Senate Bill S4069

                                BILL NUMBER:S4069          REVISED 06/03/11

TITLE OF BILL:
An act
to amend the vehicle and traffic law, in relation to allowing
the commissioner to require an electronic transfer of
vehicles and to establish separate fees for paper and
electronic transfers

This bill would allow the Commissioner of Motor Vehicles to promulgate
regulations to modernize dealer vehicle transfers of MV-50 forms by
requiring MV-50 forms to be electronic when appropriate, and to
streamline the reporting of information related to junk and salvage
vehicles. This hill is not intended to change the current process of
vehicle transactions other than the transfer of MV-50 forms.

SUMMARY OF PROVISIONS:
Section 1 would amend Vehicle and Traffic Law §415(6) to allow the
Commissioner of Motor Vehicles to promulgate regulations requiring
that transfer of the MV-50 form which is used by motor vehicle
dealers, and is known as the Retail Certificate of Sale and the
Wholesale Certificate of Sale, be in an electronic format.

Section 3 would amend Vehicle and Traffic Law §429(b)(1) to permit
the Commissioner of Vehicles to waive, by regulation, the delivery
of documents related to junk and salvage vehicles or, in the
              

alternative, to allow such requirements to be satisfied by filing
of the necessary information by or on behalf of the person to whom
such requirements apply.

The bill would take effect immediately upon receiving
Executive approval.

EXISTING LAW:
Currently, the Vehicle and Traffic Law does not provide for the
electronic filing of information contained on motor vehicle transfer
document known as the MV-50.  In addition, currently there is no
waiver for the use of documents or the electronic filing of such
documents related to junk and salvage vehicles.

LEGISLATIVE HISTORY:
This is a new bill.

STATEMENT IN SUPPORT:
As part of the Department of Motor Vehicle's efforts to remain a
nationwide leader in efficiency and quality of service, the
Department seeks the ability to create an electronic infrastructure
for transferring MV-50 forms otherwise known as the Retail
Certificate of Sale and the Wholesale Certificate of Sale.

Because the reverse side of the New York State Certificate of Title
has space for only one sales transfer, New York dealerships are
required by 15 NYCRR §78.10 to utilize an MV-50 (Retail Certificate
of Sale) or an MV-50W (Wholesale Certificate of Sale) document for
dealer sales.
When a dealer makes a retail sale of a vehicle, the MV-50 must


accompany the title, whereupon the purchaser (or dealer on his/her
behalf) applies for a new title. The MV-50 is also used to transfer
motor vehicles from one dealer to another. Pursuant to federal
odometer disclosure requirements, the MV-50 also records the
vehicle's odometer reading, as attested to by the dealer and purchaser.

MV-50's are secure multi-copy documents. Each MV-50 has a unique
serial number and is purchased by dealers, for five dollars, from the
Department in books of 50. Approximately 60,000 such books are
printed and distributed annually. Used books must be returned to DMV
and are warehoused for five years. After five years, they must be
destroyed using a secure process. By requiring an electronic MV-50,
the Department will streamline its processes and advance an important
greening initiative.

DMV receives requests from Tax and Finance, for tax audit purposes,
for over 2000 books annually, which must be physically shipped and
returned. DMV staff audits dealers' use and maintenance of MV-50s.
This is a labor-intensive, expensive process that requires visiting
the dealer's facility. An electronic filing system would make this
process more secure and efficient, because DMV's investigators would
be able to conduct audits from a remote location.

When a dealer makes an error on an MV-50 or, for other reasons, the
MV-50 cannot be used, it must be voided. Some dealers estimate
voiding as many as 10% of their MV-50s, which is a costly and
unnecessary expense. There is also no way to link blank individual
MV-50s to specific vehicles after the documents are issued, leading to
misuse of paper MV-50s, odometer fraud, and tax fraud. Since MV-50s
are ownership documents, they have significant "street value" on the
"black market", e.g., between $300 to $500 in New York City.

The electronic transfer of MV-50s, known as the Retail Certificate
of Sale and the Wholesale Certificate of Sale would avoid or
ameliorate many of these problems, while providing DMV with
comprehensive information on vehicle transfers in New York in real-
time.

In 1992, Congress enacted The Anti-Car Theft Act as a means of
preventing automobile theft and the registration of stolen vehicles.
The U.S. Department of Transportation was directed to establish a
national information system that would enable states to verify a
vehicle's information prior to the issuance of a title in their
state. The information system created is referred to as the National
Motor Vehicle Title Information System (NMVTIS). The final rule
governing NMVTIS (28 CFR Part 25) was issued in January of 2009.
According to the Rule, the "purpose of NMVTIS is to assist in efforts
to prevent the introduction or reintroduction of stolen motor
vehicles into interstate commerce, protect states and individual and
commercial consumers from fraud, reduce
the use of stolen vehicles for illicit purposes including fundraising
for criminal enterprises, and provide consumer protection from unsafe
vehicles".

According to Vehicle and Traffic Law and DMV Commissioner's
regulations, junk and salvage yards operating in New York State must
submit a statement to the Commissioner regarding the acquisition of a


vehicle which has been disposed of as junk or for salvage. The yards
are also required to submit the certificate of title or any other
ownership documentation related to those motor vehicles. According to
federal regulation, the yards are required to report vehicle
acquisition data to NMVTIS which is almost identical to the data the
yards also report to DMV.

In an effort to streamline reporting and encourage yard reporting to
NMVTIS, DMV proposes eliminating the junk and salvage vehicle
acquisition reporting requirements in the Vehicle and Traffic Law as
stated above. DMV will be seeking to acquire information
electronically from other sources including AAMVA, the NMVTIS
administrator. The information will be available to DMV in a more
timely manner since there are limited resources available to process
the paper currently received from the yards. In addition, the
proposed change will eliminate a duplicative junk and salvage yard
reporting requirement while still ensuring information about junk and
salvage vehicles is available to DMV and NMVTIS.

BUDGET IMPLICATIONS:
This act should significantly reduce state expenditure in overseeing
vehicle transfers. The cost of printing MV-50s is approximately
$220,000 per year. The Tax Department also estimates that the
electronic MV-50 system would enable them to recover an additional
$10,000,000 annually in sales tax. The Tax Department currently sends
auditors into the field to conduct audits. With the electronic
transmission of the MV-50, the tax auditors can conduct remote
audits, which consume much less time. Consequently, more auditors
would be available to conduct more audits on all annual basis. The
staff costs to create the system would be approximately $500,000
spread out over the entire implementation (2 to 3 years).