Pub 10 2020 Issue 3

16 AUTOMOBILE DEALER NEWS ILLINOIS www.illinoisdealers.com T he COVID-19 Stay at Home Executive Order, especially the early stages when customers needed appointments to enter dealership showrooms, prompted many dealers to try to accommodate their customers by pivoting to a remote sales process where possible. Although remote sales are a good way to practice social distancing while selling vehicles, remote sales involve some important differences from typical in-showroom sales to keep in mind. If you sell a vehicle on-line and deliver it to the customer, it is vital to make it clear that your dealership is the point of sale, not the customer’s driveway, so that you don’t inadvertently change the applicable sales tax jurisdiction and also so you avoid ac- cidentally triggering 3-day cooling off rights for the customer. If the customer lives in another sales tax jurisdiction, even one with the same tax rate as your dealership, changing the taxable point of sale means that the local portion of the sales tax will get allocated to the wrong taxing body. If the customer lives in a jurisdiction with a higher sales tax rate, under-collection of sales tax will compound the problem. (By the way, similar consider- ation of sales tax jurisdiction should be applied to off-site “tent sales”). The Federal Trade Commission’s (FTC) 3-day cooling off period to return merchandise applies to sales made at a per- son’s residence, such as door-to-door sales. Three-day cooling off rights do not arise when customers come into your dealership to purchase vehicles. However, if significant selling activity moves from the dealership to a customer’s residence during the course of an online sale, the 3-day cooling off rule could come into play, potentially creating a right for the customer to cancel the sale. There are several steps that you can take to show that an on- line sale with delivery to the customer’s residence was conducted at your dealership. • Agree to all terms of the sale prior to delivery. If you nego- tiate the transaction online, but then the delivery person sells an extended warranty in the customer’s driveway, you have changed the material terms of the sale, which pushes you toward the danger zone. In fact, it is a good practice to have somebody other than your sales staff de- liver vehicles that are sold online or over the telephone to make a clean break between sales and delivery activities. • If the transaction involves a trade-in appraisal, try to Remote Sales: Best Practices