials we have sent you. Your Association will pick up the cost of our member dealers’ hotel room during their stay. Your Association is humbled to honor these first five individuals who played a vital role in building our industry in Massachusetts. We are looking forward to celebrating their induction with their families and you – our member dealers who helped create the honorees list. Should you require additional information, please do not hesitate to contact me. t Massachusetts Auto Dealer
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Internet Technology
MSADA
Should Automobiles Have Antivirus Software? By Don Lander O’Connor & Drew, P.C.
You may be asking yourself, “Why do I need antivirus software in my automobile?” Before answering this question, let us look at the modern automobile and its capabilities. Most consumers think of their automobile as just a way to get from point A to point B. While this is still true, automobiles have come a long way since the days of buggy seats and hand-cranked windows. Now, virtually everything inside an automobile, including your cellphone, is connected to the onboard computer. While computers have made cars safer with sensors that provide warnings to drivers who drift out of their lanes and cameras that enable drivers to easily view their blind spots when changing lanes, they have also introduced vulnerabilities that can threaten your very life. By necessity, automobile computers are extremely sophisticated. The operating system and processes for some vehicles, such as the Ford GT, require over 10 million lines of code. Compare this to the measly 2 million lines of code necessary to keep an F-22 Fighter jet in the air. While the additional 8 million lines of code in the Ford GT are most probably valuable, it greatly increases the points of access available to hackers to penetrate a driver’s on-board computer. As noted in a May 2016 Washington Post article, an NHTSA document published in July 2016 states that “all points of electronic entry, including Wi-Fi, Bluetooth, and the diagnostic port, could be potentially vulnerable.” Have you ever gotten a piece of
malware on your computer? Imagine a world where that same computer virus could result in the following: • Your car will not start until a ransom is paid; • You lose control over steering, acceleration, or braking, and your vehicle is controlled remotely, potentially with you inside it. These exploits have already been demonstrated in several proof of concept scenarios. In July 2015, a Jeep was hacked while someone was driving it. The hackers could take over dashboard functions, steering, transmission, and brakes. This hack prompted Chrysler to recall the Jeeps to fix the vulnerability. These threats are very real and costly to correct with recalls. Since recalls are costly both from a pure dollar perspective and a reputational perspective, the best alternative to prevent these hacks is with good antivirus software that is continually updated to address new vulnerabilities and viruses. A hacker eventually will disable or crash someone’s automobile, and when that happens it will be the local dealers who will suffer the most — not the automobile company. The call to action for the local dealers is to push their automobile manufacturers to be proactive with preventing hackers from gaining access to an automobiles on-board computer by including anti-virus software and keeping the software current. The ramifications of not addressing this situation before it happens could be devastating to a local dealership. If the importance of having antivirus software in automobiles continues to be ignored, hackers will eventually gain control of a vehicle’s onboard computer, which spells trouble for drivers, dealers, and manufacturers. Currently, manufacturers are not taking this threat seriously. Therefore, dealers should put some pressure on manufacturers informing them that continuing to ignore this issue can make cars inoperable or, worse, result in loss of life. t
A hacker eventually will disable or crash someone’s automobile, and when that happens it will be the local dealers who will suffer the most.
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Massachusetts Auto Dealer www.msada.org
Joining the firm in 2014, Don is a Project Manager. Prior to joining the firm, Don was an IT Implement manager for a number of major financial services corporations in the Boston and Providence area for the past 25 years. He can be reached at dlander@ocd-tech.com.
MSADA
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Troubleshooting
MSADA
FTC Charges Dealer Group in First Ever Case By Peter Brennan, Esq. MSADA
Staff Attorney In a case that should inspire automobile dealers everywhere to review their compliance practices, the Federal Trade Commission (FTC) recently broke new ground by charging an auto dealer group operating in New Mexico and Arizona with falsifying its customers’ income and down payment information on vehicle financing applications. The income falsification charges are the first ever brought by the FTC against an automobile dealer. According to the FTC, Tate’s Automotive Group (TAG), consisting of four dealerships near Navajo Nation in the Southwest, falsified its consumers’ monthly income and down payments on financing applications and submitted the applications to third-party financing companies without the consumers’ knowledge. The FTC alleges that TAG employees were able to falsify information on financing applications because they engaged in a variety of suspect practices to prevent consumers from reviewing the income and down payment information that was entered on the applications. Allegedly, the practices by TAG employees consisted of filling out the financing applications in public places, such as grocery stores or parking lots, or over the phone, without giving the consumers an opportunity to review the income or down payment portion of the application before signing. Other times, the FTC has alleged, TAG employees altered financing applications after the applications had been signed by consumers. Unfortunately for TAG, it is alleged that some consumers noticed the inflated income and down payment numbers and reported the inaccuracies. Additionally, a major financAUGUST 2018
ing company that TAG had been regularly assigning financing contracts to conducted a fraud review and discovered that a staggering number of financing applications that had originated at TAG dealerships included inflated income numbers. For instance, at one TAG dealership, the fraud review found that over forty-four percent of financing applications listed inflated income. The FTC, in a first for the agency against an automobile dealership, has alleged that TAG’s actions in falsifying consumer information constitute deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C., 15 U.S.C. § 45(a) and (n). TAG’s owner-manager and owner-president were named individually in the complaint. The penalties for violations of the FTC Act are severe, with both civil and criminal penalties available to prosecutors. The FTC has also alleged that TAG committed violations of the Truth in Lending Act (TILA) and Regulation Z, a willful violation of which can result in imprisonment. TAG is also facing FTC charges based on its advertising practices. In addition to the income-falsification-related charges, the FTC has alleged that TAG violated the Consumer Leasing Act and Regulation M by misrepresenting the true nature of the cost to lease or purchase vehicles in television, radio, online, and print advertisements. TAG allegedly ran advertisements with deceptive monthly payment offers, hidden limitations on discounts, and undisclosed terms and conditions. These charges can also result in large financial penalties, as well as imprisonment for willful and knowing violations. When reviewing your advertising, remember that any deceptive advertisement is going to be illegal under state and federal statutes. Generally, an advertisement is deceptive if it makes false, misleading, or unsubstantiated claims, or if it omits information necessary to prevent the advertisement from being deceptive. To determine whether an advertisement is deceptive, you must consider the advertisement from the consumer’s perspective and weigh the overall impression that the
Massachusetts Auto Dealer www.msada.org
advertisement would give to a consumer. A collection of true statements can still be deceptive if the overall net impression is deceptive. Disclosures may be used but must be used appropriately. For example, the FTC alleges that TAG advertised vehicles on its website with a price that included a substantial “incentive” without adequately disclosing the conditions that consumers would need to meet to receive the “incentive”, because consumers would need to click through several additional hyperlinks to find the incentive qualification details. While TAG may believe that it was technically in compliance with the law by using these linked-to disclosures, the FTC apparently disagrees. All disclosures used in an advertisement must be clear and conspicuous to a reasonable consumer and cannot be used to contradict a false claim. Different advertising mediums will naturally have different requirements for disclosures, so make sure to review the disclosure requirements specific to your advertising medium in both state and federal statutes. The first step in any advertising campaign should be a careful review of the Massachusetts Motor Vehicle Advertising regulations at 940 CMR 5.00 and NADA’s Dealer Guide to Federal Advertising Requirements (available to members on the NADA website). Additionally, the FTC offers compliance tips online at https://www.ftc.gov/ tips-advice/business-center/selected-industries/automobiles. Many times, advertising agencies are not clear on the particulars of state and federal statutes regarding automobile advertising, so you should always consult your legal counsel prior to publishing any new advertisement. t If you have questions regarding the topics covered here, or any other issue, please contact Robert O’Koniewski, MSADA Executive Vice President, at rokoniewski@ msada.org, or Peter Brennan, MSADA Staff Attorney, at pbrennan@msada.org, or by phone at (617) 451-1051.
MSADA
Legal By Joseph W. Ambash and Jeffrey A. Fritz
Four Ways to Increase Litigation Risks and Costs We regularly offer in this column ways your dealership can minimize its employment litigation risks and costs. Notwithstanding the tongue-in-cheek title and headings here, this article is no different.
Do Not Keep Accurate Records of Your Employees’ Work Time Massachusetts law requires employers to keep accurate records of each employee’s time worked. In the absence of accurate records, wage-and-hour claims, which invariably are based on the number of hours an employee (or, in many instances, a class of employees) works each week, are significantly more difficult and costly to defend. The method by which an employer accurately records its employees’ work time is up to the employer. That said, we recommend a punch clock system that requires each employee to punch in and punch out either manually or electronically. What are some ways employers increase their litigation risks and costs? Some do so by simply relying on a schedule in determining hours worked. However, no employee works exactly from 9 a.m. to 12 p.m. and 1 p.m. to 5 p.m. each day. If that is what your records show, no investigator, judge, or jury is going to believe they are reliable. The same is true for automatic deductions, such as an hour each day for lunch, which, by their very nature, are not accurate reflections of time worked (or not worked). If your dealership uses an automatic deduction system, we recommend you end the practice immediately.
Do Not Have Your Pay Plans Periodically Reviewed The method by which your dealership pays its employees is as important as accurately recording the hours they work. Indeed, if your pay plan is (even unintentionally) structured incorrectly, the exposure to your dealership can be astronomical. And Massachusetts does not make it easy for dealers insofar as it is inconsistent with federal law in certain important ways. For
example, federal law exempts from overtime employees who function as salesmen, partsmen, and mechanics (as the law defines those terms); Massachusetts law does not contain similar exemptions. Accordingly, such employees are entitled to overtime pay unless paid on a 100% commission basis—and even that is subject to litigation at this point, as we have reported. These issues can be very complex and nuanced and, with respect to violations, your intentions will not matter. Massachusetts law can lead to some crazy results, and, in our experience, no good deed goes unpunished. For example, if you pay your salespeople on a 100% commission basis, they should not be entitled to additional overtime pay so long as, each week, they receive the equivalent of at least Massachusetts minimum wage (currently, $11 per hour) for all time worked up to 40 hours, and timeand-a-half ($16.50 per hour) for all time worked over 40 hours (and if they do not, the dealership must supplement their commissions). But if the dealer, in addition to the same commission structure, wants to pay its salespeople a salary of, say, $300 per week—which means the dealer is paying its salespeople more money—the dealer most likely would face exposure for significant minimum wage and overtime violations—multiplied by the number of salespeople, multiplied by three years, multiplied by three (i.e., automatic trebling), not to mention your and the employees’ attorneys’ fees and costs. Having your pay plans periodically reviewed will allow you to know what is “under the hood” as far as non-obvious wage-and-hour violations and provide suggestions for how to modify them to ensure compliance going forward.
Do Not Have a Pay Equity Audit Performed As you should know from our prior columns, the Massachusetts Pay Equity law went into effect July 1 of this year. This www.msada.org
law dictates, among other things, employers (1) cannot ask prospective employees for salary history information, (2) cannot discipline employees for discussing their or others’ wages, and (3) must provide equal pay for comparable work, subject to a narrower list of acceptable reasons for pay variations. We expect this new law will result in significant litigation in the coming months and years in all industries, including yours. That said, a relatively easy way exists to maintain a complete defense to such claims: conduct a pay equity audit on your workforce every three years and make any necessary adjustments.
Do Not Train Your Managers on HR Issues As we repeatedly have explained in this column, for the most part from an employment law perspective, you are your managers and your managers are you. If your managers act inappropriately toward other employees and/or fail promptly and appropriately to address the improper conduct of others, your dealership almost certainly will be on the hook. Moreover, if your managers fail properly to address performance deficiencies as they occur, terminating employees based on performance becomes significantly more risky. Accordingly, it is imperative that you train your managers to be HR assets, not HR liabilities. t
Joe Ambash is the Managing Partner and Jeff Fritz is a partner at Fisher Phillips, LLP, a national labor and employment firm representing hundreds of dealerships in Massachusetts and nationally. They can be reached at (617) 722-0044.
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AUTO OUTLOOK
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Massachusetts Auto Dealer www.msada.org
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AUTO OUTLOOK
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Massachusetts Auto Dealer www.msada.org
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COVER STORY
MSADA The Inaugural Class A Preview of the Massachusetts Auto Dealers Hall of Fame 2018 Inductees
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Auto dealers are forward looking by nature. The work involves constantly looking ahead to what customers might be buying tomorrow, next week, or next year.
By Gabi Gage
Perhaps it is that excitement that makes the business attractive to as many as four generations, and counting. As a Massachusetts dealer community, many families run deep,
while just as many others are bootstrap stories that will inspire for decades to come. “Over the 78-year existence of our Association, thousands of individuals and their families have contributed to build what our industry is here today in the Commonwealth,” says MSADA Executive Vice President Robert O’Koniewski. “Economic activity at franchised dealerships represents almost 20 percent of the retail economy in our state, while directly employing over 25,000 men and women at their stores from the Berkshires to the outer tip of Cape Cod, on up to the Merrimack Valley. “A successful, substantial industry just does not pop up overnight. It takes commitment, imagination, dedication, and a certain amount of luck and pluck.” From historic entrepreneurs to living legends, the first inductees into the Massachusetts Auto Dealers Hall of Fame embody the dedication and drive of the profession. Please join us October 3-5 at the Chatham Bars Inn on Cape Cod, as we celebrate your inaugural class.
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Massachusetts Auto Dealer www.msada.org
MSADA MSADA ERNEST BOCH, SR.
Paul E. Balise (center) turning over the business to his son James E. Balise “Jim” (left), February 26, 1963.
As a young man, Ernie Boch, Sr., inherited a Nash dealership, a gas station, and a passion from his father Andrew B. Boch in 1948. That same commitment and passion led him to revolutionize the local auto advertising scene, and, in the process, made him a household name. He put his name— and his face— out there, inviting customers to “Come on down!” From Dodge to Toyota, Ernie built a New England institution and expanded his budding empire in the 1970s when he purchased the region’s Subaru distributorship. He became both a trendsetter in the industry and a legend, claiming to have sold 32,000 cars in 1998 alone. A self-professed workaholic, the Route 1 Automile in Norwood became his domain. Larger-than-life, Ernie became an icon of the industry and also knew how to give back, supporting local organizations like Camp Jabberwocky, Hospice of Martha’s Vineyard, and donating $2.6 million toward a Mashpee performing arts center.
PAUL E. BALISE A welder and some imagination was all Paul E. Balise needed to begin his intrepid career in the auto industry back on his family farm in 1919. “[He] loved taking things apart and fixing them from a young age,” says grandson Jeb Balise. He started repairing and selling farm equipment—and eventually cars—from the farm-turned-garage in Hatfield. He became an associate Chevrolet dealer and then in 1929 moved to Chicopee Falls to realize his dream of opening a Chevrolet dealership and Used Car Outlet in Chicopee. By the 1930s he moved the dealership front-and-center to Main Street in Springfield. In the process of building the dealership, he also built a family business, one that carried on to his son, the late-James “Jim” Balise, one of Paul’s ten children, in 1958, and later Jeb, current President and dealer of Balise Motor Sales, in 1986. Paul’s influence has reached beyond Massachusetts – with GM placing his name on a wall of honor at their Detroit headquarters. “We are humbled and honored to have Paul Balise chosen for the inaugural induction of the MSADA Hall of Fame,” says Jeb. “Ironically, we are about to celebrate 100 years, and little did Paul know then, but three generations of Balise would come after him. I’m sure he never imagined we’d grow to the size we are now or be able to make the difference we do in our local communities. More than anything, I think he’d be thrilled to know we’ve grown into a leading dealer in the Massachusetts market known for putting our customers, associates, and communities first.”
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HERB CONNOLLY, JR.
RAYMOND CICCOLO “I have been truly blessed in my life,” says prolific dealer and philanthropist, Ray Ciccolo, president of the Village Automotive Group. Like the quintessential dealer, Ray not only appreciates his success, but he knows the value of hardwork and exudes leadership in the profession and community. He started his career from the ground up, first working as a dumpster bottle-breaker at the Ritz-Carlton hotel, studying business at Suffolk University, serving in the Marines, and by 24 owned two successful laundromats. It was then that he made a change and took a risk, purchasing a Rambler/Volvo dealership in Newton. Today, the business he built is one of the largest in the state with more than seven locations and close to 400 employees. More than just a dealer, Ray has shared his success with others and the community, and the Ciccolo Family Foundation contributes more than $300,000 to charities at home and abroad annually. AUGUST 2018
Herb Connolly, Jr., took over the family business from his pioneering father, Herb Sr., who came of age with an intrepid new form of transportation, the horseless carriage. In 1918, Herb sold his first new car and established his dealership, Connolly’s Aberdeen Garage. He also launched a family passion and legacy— his dealership is one of the oldest, continuously operating family-owned automobile dealerships in the country. His son continued on his legacy in 1940, running dealerships for 55 years, in Boston and Framingham. Today the dealership is alive and well under the tutelage of Herb Jr.’s grandsons. “The Connolly family is extremely fortunate to have been part of a vibrant Massachusetts dealer community for 100 years,” says MSADA President Chris Connolly. “We continue to work each day to continue Herb Sr.’s mission to put folks into machines that have far outpaced what they might have imagined possible back then. But the relationship we share with our customers is something we have been building on consistently for a century. While Herb Sr. began the family business, it was his son who steered it through the first golden age of the automobile. The expansion Herb Jr. oversaw continues to resonate to this day, and serves as a model for multigenerational businesses across industries. “We are immensely proud of the legacy that my great-grandfather initiated, and that my grandfather worked so long to preserve. In this industry, that kind of longevity takes enormous amounts of consistent effort.”
ALVAN TUFTS FULLER It would be easy to simply call Alvan Tufts Fuller the Father of Massachusetts Auto Dealing. After all, he brought the first horseless carriage over from Europe to the port of Boston in 1899. But he was also much more. Innovator. Business man. Optimist. Governor. Philanthropist. The Packard Motor Car Company granted Alvan Fuller distributorships for Boston, Albany, and Philadelphia, and he opened the flagship Boston Packard dealership and acquired the local Cadillac franchise. “From there my Grandfather’s business acumen and sales skills kicked in and he built an enormously successful automotive enterprise,” says Peter Fuller, Jr, who continues the work of his grandfather and father. An intrepid salesman, Alvan helped popularize what is now Presidents Day promotions and “pay-as-you-go” sales before making his way to Congress and eventually becoming governor of Massachusetts. After his political career, he returned to his roots—his auto dealership, and established the still-running Fuller Foundation. His support was wide-ranging, including the art, hospitals, education, religion, municipalities, and social services. As an organization that still, nearly a century later, is seeking new ways to help the community, Fuller set the tone for the generations of philanthropic endeavors by Massachusetts auto dealers. t
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Sound Off
Turn Your Roof or Parking Lot into a Solar Profit Center
MSADA By Kristin Hodges SunPower
If you have considered a solar energy system for your dealership in the past and it did not pencil out, it may be time to look again. The industry is at a true tipping point—with lower cost solar panels, local energy rebates, and federal tax credits all working together to make solar an extremely attractive value proposition for auto dealers. Solar energy systems are cropping up on commercial rooftops and parking lots across Massachusetts and the U.S., drastically reducing energy expenses and turning what used to be a fixed cost into a profit center. Dealerships use on average 18% more electricity than a typical office building, with lighting being one of the highest costs. These untapped energy cost savings can improve a dealership’s bottom line by the equivalent of two or three more vehicles sold per month, estimates Ryan Ferrero, an award-winning dealer principal of both domestic and import cars in Colorado. Due to technological advances and declining prices for solar equipment, the cost to install solar systems has fallen 53 percent over the last five years. Depending on how it is designed, a rooftop or parking lot system can generate enough clean energy to offset up to 100% of a dealership’s electricity costs, creating margins that were not there before to reinvest in the business, pay off debt, or save for a rainy day.
A Compelling Case for Massachusetts Solar
Massachusetts was one of the first states to implement a statewide goal for renewable energy, requiring a percentage of electricity generation to come from renewable sources. The state is home to several incentive programs, and many local utilities offer rebates to offset the costs of going solar. The Department of Energy Resources (DOER) recently established the Solar Massachusetts Renewable Target (SMART) program, which is expected to double the state’s solar capacity through long-term, predictable incentives, with bonus savings for solar carports and rooftop systems as well as systems with energy storage and other system
parameters. In addition to state and local incentives, business owners who purchase solar typically qualify for the Federal Investment Tax Credit valued at 30 percent of the total cost of the installed solar project through 2019.
Solar as a Marketing Strategy
Solar can be a powerful marketing tool and competitive differentiator that helps attract and close customers, especially millennials. As dealerships look for ways to attract this environmentally conscious audience, sustainability becomes another arrow in their quiver. “Walking the talk” engenders trust, especially among female customers who influence 85% of new-car buying decisions. Green initiatives are gaining strength with all manufacturers, especially with imports. Manufacturers such as Honda, Toyota, and Nissan are all leading the auto industry with electric vehicles, and sustainability tends to resonate with their buyers.
Get the Facts
If you are interested in exploring solar, the first step is to take a look at your energy use, local utility rate structure, and energy rebates to determine how quickly solar could produce a return on investment (ROI) for your dealership. A reputable solar company in your area can help with this and will prepare a solar proposal that should include a feasibility analysis, complete with information on how your facility consumes energy, the savings that solar could yield, as well as local, state, and federal incentives. Going solar can be a wise investment in a dealership’s future—potentially reducing your tax burden, cutting costs, and putting an extra shine on your brand image. For specifics on the Massachusetts market, including educational webinars, visit sunpower.com/massachusetts. t SunPower is a global manufacturer of solar products, and an associate MSADA member. The company’s products have been installed in dozens of dealerships across the U.S. through a network of locally owned solar businesses.
Have an opinion you want to share? Email rokoniewski@msada.org. www.msada.org
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Village Automotive Group Cuts Ribbon on New Solar Power Units Audi Norwell and Porsche Norwell kickstarted two new solar power units in August with a ribbon cutting ceremony that featured local industry leaders and Mass. State Senator Patrick O’Connor (R - Weymouth). The new 274kilowatt systems at Audi Norwell (191 kW) and Porsche From Left to Right - FireFlower Alternative Norwell (83 kW), Energy CEO, Kathy Doyle; Senator Pat- built by MassArick O’Connor; Village Automotive Group merican Energy, President, Ray Ciccolo; Porsche Norwell will generate over General Manager, Alex Ciccolo
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Massachusetts Auto Dealer www.msada.org
From Left to Right - Audi Norwell General Manager, Michael Gaughran; Mass. Senator Patrick O’Connor; FireFlower Alternative Energy CEO, Kathy Doyle; Village Automotive Group President, Ray Ciccolo
9 million kilowatt hours (kWhs) during their 25-year lifetime. The systems will produce approximately 50 percent of the annual electricity consumption in each dealership.
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NEWS from Around the Horn
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Herb Chambers Adds Maserati Location The Herb Chambers Companies is bringing classic Italian luxury to a second Massachusetts location, opening Herb Chambers Maserati of Millbury in August. Maserati joins Alfa Romeo at this location, offering two Italian luxury brands under one roof. A state-of-theart showroom, luxurious guest lounge for customers taking advantage of the full-service center, and valet parking highlight the first-class car shopping experience in Millbury. “We are ecstatic to add Maserati of Millbury to our extensive family of dealerships,” said Herb Chambers, president of The Herb Chambers Companies. “We relentlessly strive to offer the highest level of customer service to our clients, and the widest variety of quality brands. With the opening
of our second Maserati location, we are incredibly happy to be the first auto dealer in Massachusetts with two sites to showcase this iconic brand.”
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NEWS from Around the Horn CHICOPEE
WEST SPRINGFIELD
Hole-in-One Wins New Mercedes
Bertera Subaru Sponsors Make-A-Wish Program
William Morrissey’s hole-in-one while playing in the Law Enforcement Torch Run Celebrity Golf Classic Tournament earned him a Mercedes-Benz GLC 300, offered by Mercedes Benz of Springfield. The tournament, held in June at the County Club of William Morrissey, of Agawam, winner of a new car stands with Peter and Michelle Wilbraham, benWirth, owners of Mercedes-Benz of Spring- efited the local field, as as he picked up his new car at their Special Olymdealership. pics. Dealership owners Peter and Michelle Wirth offered the SUV as a part of their frequent charity efforts. Morrissey also earned a new pool and $1,000.
Make-A-Wish Massachusetts and Rhode Island recently celebrated the success of Bertera Subaru of West Springfield’s Share the Love campaign. This is the fourth year in a row that Bertera Subaru of West Springfield has chosen Make-A-Wish as their “hometown charity of choice.” Lila Keegan of Hampden was granted her wish of going on a cruise, while Liam Lobik of Longmeadow got a new puppy. Shawn Sullivan, General Manager of Bertera Subaru, told 22News, “The best part of it all is meeting the kids. The kids are fantastic. Their attitudes...there’s three or four of them here today...and you’ll find out they’re so grateful and more than grateful are the parents for having the opportunity to share this with them.” Bertera Subaru of West Springfield has raised more than $64,000 for the Make-A-Wish organization this year.
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MSADA HYANNIS
Prime Acquires Two Land Rover Dealerships Prime Motor Group has announced it has purchased two Land Rover Dealerships, one in Hanover and another in Hyannis on Cape Cod. The purchase means the business now operates 32 car dealerships across New England, including five on the South Shore. The Hanover and Hyannis dealerships are the only Land Rover dealerships Prime Motor Group owns. The two locations include Land Rover Experience Centers that offer video presentations on vehicle features. WARWICK, Rhode Island
Tesla Backs out of New Store Location Amid an uncertain stock outlook and increasingly erratic behavior from Tesla founder Elon Musk, plans for a new Tesla store in Warwick have been put on hold indefinitely. The electric car manufacturer received permission to open a store at a former Hyundai dealership, and the city’s former
mayor said in January that the store would open in the spring. A spokesman for acting Mayor Joseph Solomon told the Providence Journal that Tesla “will not be coming to Warwick at this time.” It was unclear if Tesla would open a store at another location or if it will open a store in the state at all. BOSTON
Lexus Participates in Strike Out Hunger Program For the third year in a row, Lexus is working with the New England Sports Network (NESN) in an effort to combat hunger in the Boston area through the Strike Out Hunger program. To raise awareness and funds for hunger relief across Eastern Massachusetts, Lexus is donating $50 to The Greater Boston Food Bank every time a Boston pitcher strikes out the opposing team’s hitter. The initiative launched on Opening Day and runs through all games in the 2018 regular season. The third annual Strike Out Hunger campaign follows two highly successful years, with Lexus donating $147,100 to The Greater Boston Food Bank. The contribution provided more than 437,000 healthy meals to those in need across Eastern Massachusetts.
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NEWS from Around the Horn CHATHAM
Join MSADA for the First Dealers Hall of Fame Ceremony MSADA will host the first ever Massachusetts Auto Dealers Hall of Fame induction ceremony October 3 - 5 at the Chatham Bars Inn. Dealers are invited to come together to honor their forebears in the industry at a historic hotel in a beautiful setting. A block of rooms has been reserved for dealer members. See more about the inaugural inductees in this month’s cover story, and email rokoniewski@msada.org for more details.
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ACCOUNTING MSADA
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A Look at the New Pass-Through Deduction and Interest Deduction Limitation By Richard Parmelee
CPA, BlumShapiro
One of the most significant aspects of the Tax Cuts and Jobs Act for dealerships organized as pass-through entities was the enactment of the Section 199A Qualified Business Income (QBI) Deduction. The basic concept behind the QBI provision was that taxpayers with income from qualified trades or businesses would be entitled to a deduction of 20% taxable income. The 20% deduction is substantial, lowering the effective tax rate of a taxpayer in the top tax bracket from 37% to an effective rate of 29.6%. The deduction contained several limitations: • Income must be domestic “qualified business income” from a trade or business; and • The deduction is limited to the greater of 50% of W-2 wages paid with respect to the qualified trade or business or 25% of W-2 wages paid by the qualified trade or business, plus 2.5% of the unadjusted basis of qualified property. During 2018 we have held discussions with our dealership clients about questions arising from Section 199A. On August 8, the Treasury Department and the IRS released proposed regulations that answer a number of those questions.
What is a Qualified Trade or Business? For our dealership clients selling automobiles, trucks, motorcycles, equipment, or recreational vehicles, there was no doubt that the income from those trades or businesses qualified for the deduc-
tion. For many of our clients a typical arrangement would be for the dealership to be owned by one entity and the real estate to be owned by a separate entity, with the real estate being self-rented by the dealership under a triple net lease arrangement where the ownership of those entities is common. The Internal Revenue Code contains several definitions of what is considered a trade or business. For purposes of IRC Code Section 162, an activity conducted with continuity and regularity is considered to meet the threshold of being considered a trade or business. Triple net leases are problematic under this definition, which creates a problem for client dealership real estate activities operated under triple net leases. The proposed regulations attempt to address this issue by permitting taxpayers to aggregate single trades or businesses operated across multiple legal entities to be treated as a single trade or business. The IRS requires that several factors be met; however, in our earlier example where the dealership and real estate are owned in separate entities by common owners, it appears clear that taxpayers can elect to aggregate those activities, allowing the self-rented real estate to qualify for the Qualified Business Income deduction.
W-2 Limitation Many dealerships initially assumed that the wage limitations would not impact them. However, a strict reading of Section 199A led many to believe that only wages reported under the federal employment identification number (FEIN) for the dealership entity could be used in computing the wage limitation. This is particularly problematic for dealers who have an employee paid by one dealership entity, whose wages may be allocated to several other commonly owned dealership entities. The allocated wages would not be eligible when calcuwww.msada.org
lating the wage limitation. This situation is further complicated for dealerships that use professional employer organizations (PEO) where all W-2 wages are reported under the PEO’s FEIN. The proposed regulations resolve this issue by allowing W-2 wages paid by another dealership entity to a common law employee of the dealership entity expensing the wages to use the wages paid to the common law employee in calculating the wage limitation. The proposed regulations also allow wages paid by a PEO to be used in calculating the wage limitation. Taxpayers are not allowed to double count these wages in computing the limitation, so care should be taken in situations where wages reported on one W-2 are allocated amongst multiple entities.
Business Losses Confusion existed for taxpayers with business entities generating losses. In particular, questions arose with taxpayers who owned multiple entities where some entities were profitable and others had losses. In a simplistic example, let us assume that a taxpayer owns two dealerships. Dealership A has QBI of $1,000,000 and dealership B has a loss of $350,000. In this situation the question is, is the QBI deduction $1,000,000 x 20% = $200,000 with no deduction for dealership B, or is it $1,000,000 - $350,000 = $650,000 x 20% = $130,000? The proposed regulations clarify that the deduction in this scenario would be $130,000. If the combination of all positive and negative QBI amounts resulted in a net loss, the taxpayer is required to carryforward the loss to the following tax year. The W-2 wages and basis amounts do not carryforward. The proposed regulations issued by the Department of Treasury and the IRS answer a number of significant questions for dealerships and their owners. t
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Patrick Manzi
NADA Senior Economist
Boyi Xu
Economist
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NADA MARKET BEAT
JANUARY 2016
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Never Stop Learning By Jodie Teuton Chairwoman, American Truck Dealers ATD Chairwoman Jodie Teuton is vice president of Kenworth of Louisiana and Southland Truck Leasing in Gray, Louisiana.
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Many parents like me must be joyful that their child is moving to college and standing on the precipice of adulthood. My daughter will proudly attend Millsaps College this fall where she will join many other students who will be working hard to set goals and plan a successful future. Meanwhile, the truck industry is moving forward and enjoying the best business environment in nearly four decades, but that does not mean our education is complete. Whether you are a newly-minted freshman in college or a veteran in this industry, education never stops, especially at the American Truck Dealers (ATD). While students head back to school, you can visit ATD’s website and consider all the resources we offer to help improve the truck dealership business. I urge all dealers and managers to consider our signature ATD Academy, which provides six intensive, week-long instructor-led classes at our headquarters in Tysons Corner, Virginia. The Academy curriculum includes comprehensive classes on financial management, parts, service, and business leadership. The Academy also provides many opportunities for manufacturing and allied industry executives to participate. For those who cannot attend class in person, we offer online education and training from the comfort of your own computer. ATD has developed hundreds of online courses, including past webinars on demand at no charge for members; our Driven guides covering a variety of industry topics, including the Dealer Guide to Federal Excise Tax Compliance; and interactive courses that incorporate real-world simulations. Content is regularly updated so that our education offerings can continue to meet your needs. And all ATD presentations are led by industry experts, who like all excellent teachers, are determined to see you succeed in your businesses. In that regard, what would school be without a report card? ATD always welcomes your feedback and evaluation of how you think we are serving your needs as a national association. Let us know what topics you would like covered for future webinars. Tell us if you would like to see a specific workshop at the ATD Show. While students enjoyed their summer break,
Massachusetts Auto Dealer www.msada.org
ATD never stopped working to improve, even as the heat turned up. In July, I attended a meeting at the White House to discuss how ATD is working to repeal the harmful federal excise tax on new heavy-duty truck sales. And ATD finished gathering survey responses for the 2018 ATD Dealer Attitude Survey in early June. I thank dealership managers nationwide who took the time to complete this important survey. Your ATD line representatives and staffers will use your feedback to communicate what matters to our fellow dealers during meetings with manufacturers. Your survey responses frame the important discussions that are held with OEMs throughout the year. The greater your response rate, the more weight the survey results carry. Some of the greatest results have come from ATD’s 2017-2018 study conducted by ACT Research, the Commercial Truck Dealer Future Landscape. The lessons from this study are many. Truck dealers must adapt to an ever-evolving environment, including coping with big data that impacts our dealerships, adapting to new technology particularly autonomous trucks, and staying informed about federal regulations that dictate how we operate our businesses. Much like my daughter registering for college classes, managing a truck dealership requires focus and an acceptance that every day can be a learning experience. Speaking of registration, it is never too early to register for the ATD Show 2019 in San Francisco, being held January 24-27. I urge you to take advantage of early registration as hotels are filling up quickly. You will benefit from the keynote speaker sessions, learning from our renowned educational workshops, and attending important make meetings with OEMs. The annual show is a culmination of everything we have seen and learned in our great commercial-truck industry. ATD recognizes that even adults must continue their education so that we can succeed despite an ever-changing business landscape. Now is the time to capitalize on our record sales, set goals for the future, and continue learning from industry experts and one another. After all, the future of our industry rests in our desire to never stop learning. t
NADA Update
By Scott Dube
Convening in Washington Join NADA in September to Make Your Voice Heard
Scott Dube, President of Bill Dube Hyundai and MSADA Immediate Past President, represents NADA’s Massachusetts members on the NADA Board of Directors. As Washington, D.C. continues to seem like it might overheat from headlines at any moment, I urge you to remember that we have our own story to put in front of those making decisions on our behalf each day. Congress never stops having its collective ear bent on any number of issues, and each year we make sure our NADA Washington Conference demonstrates that dealers are a vital part of every community in our great nation. Please join me on September 25 and 26 on Capitol Hill as we meet with legislators and their staff to speak on issues important to us. For more details, go to nada.org, or email me directly at scott@dubecars.com. It can be hard to find time to speak with your representatives. But if you do not, the person on the other side of your issue will. We at MSADA and NADA will always be in your corner, advocating for the best interests of franchised dealers in our Commonwealth and across the country. But we need your individual story, too. Only you can tell it.
Dealership Employee Evacuates Twice on Same Day from California Wildfires At 3:45 a.m., on July 26, Erin Brown and her family were awakened by a knock on the front door and lights swirling from a fire truck. It was the chief and his crew from Cal Fire, who were evacuating the homes in the area over the past four hours. “They said the fire was moving so quickly that we only had 10 or 15 minutes if we chose to evacuate. The electricity went off right as they said, ‘We’ll give you a few minutes to get out,’” said Brown, who works in the administration department at SJ Denham Chrysler-Jeep-Fiat in Redding, California. “We were running around in the house in the dark with flashlights trying to see things.” With flames in sight illuminating the ridge across from their home while the firefighters waited for them to evacuate, Brown, along with her boyfriend and son, packed their cars with a few clothing items, laptop computers, birth cer-
tificates, and Social Security cards as quickly as they could, including two cats and a dog. They were the last family on the street to evacuate. “We were blessed that one of our cats got curious about the fire truck and came to see what it was. She’s kind of wild, and we snatched her up and threw her in a crate as fast as we could,” added Brown, who arrived at her mother’s home, located seven miles east across the Sacramento River, at 4:30 a.m. Over the next several hours they were glued to the television watching the news for the latest updates and scanning social media outlets on their cell phones. Later that day, Brown drove to the closest road block to find out if fire department officials had any information about the status of her home. That’s when she saw a wall of fire traveling from west to east toward her mother’s neighborhood. “We could see the fire had moved across the gorge and was coming our direction so rapidly. It was insane,” Brown said. “While speeding back to my mom’s house, we called her and all the neighbors and warned them to pack up fast. We put our pets back in their crates, loaded them in our cars, and each of us rushed out into the gridlock with all the other residents who had no evacuation warning. People were honking their horns, trying to notify others that they needed to come outside and look and see how fast the fire was moving.” At 8 p.m., Brown and her family arrived at the home of her son’s friend, located at the far east side of town. Over the next two days, they took turns staying awake to scan the skies and watch the news while the others slept. “The second evacuation was so sudden. There was no notice. There was no warning. There was nothing on the news,” Brown said. “If you weren’t out paying attention to what was going on and physically looking around, your life was at high risk.” Four of seven homes on Brown’s street, including her own, were destroyed. The fire burned up to her mother’s fence line, sparing her home and the homes of two neighbors. “We later equated that day to living out a scene from a movie,” she said. “It was surreal that such chaos and destruction were occurring all around us. There was no time to be afraid. There was only thoughts of logic and survival.” The Carr Fire, which began July 23, has destroyed 1,604 buildings in the Northern California counties of Shasta and Trinity, including 1,079 homes. Another 190 homes have been damaged. Eighty-eight percent of the fire has been
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NADA Update contained as of August 20. So far, seven dealership employees, including Brown, who sustained personal property damage from the Carr Fire, have received financial assistance from the NADA Foundation’s Emergency Relief Fund. Since 1992, the Emergency Relief Fund has donated more than $7 million to dealership employees and their families impacted by natural disasters.
White House Urges Businesses to Sign Pledge to Boost Workforce Training The White House is calling on businesses, including new-car dealerships, to sign a “Pledge to America’s Workers” to improve workforce development and increase vocational training opportunities for students and workers over the next five years. President Donald Trump recently signed an executive order establishing the National Council for the American Worker and the American Workforce Policy Advisory Board, which includes the “pledge” initiative and developing a plan to address workforce issues, including a national campaign to raise awareness of the urgent skills crisis. Last week, NADA’s leadership attended a meeting at the White House and asked administration officials to consider addressing the dealership technician shortage as part of its workforce initiative. If your dealership would like to make a pledge to increase career opportunities for students and workers, including apprenticeships, work-based learning programs, continuing education, on-the-job training or re-skilling, go to NADA. org for details.
Treasury Issues Proposed Regulations Regarding Tax Reform Earlier in August, the U.S. Department of the Treasury released the highly anticipated proposed regulations addressing the new 20 percent pass-through deduction. Just a few days earlier, Treasury also released proposed regulations addressing the new bonus depreciation rules. These proposed regulations provide answers to many of the questions regarding the Tax Cuts and Jobs Act that was enacted in December 2017. While they are generally taxpayer-friendly and provide a number of benefits to dealers, some questions still remain to be addressed. NADA will submit comments to Treasury regarding the impact of these proposed regulations on dealers.
NADA Foundation Meets with White House to Discuss Technician Shortage Annette Sykora, chairman of the National Automobile Dealers Association Foundation, met with White House officials in August to discuss the foundation’s new WorkAUGUST 2018
MSADA force Initiative and potential engagement with the recently announced President’s National Council for the American Worker. During a meeting at the White House with officials overseeing President Trump’s new workforce initiative, Sykora; Peter Welch, NADA president and CEO; and Jonathan Collegio, NADA senior vice president of public affairs, presented plans for the NADA Foundation’s Workforce Initiative to promote the value of careers at new-car dealerships, especially service technicians, in the retail-automobile industry.
NADA Show 2019 Offers Dealership Managers a Preview of the New NADA Professional Series A preview of the new NADA Professional Series – a training program designed specifically for dealership managers – will be included among the educational workshop offerings at NADA Show 2019 in San Francisco from January 24-27. Dealership managers, who work in the office, sales, service and parts departments, are invited to attend the NADA Show to get an up-close look to find out how the NADA Professional Series can improve dealership operations while supercharging their careers into leadership roles. The four workshops include: - Office Managers: Protecting Your Dealership’s Biggest Assets; - Sales Managers: Managing Millions in Vehicle Inventory; - Service Managers: Maximizing Your Daily Disappearing Inventory; and - Parts Managers: Stopping Parts Obsolescence Before It Starts. Find out more about the NADA Show’s educational programs at NADAshow.org. The early-bird registration discount ends September 14.
Alert: Experient is the Official Hotel Booking Agent for NADA Show 2019 Experient is the sole authorized hotel provider for NADA Show 2019 in San Francisco. Experient provides guaranteed reservations at reduced rates in the NADA Show hotel block. Only these hotels provide access to shuttle buses, which take attendees to-and-from the Moscone Center at no charge. Staying at an official hotel also allows attendees to network with colleagues before-and-after show activities. If you receive an email or phone call from another reservation service, please be advised they are not connected with NADA. Hotel reservations with reduced rates are available by booking through the NADA Show/Experient website at www.nadashow.org or by calling (800) 465.7110. t
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