Regulatory Updates

VADA Navigates the Virginia Regulatory Maze for Virginia Dealers

VADA is involved in many types of issues outside the legislative process that could have negative impacts on our dealer members. Here are several matters that we have been working on in the past few months.

Factory Ownership and Tesla Motors:

Tesla Motors is a manufacturer of electric vehicles. Tesla requested that the Department of Motor Vehicles allow it to operate dealerships in Virginia. It argues there are no dealers available in Virginia because it does not plan to have dealers sell its vehicles.

The VADA submitted comments to the Commissioner that raised our concerns that the notice of Tesla’s request for a dealer license and that the evidence Tesla presented that there were no dealers available to operate a dealership were both insufficient under the statute. We argued the statute was not satisfied by Tesla simply claiming it did not want to have dealers.

We received the DMV Commissioner’s hearing decision in the Tesla matter in late November.  In light of our comments, the Commissioner sent the case back to the hearing officer for further consideration on those issues. He noted that the VADA has raised several issues and directed the hearing officer to receive additional evidence from the VADA and Tesla.

Both VADA and Tesla have submitted additional arguments to the hearing officer in this matter and are awaiting his recommendation to the Commissioner. The Commissioner will then have 60 days to render his decision.

We will continue to be involved in this case to protect the statute prohibiting factory ownership.

First Aid Regulations:

In late 2008, the Virginia Department of Labor and Industry proposed new regulations governing the availability of first aid responders at certain businesses. It would have essentially required dealerships to have an employee trained in first aid and CPR available during all working hours of the dealership.

While many dealers have personnel trained in first aid and CPR on staff, demanding that designated first aid and CPR responders be on duty at all times would have been highly burdensome and extremely expensive.  Employees may be late appearing for work, may call in sick, be on vacation, or change jobs.  In order to ensure compliance with the Proposed Regulations at all times, it would have essentially become necessary for many businesses to provide the required training to all of their employees.  Such a policy simply would not make sense for most of VADA’s members who are either located in metropolitan or well-populated areas where timely emergency service access is available.

After battling with the Department of Labor and Industry on this issue for over 4 years, the regulations were finally withdrawn at the end of 2012 and will not be put into place.

Sales Tax on Vehicles to be Titled Out of State:

A recent ruling by the Virginia Tax Commissioner seemed to say that when a Virginia dealer sells a vehicle to an out-of-state customer and therefore does not collect the 3% sales and use tax, the dealer must instead collect the retail sales tax of 5%.

We had a very productive meeting with representatives of the Tax Department who clarified this ruling. They made clear that the ruling would only impose a tax in Virginia if the state where the customer is taking the vehicle does not impose any tax on the sale.

The case that was the subject of the ruling was a vehicle purchase by a New Hampshire resident and the Tax Department argued that the tax should be imposed in Virginia because New Hampshire imposes no tax. We asked them to provide us any other states they understand collect no tax and what tax they would require Virginia dealers to collect in those cases.

While we still have some concerns about the practical application of this ruling, we are pleased to have Tax Department clarify this important fact that was not included in the ruling. We will await more information from them.

This clarification puts to rest much of our concern as the states bordering Virginia that make up most of the out-of-state transactions for our dealers do charge tax and this ruling would not apply to those transactions.

We will keep you updated on any additional information on this topic