MTV-03-16-00005-P Use of the Vehicle Electronic Reassignment and Integrated Facility Inventory System

1/20/16 N.Y. St. Reg. MTV-03-16-00005-P

NEW YORK STATE REGISTER

VOLUME XXXVIII, ISSUE 3

January 20, 2016

RULE MAKING ACTIVITIES

DEPARTMENT OF MOTOR VEHICLES

PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. MTV-03-16-00005-P

Use of the Vehicle Electronic Reassignment and Integrated Facility Inventory System

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:

Proposed Action:

Addition of section 78.9 to Title 15 NYCRR.

Statutory authority:

Vehicle and Traffic Law, sections 215(a) and 415

Subject:

Use of the Vehicle Electronic Reassignment and Integrated Facility Inventory system.

Purpose:

To require dealers to use the Vehicle Electronic Reassignment and Integrated Facility Inventory system.

Text of proposed rule:

A new section 78.9 is added to read as follows:

78.9 Electronic recordkeeping and transmission of information related to the sale of vehicles

(a) Vehicle Electronic Reassignment and Integrated Facility Inventory system. Except as provided in subdivision (c) of this section, dealers are required to use the Vehicle Electronic Reassignment and Integrated Facility Inventory (VERIFI) system to transfer ownership of all vehicles and record vehicle sales. Dealers are required to:

(1) Sign a facility participation agreement with a vendor selected by the commissioner;

(2) Use the VERIFI system, as prescribed in the vendor’s facility participation agreement;

(3) Electronically transmit the information set forth in the book of registry, records of paper MV-50 forms, and records of paper temporary certificates of registration;

(4) When an electronic MV-50 cannot be issued due to the nature of the sales transaction, such as a sale to a party in another state, use a paper MV-50 pursuant to the terms in the facility participation agreement, and record required data in the VERIFI system via the methods prescribed by the VERIFI facility participation agreement. Data recorded on any paper MV-50 must be entered into the VERIFI system no later than the time of issuance of the paper MV-50 to the buyer;

(5) Maintain an active and valid account with the VERIFI vendor, per the terms of the facility participation agreement, in order to issue electronic MV-50s and to receive and issue paper MV-50s. Failure to maintain an active and valid account with the VERIFI vendor and follow the procedures set forth in the facility participation agreement shall be a violation of this subdivision.

(b) Fees: The fee for each electronic Retail or Wholesale Certificate of Sale (MV-50 or MV-50W) shall be the same as the fee for the paper version of the form, as set forth in Vehicle and Traffic Law section 415(6). Dealers must pay a per transaction fee to the vendor, as set forth in the facility participation agreement.

(c) Exemptions:

(1) The Commissioner may, upon written request, in a form prescribed by the Commissioner, exempt a dealer from the requirement to use the VERIFI system as required by subdivision (a) of this section, provided the dealer:

(i) sells fewer than ten vehicles per year, and

(ii) has two or fewer dealer demonstration and/or transporter plates, and

(iii) is not enrolled in Dealer Partnering Program or a participant in the Dealer Plate Issuance Program, and

(iv) has not had a dealer registration suspended or revoked since the effective date of this section.

(2) Dealers granted an exemption under this section must sign a facility participation agreement with the vendor and pay the appropriate transaction fee for each sale of a vehicle. Within five (5) days of the date of sale of the vehicle, dealers must report required data recorded on an MV-50 or MV-50W to the vendor via paper or by telephone, as specified in the VERIFI facility participation agreement. Failure to maintain an active and valid account with the VERIFI vendor and follow the procedures set forth in the facility participation agreement shall be a violation of this subdivision and shall result in the withdrawal of any exemption previously granted to such dealer.

(3) If a dealer registration is suspended or revoked on or after the effective date of this section, any exemption granted to such dealer under this section shall be deemed void and of no effect.

(d) Exemption from Recordkeeping Regulations:

Notwithstanding any other provision of this Part, a dealer who has not been granted an exemption under subdivision (c) of this section, and who complies with the provisions of this section regarding the filing of records via the VERIFI system, shall be exempt from retaining and filing the paper record of the MV-50 form and the temporary certificate of registration for transactions conducted in the VERIFI system as set forth in this Part.

Text of proposed rule and any required statements and analyses may be obtained from:

Heidi Bazicki, Department of Motor Vehicles, 6 Empire State Plaza, Rm. 522A, Albany, NY 12228, [phone], email: [e-mail]

Data, views or arguments may be submitted to:

Ida L. Traschen, Department of Motor Vehicles, 6 Empire State Plaza, Rm. 522A, Albany, NY 12228, [phone], email: [e-mail]

Public comment will be received until:

45 days after publication of this notice.

Regulatory Impact Statement

1. Statutory authority: Vehicle and Traffic Law (VTL) section 215(a) provides that the Commissioner of Motor Vehicles may enact rules and regulations that regulate and control the exercise of the powers of the Department. VTL section 415 controls the registration, rights and responsibilities of dealers. VTL section 415(6) provides that “ [i]f the commissioner issues to dealers a document which is required to be used by a dealer to sell or transfer a vehicle, the fee for the issuance of each such document shall be five dollars.”

2. Legislative objectives: Article 16 of the VTL authorizes the Commissioner of Motor Vehicles to regulate motor vehicle dealers. The objective of this Article is to allow dealers to conduct their business in an efficient manner, while granting the Commissioner regulatory authority to ensure that consumers are protected. This regulation, which requires the use of electronic recordkeeping and vehicle sales by dealers, accords with this legislative objective by increasing efficiencies for dealers and enhancing the Commissioner’s ability to audit dealer compliance with laws and regulations.

3. Needs and benefits: The proposed rule is necessary to increase dealer efficiencies in tracking motor vehicle sales and to benefit consumers by enhancing the Department of Motor Vehicles’(DMV) and other entities’ ability to ensure dealer compliance with laws and regulations.

Currently, New York State dealers maintain records of vehicle ownership, sales and dealer plate issuance through paper based processes. Dealers are required to 1) keep a paper inventory log of vehicles in their possession, 2) use paper MV-50s (Certificates of Sale) to transfer ownership of a vehicle owned or controlled by the dealer, and 3) issue paper temporary registrations. Dealers report that the paper inventory system is cumbersome, burdensome and outdated. In addition, they report that they lose money when the paper MV-50 must be voided due to dealer error when completing the form. The DMV charges five dollars per MV-50s, as required by VTL section 415(6).

These proposed amendments will require dealers to record vehicle sales through the Vehicle Electronic Reassignment and Integrated Facility Inventory (VERIFI) system. The Commissioner will select a vendor via the Request for Proposal/bidding process and such vendor will enter into agreements with dealers for the electronic transmission of information related to motor vehicle ownership and sales.

Under this regulation, NYS dealers, via the VERIFI system, will electronically record their vehicle inventory and transfer of ownership, eliminating the need for paper MV-50s. If an error is made while completing the electronic MV-50, the dealer will not have to void the entire document, but rather, will be able to make an immediate correction. Although the dealers will still have to pay five dollars for each electronic MV-50, their costs will decrease due to the reduction in voided documents. In addition, the DMV and other users of the MV-50s will be able to readily review the electronic MV-50s, and by running queries, more easily detect non-compliance and reduce fraudulent uses of these documents. Further, entities such as the New York State Tax & Finance Department will be able to use the electronic MV-50s to monitor compliance with sales tax collection laws. Currently, the Tax Department has to manually review hundreds of paper MV-50s to monitor sales tax compliance. With the use of electronic MV-50s, the Tax Department will be able to efficiently detect sales tax non-compliance through the use of system queries.

The Book of Registry, which records all vehicles in the dealer’s inventory, will be maintained electronically, as will the logbook of plates issued by dealers. It is anticipated that this will be a web based system that could be accessed by designated facility employees. Further, many dealerships manage their inventory and sales through a Dealership Management System (DMS). The vendor will be required to provide connections to DMS system vendors so that these systems may integrate with VERIFI thereby creating time savings by pre-populating fields with data that dealers are already collecting in the DMS’s.

Finally, the DMV recognizes that it may not be cost effective for dealers with small businesses (sell fewer than 10 vehicles annually) to participate in the electronic transaction and recordkeeping program. Therefore, section 78.9(c) carves out an exemption for such dealers.

4. Costs:

a. To regulated parties: The dealers will continue to pay the DMV five dollars for each MV-50, as required by VTL section 415(6). In addition, the dealers will pay the VERIFI vendor a fee for processing MV-50 transactions. Dealers will need a computer and a printer to process electronic transactions. The printer is needed to print a receipt for the customer. The regulation permits, but does not require, the dealer to pass along the cost to its customers.

b. Cost to the State, the agency and local governments: This proposed rule will have no fiscal impact on the DMV. DMV will contract with a vendor who will charge the dealers for processing electronic transactions. In addition, it will not impact local governments, since the regulation concerns electronic recordkeeping by dealers.

c. Source: The Department’s Office of Vehicle Safety provided this information.

5. Local government mandates: The proposed rule will not impact local governments, since it concerns electronic recordkeeping by dealers.

6. Paperwork: The proposed rule will require dealers to electronically process motor vehicle sales and to maintain electronic records of their inventory.

7. Duplication: This proposed regulation does not duplicate or conflict with any State or Federal rule.

8. Alternatives: The Department sought comments from the New York State Automobile Dealers Association, the Greater New York Automobile Dealers Association, the Eastern New York Coalition of Automotive Retailers, the Rochester Automobile Dealers Association, the Syracuse Automobile Dealers Association, and the Niagara Frontier Automobile Dealers Association, regarding the proposed regulation.

The New York State Automobile Dealers Association noted that the proposed regulation would require the dealers to pay the VERIFI vendor a fee for each transaction. They requested that they be given the authority to pass the cost along to the dealer’s customers. The proposed regulation does not prohibit a dealer from passing along the cost to its customers.

The Greater New York Automobile Dealers Association mistakenly assumed that the VERIFI system would generate a paper MV-50 for exempt dealers. This is not correct. The DMV will continue to issue paper MV-50s to exempt dealers and to non-exempt dealers; they will not be generated from the VERIFI system. Non-exempt dealers will use paper MV-50s because they will not participate in the VERIFI system. Non-exempt dealers will use paper MV-50s in connection with sales to out-of-state residents and in the event of an outage that renders the VERIFI system inoperable.

The Greater New York Automobile Dealers Association also noted that the proposed regulation could undermine their attempt to centralize recordkeeping processes. To the contrary, entry of MV-50 data into the VERIFI system could be done at a central location, as long as the entry is related to the specific facility that sold the vehicle.

9. Federal standards: The rule does not exceed any Federal standards.

10. Compliance schedule: The Department will work with the VERIFI vendor to create an implementation schedule, gradually absorbing dealers into this new program.

Regulatory Flexibility Analysis

1. Effect of rule: There are currently over 11,800 dealers in New York State, the majority of which are small businesses. This proposed regulation would have no impact on local governments.

2. Compliance requirements: These proposed amendments will require dealers to record vehicle sales through the Vehicle Electronic Reassignment and Integrated Facility Inventory (VERIFI) system. The Commissioner will select a vendor via the Request for Proposal/bidding process and such vendor will enter into agreements with dealers for the electronic transmission of information related to motor vehicle ownership and sales. NYS dealers, via the VERIFI system, will electronically record their vehicle inventory and transfer of ownership, largely eliminating the need for paper MV-50s.

3. Professional services: This regulation will require dealers to contract with the vendor who operates the VERIFI system.

4. Compliance costs: The dealers will continue to pay the DMV five dollars for each MV-50, as required by VTL section 415(6). In addition, the dealers will pay the VERIFI vendor a fee for processing MV-50 transactions. The regulation that would permit, but not require, dealers to pass along this cost to its customers. Dealers would need a computer and a printer to process electronic transactions. The printer is needed to print a receipt for the customer.

5. Economic and technological feasibility: The proposal is economically and technologically feasible for dealers to comply with because they will only need a computer and printer to connect to the VERIFI vendor. Most dealers already own such equipment.

6. Minimizing adverse impact: The Department sought comments from the New York State Automobile Dealers Association, the Greater New York Automobile Dealers Association, the Eastern New York Coalition of Automotive Retailers, the Rochester Automobile Dealers Association, the Syracuse Automobile Dealers Association, and the Niagara Frontier Automobile Dealers Association, regarding the proposed regulation.

The New York State Automobile Dealers Association noted that the proposed regulation would require the dealers to pay the VERIFI vendor a fee for each transaction. They requested that they be given the authority to pass the cost along to the dealer’s customers. The proposed regulation does not prohibit the dealer from passing along the cost to its customers.

The Greater New York Automobile Dealers Association mistakenly assumed that the VERIFI system would generate a paper MV-50 for exempt dealers. This is not correct. The DMV will continue to issue paper MV-50s to exempt dealers and to non-exempt dealers; they will not be generated from the VERIFI system. Non-exempt dealers will use paper MV-50s because they will not participate in the VERIFI system. Non-exempt dealers will use paper MV-50s in connection with sales to out-of-state residents and in the event of an outage that renders the VERIFI system inoperable.

The Greater New York Automobile Dealers Association also noted that the proposed regulation could undermine their attempt to centralize recordkeeping processes. To the contrary, entry of MV-50 data into the VERIFI system could be done at a central location, as long as the entry is related to the specific facility that sold the vehicle.

7. Small business and local government participation: See response to number 6 above.

Rural Area Flexibility Analysis and Job Impact Statement

A rural area flexibility analysis, and a job impact statement are not required for this rulemaking proposal because it will not adversely affect rural areas or job development.

This proposed rule requires dealers to join the electronic VERIFI system through which they will record vehicle ownership and transfers, replacing the current paper-based system. This will have no disproportionate or adverse impact on rural areas or on job development.