Chapter Trans 140

Trans 140.27   Late claims.

Trans 140.28   Alternative procedure for determination of claims.

subch. I of ch. Trans 140 Subchapter I — Dealer Security and Financial Eligibility Requirements

Trans 140.01 Trans 140.01 Purpose and scope.

Trans 140.01(1) (1) Statutory authority. As authorized by ss. 218.0152, 218.25, and 227.11, Stats., the purpose of this chapter is to establish the department’s administrative interpretation of ss. 218.0114 (4), (5), (20), (22), 218.0116 (1) (a) and (d), Stats., relating to the security requirements and financial qualifications of motor vehicle wholesaler, dealer, and salesperson license applicants, s. 218.11 (3) and (6) (a) and (g), Stats., relating to the financial qualifications of mobile home dealer license applicants to engage in the sale of recreational vehicles, and ss. 218.21 (1), (1m), (4) and (6), and 218.22 (1) and (3) (a) and (g), Stats., relating to the financial qualifications of motor vehicle salvage dealer license applicants, and s. 218.41 (2) (c) and (3) (a), Stats., relating to the financial qualifications of moped dealer license applicants.

Trans 140.01(2) (2) Applicability.

Trans 140.01(2)(a) (a) This chapter applies to any sole proprietorship, partnership or corporate entity applying for or holding a Wisconsin dealer’s license under any of the statute sections cited in sub. (1).

Trans 140.01(2)(b) (b) The provisions of subch. II apply to all applicants for a license issued by the department under ch. 218, Stats., and to all such licensees, who furnish a bond or letter of credit pursuant to s. 218.0114 (5) or (20), 218.11 (3) or (6) (g), 218.21 (4) or (6), or 218.33 (1), Stats. The provisions of subch. II also apply to all sureties and financial institutions that issue such bonds or letters of credit, and to all claimants against such bonds or letters of credit.

Trans 140.01 Note Note: Forms used in this chapter are: MVD-2195 Financial Statement, MVD-2077 Motor Vehicle Dealer, Mobile Home Dealer or Salesperson Bond, MVD-2077A Moped Dealer Bond, MVD 2511 Motor Vehicle Dealer Bond and MVD 2497 Motor Vehicle Salvage Dealer Bond.

Trans 140.01 History History: Cr. Register, March, 1985, No. 351, eff. 4-1-85; cr. (2) (am) and am. (2) (b), Register, July, 1986, No. 367, eff. 8-1-86; correction in (1) made under s. 13.93 (2m) (b) 7., Stats., Register, December, 1987, No. 384; am. (1), renum. (2) (am) to be (2) (b) and am., r. (2) (b), Register, February, 1996, No. 482, eff. 3-1-96; corrections in (1), (2) (b) made under s. 13.92 (4) (b) 7., Stats., Register March 2012 No. 675.

Trans 140.02 Trans 140.02 Definitions. In this chapter:

Trans 140.02(1) (1) “Asset” means anything of value owned by the corporation, limited liability company, partner or sole proprietor.

Trans 140.02(2) (2) “Current assets” means cash and assets, including trade or investment items, which may be readily converted into cash in the ordinary course of business within one year from the date of the balance sheet and include, but are not limited to, cash and equivalent, customer and factory receivables, inventories, last in first out reserves and marketable securities.

Trans 140.02(3) (3) “Current liabilities” means liabilities which are due and payable within one year from the date of the balance sheet.

Trans 140.02(4) (4) “Discounted” means an asset which is not considered at full value when determining the financial statement net worth.

Trans 140.02(5) (5) “Financial institution” has the same meaning as found in s. 705.01 (3), Stats.

Trans 140.02(6) (6) “Financial statement” means a balance sheet showing assets, liabilities, and net worth on a fixed date.

Trans 140.02(7) (7) “Intangible asset” means an asset which does not have a readily determined value, such as goodwill, and is not generally offered for sale.

Trans 140.02(8) (8) “Letter of credit” means an irrevocable instrument issued by a financial institution guaranteeing payment on behalf of its customer to a beneficiary for a stated period of time and when certain conditions are met.

Trans 140.02(9) (9) “Liability” means an obligation to pay money or other assets or to render a service to another person.

Trans 140.02(10) (10) “Major liability” means a liability equal to or greater than 10% of the total liabilities listed on the financial statement.

Trans 140.02(11) (11) “Net worth” means the difference between the asset and liability values on a balance sheet. Negative net worth is the excess of liabilities over assets.

Trans 140.02(12) (12) “Pro-forma statement” means a financial statement that presents information that anticipates some event or events which will occur in the future.

Trans 140.02(13) (13) “Recreational vehicle dealer” has the same meaning as found in s. Trans 142.02 (7).

Trans 140.02(14) (14) “Substantial portion of the assets” means a value greater than 30% of all assets.

Trans 140.02 History History: Cr. Register, March, 1985, No. 351, eff. 4-1-85; renum. (1) to (7) to be (4), (6), (7), (10), (11), (12) and (14) and am. (6) and (12), cr. (1) to (3), (5), (8), (9) and (13), Register, February, 1996, No. 482, eff. 3-1-96.

Trans 140.022 Trans 140.022 Security; forms and types.

Trans 140.022(1) (1) Forms of security. The only acceptable forms of security to fulfill the security requirements of ss. 218.0101 to 218.0163, Stats., are as follows:

Trans 140.022(1)(a) (a) Surety bonds. The bond shall be filed on a form prescribed by the department and issued by a bonding company licensed by this state and acceptable to the department. The bond shall be payable in the name of the department for the benefit of any person who sustains a loss because of an act of the licensee constituting grounds for the suspension or revocation of a license under ss. 218.0101 to 218.0163, Stats.

Trans 140.022 Note Note: Under ss. 632.14 to 632.18, Stats., surety insurance is regulated by the Commissioner of Insurance.

Trans 140.022(1)(b) (b) Letters of credit. The letter of credit shall be filed on a form prescribed by the department and issued by a financial institution acceptable to the department. The issuer shall waive the right to revoke the credit before its expiration date, which shall be no earlier than 3 years after the last day of the period covered by the letter. The letter of credit shall be payable in the name of the department and upon a written statement by the department that one or more persons have sustained a loss because of acts by the licensee constituting grounds for the suspension or revocation of a license under s. 218.0116, Stats.

Trans 140.022 Note Note: These forms may be obtained by contacting the Dealer Section’s Business Licensing Unit at [phone].

Trans 140.022(2) (2) Minimum security. A motor vehicle dealer or applicant for a motor vehicle dealer license shall provide and maintain in force a bond or letter of credit of not less than $50,000, or if the dealer or applicant sells or proposes to sell motorcycles and not other types of motor vehicles, a bond or irrevocable letter of credit of not less than $5,000.

Trans 140.022(3) (3) Supplemental security. In addition to the security required under sub. (2), the department may require a motor vehicle dealer, or applicant for a motor vehicle dealer license, to provide and maintain in force a supplemental bond in an amount not less than $5,000 nor more than $100,000. The department may also require such securities of wholesalers and motor vehicle salespersons and applicants for such licenses. The department shall require such bonds according to the criteria described in s. Trans 140.027.

Trans 140.022 History History: Cr. Register, February, 1996, No. 482, eff. 3-1-96; corrections in (1) (intro.) made under s. 13.92 (4) (b) 7., Stats., Register March 2012 No. 675; 2013 Wis. Act 363: am. (2) Register May 2014 No. 701, eff. 6-1-14.

Trans 140.027 Trans 140.027 Criteria for supplemental security.

Trans 140.027(1) (1) Amount. The department may require supplemental bonds of motor vehicle dealers or wholesalers according to their annual vehicle sales and their total points in the current licensing period. The department shall provide a licensee or applicant written notice of the requirement for supplemental security. The department may require supplemental securities of applicants for such licenses according to the department’s estimates of their annual retail vehicle sales and their total points for the licensing period for which the application is made. The department may determine or estimate points and annual vehicle sales according to subs. (2) and (3). Bonds shall be in the amounts described in the following table:

Trans 140.027(2) (2) Determining points.

Trans 140.027(2)(a) (a) General. The department may assess points against a licensed dealer or wholesaler, or an applicant for a license, who has violated any provisions in ss. 218.0101 to 218.0163, Stats., or rules interpreting ss. 218.0101 to 218.0163, Stats., that constitute grounds for the suspension or revocation of their license. The department may also assess points against a licensed dealer, wholesaler, or an applicant for a license when the department has reasonable cause to doubt the licensee or applicant’s financial responsibility or solvency. The department shall provide a licensee or applicant written notice of a point assessment. Written notice of a point assessment shall specify the reasons for the point assessment, including the issuance of a complaint to revoke or suspend a license, a written stipulation to a conditional license, a civil forfeiture complaint or citation, notice of denial of a license, and a special order issued by the division of hearings and appeals. All points assessed by the department shall remain in effect for the duration of the current licensing period, and any new point assessments shall be added to the existing point total for that licensee throughout the current licensing period. 

Trans 140.027(2)(b) (b) Effect of point assessments from previous licensing period. The department may assess additional points or carry over points to a new licensing period under the following conditions:

Trans 140.027(2)(b)1. 1. The department may assess additional points for current violations when point assessments in previous licensing periods demonstrate a pattern of violations or repeat offenses.

Trans 140.027(2)(b)2. 2. The department may carry over point assessments from one licensing period to the next period for which a dealer or wholesaler makes application if a significant share of the licensee’s or applicant’s ownership or employees includes persons who were assessed points, or who were directly involved in violations causing points to be assessed, when they were last licensed by the department.

Trans 140.027(2)(c) (c) Appeals to eliminate point accumulations. A licensee may, after 12 months of posting additional security, submit to the department evidence of eliminating the compliance or financial problems cited by the department when it assessed points, and ask that the department reduce or eliminate the licensee’s current points. The licensee may submit only one request regarding the same point assessments during the licensing period.

- See PDF for table

Trans 140.027(2)(d) (d) Point assessments. The department may assess points according to the following table:

- See PDF for table

Trans 140.027(3) (3) Determining annual vehicle sales. For the purpose of using the table in sub. (1), the number of vehicles sold per year may be defined as any of the following:

Trans 140.027(3)(a) (a) Total number of motor vehicles sold at retail during the previous 12 months from the date requested by the department, the most recent calendar year, the most recent fiscal year when the dealer had been licensed, or the most recent year represented on the licensee’s application, at the discretion of the department.

Trans 140.027(3)(b) (b) Projected number of motor vehicles to be sold at retail during the next 12 months, based on the business’ most recent quarterly sales.

Trans 140.027(3)(c) (c) Projected number of motor vehicles to be sold at retail during the next 12 months, based on the best information available to the department.

Trans 140.027(4) (4) Appeals.

Trans 140.027(4)(a) (a) A person adversely affected by any of the following actions may request an informal hearing from the department before the action becomes effective:

Trans 140.027(4)(a)1. 1. The issuance of written notice assessing points under this section.

Trans 140.027(4)(a)2. 2. The issuance of written notice requiring supplemental security under this section.

Trans 140.027(4)(b) (b) A request for informal hearing on an action under par. (a) shall be made in writing and shall be filed with the department within 10 days after the licensee or applicant receives notice of the department’s action.

Trans 140.027(4)(c) (c) If the department receives a written request for an informal hearing, the department shall conduct a prompt informal hearing before a department employee or official who was not personally involved in the investigation or decision to take the action, and who has the authority to withdraw, modify or correct the action as necessary. The informal hearing shall be conducted within 10 business days after a request for informal hearing is received by the department, unless the person requesting the informal hearing agrees to a later date. An informal hearing may be conducted by telephone or at the department’s offices.

Trans 140.027(4)(d) (d) Within 5 business days after the conclusion of an informal hearing, the department shall issue a brief written memorandum which summarizes the informal hearing, and any decision or action resulting from the informal hearing. A copy of this memorandum shall be provided to the person requesting the informal hearing.

Trans 140.027(4)(e) (e) The department’s decision is final, and no further appeals may be submitted or considered.

Trans 140.027 Note Note: If the department initiates an action to deny, suspend, or revoke a license because of failure to obtain supplemental security, the affected licensee or applicant is entitled to a full evidentiary hearing before the division of hearings and appeals, pursuant to subch. I of ch. 227, Stats.

Trans 140.027 History History: Cr. Register, February, 1996, No. 482, eff. 3-1-96; corrections in (2) (a), (d) made under s. 13.92 (4) (b) 7., Stats., Register March 2012 No. 675.

Trans 140.028 Trans 140.028 When financial information is required.

Trans 140.028(1) (1) The department may require a motor vehicle dealer or any other business licensed under ch. 218, Stats., or any applicant for such licenses, to submit information relating to its financial standing, solvency, or responsibility under any one of the following circumstances:

Trans 140.028(1)(a) (a) The department has reasonable cause to doubt the financial responsibility of the applicant or licensee.

Trans 140.028(1)(b) (b) The department has reasonable cause to doubt the applicant or licensee’s compliance with ch. 218, Stats., or its related rules, where the violation constitutes grounds for suspension or revocation of a license. “Reasonable cause” includes a situation in which the licensee, applicant or employees of the licensee or applicant have been found by the department to have violated ch. 218, Stats., or rules interpreting ch. 218, Stats., anytime during the current or the immediately previous licensing period.

Trans 140.028(1)(c) (c) The applicant or licensee is a motor vehicle salvage dealer that has not supplied a bond per s. 218.21 (4) (a), Stats., under the conditions specified in s. 218.0114 (20) (b), Stats.

Trans 140.028(1)(d) (d) The applicant or licensee is a recreational vehicle dealer.

Trans 140.028(1)(e) (e) The applicant or licensee is a wholesaler.

Trans 140.028(1)(f) (f) The applicant or licensee is a moped dealer.

Trans 140.028(2) (2) Failure to provide the financial information required under sub. (1) shall be grounds for denial or revocation of the license.

Trans 140.028 Note Note: Provisions for protection of trade secrets are found in ss. 19.36 (5), 134.90 (1) (c) and 218.0114 (20) (c), Stats.

Trans 140.028 History History: Cr. Register, February, 1996, No. 482, eff. 3-1-96; correction in (1) (c) made under s. 13.92 (4) (b) 7., Stats., Register March 2012 No. 675.

Trans 140.03 Trans 140.03 Balance sheet information.

Trans 140.03(1) (1) If required by the department, licensees or applicants shall submit a balance sheet dated not more than 90 days prior to the date of submission, that is prepared in accordance with generally accepted accounting principles. A small business as defined in s. 227.114, Stats., which does no interim financial reporting may submit a balance sheet from the close of the business’ most recent fiscal year. The balance sheet shall contain the following:

Trans 140.03(1)(a) (a) Assets.

Trans 140.03(1)(b) (b) Liabilities.

Trans 140.03(1)(c) (c) Net worth.

Trans 140.03(1)(d) (d) The signature of one of the corporate officers, partners, or owners.

Trans 140.03(1)(e) (e) The name of any financial institution used by the applicant.

Trans 140.03(1)(f) (f) A schedule of securities owned, if any.

Trans 140.03(1)(g) (g) A schedule of real property held, its fair market value, book value and the amount and terms of any indebtedness.

Trans 140.03(2) (2) Pro-forma statements shall not be accepted.

Trans 140.03(3) (3) If the department determines that there has been a misstatement on a financial statement, the misstatement shall be grounds for denial or revocation of the license.

Trans 140.03 Note Note: Form MVD-2195 Financial Statement.

Trans 140.03 History History: Cr. Register, March, 1985, No. 351, eff. 4-1-85; am. (1) (intro.), (e) and (g), Register, February, 1996, No. 482, eff. 3-1-96.

Trans 140.04 Trans 140.04 Asset reporting.

Trans 140.04(1) (1) Valuation. The financial statement shall present assets in terms of historical cost or book value of assets. In lieu of a statement presented with historical cost of fixed assets or book value of assets, the department shall consider a statement presenting fair market value information of fixed assets if clearly labeled and accompanied by an appraisal report of a certified appraiser or tax appraisal.

Trans 140.04(2) (2) Cash. Whenever a substantial portion of the assets of an entity is in the form of cash, confirmation of the amount is required from the financial institution holding the cash.

Trans 140.04(3) (3) Receivables. When a substantial portion of the assets of an entity are in the form of receivables from another individual, partnership or corporation, all or part of the receivables shall be discounted in considering the net worth of the applicant. In order to evaluate the quality of a receivable, a financial statement from the individual, partnership or corporation may be required. In no case will the department discount factory receivables.