General dealer questions & forms
Please see the following for answers to some of the more common questions we hear from dealers. If you have a question that is not answered here, or if you would like more information about any topic, please call our office at (800) 292-1923.
Safety issues and recalls
Dealers are reminded that the National Highway Traffic Safety Administration (NHTSA) offers a search tool to determine if a vehicle has an open recall. This resource is available online at www.nhtsa.gov/recalls.
This is an excellent tool dealers should use on the day of sale for any used vehicle. The report will either show no open recalls, or it will display a list of any outstanding recalls. Dealers may want to print a copy for the customer and the dealer’s deal jacket.
Any transaction involving $10,000 or more in cash must be reported to the Internal Revenue Service (IRS) by completing FinCen Form 8300. This is revised version of the Cash Reporting Form due to the passage of the USA Patriot Act of 2001. You may obtain a copy of the form by clicking on www.irs.gov/pub/irs-pdf/f8300.pdf.
Contract Cancellation Information
This alert from the Michigan Attorney General provides a short summary of Michigan laws regarding the rights of a consumer, related to certain contracts. Many people incorrectly assume they have a right to cancel any contract. They may also think they can return an item, no questions asked, for their money back. General Principle: in most instances an individual does not have a right to cancel a contract.
Dealers are, however, reminded about vehicle sales to minors. In most instances, a vehicle contract with an individual under the age of 18 can be rendered null and void, as it is not enforceable. Dealers are advised to require a responsible adult to become the purchaser or co-purchaser of a vehicle.
Dealers must disclose damage to the consumer if the amount exceeds 5 percent of the Manufacturer’s Suggested Retail Price (MSRP) or $750 for surface coating repairs, corrosion restoration or a combination of the two. The disclosure must be made before the consumer signs the RD-108.
Demo Affidavit form (Form 137)
MADA offers our members this demo affidavit for calendar year 2023 The form is set up so you can fill it out online then print. Please note that there are two pages and it is designed to be printed as a two-sided document.
Legislation regulating Michigan dealerships
- Regulation of Motor Vehicle Manufacturers, Distributors, Wholesalers, And Dealers (Act 118 of 1981)
- Motor Vehicle Service and Repair Act (Act 300 of 1974)
- Michigan Vehicle Code (Act 300 of 1949)
Michigan Lemon Law & Warranty Reimbursement
The Lemon Law applies to passenger vehicles, sport utility vehicles, pickup trucks, and vans purchased or leased in Michigan. If the vehicle wasn’t purchased or leased in Michigan, it must have been purchased or leased by a Michigan resident. At the time of purchase or lease, it must have had a manufacturer’s express warranty. Generally, the Lemon Law does not apply to used vehicles. But the Lemon Law does apply to vehicles still “covered by a manufacturer’s express warranty at the time of purchase or lease.” The problem must be reported to the manufacturer or its authorized dealer within one year from the date it was delivered to the original buyer. If those criteria are met, the Lemon Law may apply to a “used” vehicle. Read more on this topic from the Michigan Attorney General’s office – Lemon Law Q&A. Also see:
Michigan Legislation – New Vehicle Warranties Act 87 of 1986 (“lemon law”)
AN ACT regarding warranties on new motor vehicles; to require certain repairs to new motor vehicles; to provide remedies for the failure to repair such vehicles; and to prescribe duties for certain state agencies.
Michigan Legislation – Motor Vehicle Franchise Act Act 118 of 1981 (excerpts pertaining to warranty reimbursement)
- 445.1577, Section 17 Dealer’s obligations for preparation, delivery, and warranty service; written specifications; compensating dealer for required warranty service; schedule of compensation; prohibited conduct; claims for labor and parts; payment; approval or disapproval; charge back for false or fraudulent claims; records of warranty repairs; compensation and claims for promotion events, programs, or activities; approval or disapproval of claims; meeting; disclosure of proprietary or confidential information; audit.
- 445.1577a, Section 17a Reasonable compensation for parts reimbursement and labor rates; factors.
Passenger van: restrictions on the sale/lease of an 11 – 15 passenger van
Dealerships are prohibited from selling or leasing these vehicles to public, parochial or private schools if children are to be transported to and from school or school related activities. This rule applies to the “renting” of these vans.
- NHTSA School Bus Regulations, including FAQ: How do NHTSA’s school bus regulations apply to vehicle dealers?
- Letter to Michigan Department of State Police answering questions about how federal law regulates the sale and lease of new vehicles with different seating capacities and configurations.
Sunday sales are prohibited in some counties. Michigan Public Act 66 of 1953 prohibits dealerships located in counties with a population of more than 130,000 from doing business on Sunday. The act prohibits the opening of any retail or wholesale new and used vehicle business from engaging in business (i.e. buy, sell, exchange, trade or participate in negotiation) on Sunday. It also applies to vehicle leasing. The following counties are currently PROHIBITED from doing business on Sunday: Berrien, Calhoun, Genesee, Ingham, Jackson, Kalamazoo, Kent, Livingston, Macomb, Monroe, Muskegon, Oakland, Ottawa, Saginaw, Saint Clair, Washtenaw and Wayne.
Tax: buyers who will register the vehicle in another state
Sales tax must be collected on vehicles bought and delivered in Michigan for titling and registration in another state. Please click here for a summary from the Michigan Department of Treasury.
Tax: Native American sales
The Michigan Department of Treasury revised its policy in 2003. Under the new rules, tribal government entities and individual Native Americans whose communities have “Tribal Agreements” with the Department of Treasury may make tax-exempt purchases of vehicles if they provide a Tribal Exemption Certificate (Form 3996) and a letter of authorization from the State of Michigan. More information here.
Vehicle Dealer Supplemental Form
The Michigan Vehicle Dealer Supplemental Report Form 92 provides dealers with a sales tax credit. It should be filed with the Department of Treasury in conjunction with your Combined Return for Michigan Taxes Form 160. Go to www.michigan.gov/documents/92f_4862_7.pdf to download this form and its instructions.