Wisconsin Legislature: Trans 140.04(5)(c)

(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.

(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.

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

(e) The applicant or licensee is a wholesaler.

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

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

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

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 Balance sheet information.

(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:

(a) Assets.

(b) Liabilities.

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

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

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

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

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

(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.

Note: Form MVD-2195 Financial Statement.

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 Asset reporting.

(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.

(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.

(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.

(4) Inventory. The financial statement shall include the number of units in inventory and the number of units floor planned or used for loan collateral. A GAAP presentation of inventory values would not allow for the use of a reserve account for balance sheet information compiled for external purposes. As an exception to a GAAP presentation, the department will allow the use of a reserve account to accurately assess the value of inventory.

(5) Certain assets not to be considered. The department shall not consider the following assets in evaluating the financial statement of an applicant:

(a) As specified in s. 815.20, Stats., equity in homestead property up to $25,000;

(b) As specified in s. 815.18, Stats., items of personal property which are exempt from execution;

(d) Leasehold improvements; and

(e) All other assets subject to prior liens, security agreements, or other pledges.

History: Cr. Register, March, 1985, No. 351, eff. 4-1-85.

Trans 140.05 Liability reporting.

(1) Reporting. All liabilities and contingent liabilities shall be reported. The terms, amount and conditions of any major liabilities shall be separately scheduled. This schedule should show the names of individuals or institutions who hold the debt, the amount of debt, and the terms of repayment. A list of customers and the amounts on deposit with the dealer should be attached to the financial statement.

(2) Ratio analysis. A ratio analysis comparing current liabilities with current assets shall be used to evaluate a dealer’s financial potential. Current liabilities which exceed current assets may be grounds for the denial, suspension or revocation of a dealer’s license.

History: Cr. Register, March, 1985, No. 351, eff. 4-1-85; am. (2), Register, February, 1996, No. 482, eff. 3-1-96.

Trans 140.06 Net worth reporting.

(1) Treasury stock. Treasury stock held by a corporation shall be reported separately on the balance sheet and clearly labeled as treasury stock.

(2) Previous profit. Profit from the previous period of operations shall be reported separately in the net worth section of the balance sheet.

(3) Negative net worth. A financial statement with a negative net worth is evidence of lack of financial ability to conduct business and the license shall be denied or revoked.

History: Cr. Register, March, 1985, No. 351, eff. 4-1-85.

Trans 140.07 Types of entities.

(1) Sole proprietorships. A sole proprietorship may report the entire value of assets jointly owned by the sole proprietor and by one or more persons on its financial statement. The financial statement shall be signed by the sole proprietor.

Note: An example of a joint asset would be a home owned by the sole proprietor and the sole proprietor’s spouse.

(2) Partnerships. Partnerships shall submit a statement for the partnership as a whole and individual statements for each of the general partners. If the partnership agreement provides for anything other than an equal sharing by the partners, it shall be prominently noted on the statements. The provisions of sub. (1) relating to the listing of jointly owned assets also apply to this subsection.

(3) Corporations. A financial statement is required for the corporation which will hold the license. A financial statement of a controlling corporation, parent corporation or an interlocking corporation may be submitted, but shall not be substituted for the financial statement of the applicant.

History: Cr. Register, March, 1985, No. 351, eff. 4-1-85; 2013 Wis. Act 363: renum. (3) (a) to (3), r. (3) (b) Register May 2014 No. 701, eff. 6-1-14.

Trans 140.08 Copies required. Salvage dealers, motor vehicle wholesalers, and moped dealers shall file one copy of their financial statement with the department. All other dealers shall file their financial statements in duplicate. The department shall forward the duplicate copy to the co-licensor, the office of the commissioner of banking.

History: Cr. Register, March, 1985, No. 351, eff. 4-1-85.

Trans 140.09 General requirements.

(1) Operating statement. If required by the department, the applicant shall submit an income statement or other financial statement. The department may require a dealer to submit updated financial information during the license year if questions arise regarding the dealer’s financial condition.

(2) Acceptable net worth.

(a) The following guidelines are used in determining the acceptable level of net worth of an applicant:

(b) The department may deny the license of an applicant who fails to meet the net worth criteria set out in par. (a).

History: Cr. Register, March, 1985, No. 351, eff. 4-1-85; r. and recr. (2) (a), Register, February, 1996, No. 482, eff. 3-1-96; 2013 Wis. Act 363: am. (2) (a) Register May 2014 No. 701, eff. 6-1-14.

Subchapter II — Claims Against Bonds of Department Licensees

Trans 140.20 Definitions. The terms used in this subchapter shall have the same meanings as in ch. 218, Stats., except as specifically provided below:

(1) “Claim arose against the bond or letter of credit of a licensee” means a situation in which a cause of action has accrued against the licensee. Unless otherwise provided by statute, a cause of action accrues where there exists a claim capable of present enforcement, a suable party against whom it may be enforced, and a party who has a present right to enforce it. A tort claim accrues when the injury is discovered or reasonably should have been discovered.

Note: See ch. 893, Stats., and cases thereunder, governing the applicable statutes of limitation, and determination of the date when a cause of action accrues.

(2) “Commercial customer” means a private person who buys or agrees to buy one or more motor vehicles from the licensee for the person’s business or commercial use. A private person who sells, trades, or consigns to the licensee a motor vehicle used by the person primarily for business or commercial purposes is also a commercial customer.

(3) “Financial institution” means any person or organization authorized to do business under any state or federal law relating to financial institutions, including, without limitation, banks and trust companies, savings banks, building and loan associations, savings and loan associations, credit unions and sales finance companies. A credit corporation or similar financing organization of a motor vehicle manufacturer, factory branch, distributor or dealer is a financial institution. Any person who floor plans motor vehicles is a financial institution.

(4) “Floor plan” means to make a financing arrangement for the lending of money to a motor vehicle dealer so that he or she may purchase a motor vehicle to include in his or her inventory; the loan being secured by the motor vehicle while in the dealer’s possession and to be repaid when the motor vehicle is sold.

(5) “Motor vehicle” shall have the same meaning as s. 218.0101 (22), Stats., and includes mobile homes as defined by s. 218.0114, Stats. For the purposes of this subchapter, a moped as defined by s. 218.40 (2), Stats., is also a motor vehicle.

(6) “New motor vehicle” shall have the same meaning as s. Trans 137.03 (7).

(7) “Private person” means a person not licensed under ch. 218, Stats., and not required to be so licensed, for the purpose of the transaction from which the person’s claim arises. A financial institution, or a motor vehicle manufacturer, factory branch, factory representative, distributor, distributor representative, or a motor vehicle, mobile home, moped, salvage, trailer or auction dealer or a salesperson employed by such dealer is not a private person.

(7m) The “period covered by the security” is co-extensive with the biennial license, issued under ch. 218, Stats., which is conditioned on providing the security in question. If the biennial license is extended by operation of s. 227.51 (2), Stats., the period covered by the security also is extended and remains co-extensive unless sooner cancelled by the surety.

Note: Forms for bonds and letters of credit are available from the Dealer Section, Department of Transportation, P.O. Box 7909, Madison, Wisconsin 53707.

(8) “Retail customer” means a private person buying or agreeing to buy one or more motor vehicles from the bonded licensee for the private person’s personal, family or household use. A person buying or agreeing to buy a motor vehicle or mobile home to be used primarily for business or commercial purposes is not a retail customer. A private person who sells, trades, or consigns to the bonded licensee a motor vehicle used personally or by the person’s family or household, and not used primarily for business or commercial purposes, is a retail customer.

(9) “Secured party” means a lender, seller or other person, whose claim is based on a transaction in which there is, or was, a security agreement creating a security interest in the lender’s, seller’s or person’s favor, even if that interest is not sufficient to satisfy the claim. A person able to claim a lien under ss. 779.41, 779.415, or 779.43 (3), Stats., is a secured party.

History: Emerg. cr. eff. 10-16-85; cr. Register, July, 1986, No. 367, eff. 8-1-86; r. (1), renum. (1m) to be (1) and am., am. (2) and (7m), Register, February, 1996, No. 482, eff. 3-1-96; corrections in (5) made under s. 13.92 (4) (b) 7., Stats., Register March 2012 No. 675; CR 22-048: am. (7) Register July 2023 No. 811, eff. 8-1-23.

Trans 140.21 Allowed claims.

(1) A claim is an allowable claim if it satisfies each of the following requirements and is not excluded by sub. (2) or (3):

(a) The claim shall be for monetary damages in the amount of an actual loss suffered by the claimant.

(b) The claim arose during the period covered by the security.

(c) The claimant’s loss shall be caused by an act of the licensee, or the claimant’s agents or employees, which is grounds for suspension or revocation of any of the following:

1. A salesperson license or a motor vehicle dealer license, in the case of a secured salesperson or motor vehicle dealer, pursuant to s. 218.0116 (1) (a) to (gm), (im) 2., (j), (jm), (k), (m) or (n) to (p), Stats.

2. A recreational vehicle dealer license, in the case of a bonded recreational vehicle dealer, pursuant to s. 218.11 (6), Stats.

3. A salvage dealer license, in the case of a bonded salvage dealer, pursuant to s. 218.22 (3), Stats.

4. An auction dealer license, in the case of a bonded auction dealer, pursuant to s. 218.32 (3), Stats.

5. Any other license issued by the department under ch. 218, Stats., in any other case, including that of a bonded manufacturer, distributor, distributor-wholesaler, or trailer dealer, pursuant to s. 218.0116 (1), Stats.

(d) The claim must be made within 3 years of the last day of the period covered by the security. The department shall not approve or accept any surety bond or letter of credit which provides for a lesser period of protection.

Note: This paragraph does not supersede any applicable provision of ch. 893, Stats., and does not limit the liability of the licensee in any way.

(2) The following claims shall be disallowed:

(a) Any claim by a claimant licensed under ch. 218, Stats., or required to be so licensed.

(b) Any claim by the licensee, the licensee’s employing dealer, if any, or the licensee’s agents, partners, stockholders or employes.

(c) Any claim arising from activities of the licensee which are not regulated by the department under ch. 218, Stats., specifically including, without limitation, claims for rent, mortgage payments, wages, commissions, personal services rendered and commercial transactions not directly related to the sale or purchase of a motor vehicle.

(d) Any claim by a manufacturer, factory branch, factory representative, distributor or distributor representative involving the sale or delivery of a new motor vehicle to the licensee.

(e) Any claim for interest or penalties, legal costs, attorney fees, or punitive damages except as otherwise expressly provided in sub. (5).