RV Dealer Accused of Selling Address
Sales tax: California couple says the
Oregon dealer participated in a tax-evasion scheme.
By Drew DeSilver
Reprinted by permission
from The Register-Guard, Eugene, Oregon, August 12,
1997.
A Southern California couple has accused Lane
County's largest recreational vehicle dealership of
selling them an Oregon address so they could register
their newly purchased RV in Oregon and avoid paying
California taxes.
In a lawsuit filed Aug. 4 in Lane County Circuit
Court, Garland and Carol Riendeau say they paid a
salesmen at Guaranty RV Center in Junction City
(Oregon) $400 for the address, but ended up with a
$25, 450 California tax bill anyway.
An official at Guaranty had no comment on the
lawsuit. The dealer's attorney, Pat Horton, did not
return a reporter's phone call seeking comment.
Guaranty has 30 days to formally respond to the
complaint.
Richard Frederick's, the Riendeau's attorney,
declined to discuss the case, saying the complaint
spoke for itself.
Oregon, with no sales tax, long has been a magnet
for people in neighboring states who want to buy cars
and other big-ticket items tax-free.
"Tax evasion schemes by out-of-staters are
commonplace," said Jan Margosian, consumer
information coordinator at the Oregon attorney
general's office. "Someone comes down from
Washington and opens a post office box so they can
register their vehicle here. But I have never heard
of a dealer organizing something like that," she
said.
According to the Riendeaus' suit, in August 1996
they bought a new Country Coach Affinity motor home
from Guaranty for $275,000. The couple claims that a
Guaranty salesman, Jan Odland, told them Guaranty had
a "service - that would allow plaintiffs to
register the RV at an Oregon address so (they) would
not have to pay California license fees, sales taxes
and other charges associated with purchasing an
RV."
After the couple paid Odland $400 in cash, the
complaint states, he supplied them with an Oregon
address, which they used to complete the sales
paperwork and register the RV with the Oregon
Department of Transportation.
They now claim that Guaranty and Odland made
"false and misleading statements" about the
registration requirements, constituting a violation
of Oregon's unfair trade practices law. The couple is
asking the court to cancel their purchase agreement
and order Guaranty to pay their tax bill, along with
any interest and penalties,
California has a statewide sales tax of 7.25
percent, said Jim Kuhl, a senior tax auditor at the
state Board of Equalization in Sacramento, hence, the
tax on a $275,000 RV would be at least $19,937.50.
Many California counties have local taxes that add up
to 1.25 percent more. Fredericks said he did not know
in what county the Riendeaus live.
The prospect of saving hundreds or thousands of
dollars in sales taxes has long tempted resident of
neighboring states to register their cars in Oregon,
even though Oregon law expressly forbids it.
"A lot of our neighboring states are on the
lookout for Oregon license plates that are around for
a long time, for that very reason," said Jim
Brown, deputy directory of the Oregon Department of
Revenue. "If it's true that a dealership was
offering some kind of service, that's pretty
incredible and rather dangerous."
A California resident who knowingly registers a
vehicle outside the state for the purpose of evading
taxes faces a 50 percent penalty, plus interest, said
the California tax agency's Kuhl.
However, Kuhl said, there are legal ways for
California residents to avoid paying the state's
sales tax. Under that state's law, if a vehicle or
other item is used within California for a majority
of the first six months someone owns it, it is
taxable. That means, he said, that someone could buy
an RV in Oregon, drive it outside California for 90
days, then bring it into the state; even if the
vehicle never left California again, it would not be
hit with the sales tax.
In the San Diego area, Kuhl added, there are
organized "three-mile clubs" through which
people buy yachts in Mexico. The buyer takes
possession of the yacht in international waters,
outside the three-mile limit, then sails it for three
months; when he returns to California, no tax is due.
Guaranty Spokesman Calls Allegation
"Ridiculous"
RV News attempted to contact Guaranty's president,
Herb Nil, for comment but was referred to Bill
DeGroot, president of Guaranty's advertising agency.
DeGroot told RV News the allegation is ridiculous.
He said, "There is absolutely no truth to the
allegation. We have never sold or supplied addresses
to out-of-state customers. It's incredible to suggest
that Guaranty would participate in an illegal policy
when it is so easy for a California resident to avoid
the California sales tax by simply keeping the
motorhome out of the state for the first 90
days."
When asked whether or not salesman Jan Odland was
still on the Guaranty sales staff, DeGroot said that
there is an internal investigation underway and if it
is determined that a salesman supplied or sold an
address on his own, the salesman would no longer be
employed by Guaranty.
DeGroot further explained, "If buyers supply
the proper credentials at the closing, it is not a
dealer's responsibility to evaluate whether or not
customers are telling the truth about their legal
residence."
Allison Transmission Shortage Stalls
Production of Highline RV Chassis
Highline motorhome manufacturers who build their
own chassis are feeling the effects of Allison's
decision to curtail shipments of the MD3060 series
transmissions by 25 percent.
SMC Corporation is one of the manufacturers
effected. Martin Perlot, marketing director for SMC
told RV News that the shortage has resulted in having
to lay off 150 employees. Perlot said, "Allison
told us the reason for the cutback was that their
projections for the transmission had been
underestimated."
SMC's Magnum Manufacturing supplies the majority
of chassis used by SMC to produce Safari and Beaver
motorhomes.
Perlot said the shortage was being felt across the
industry and is also effecting Monaco's Roadmaster
chassis and Freightliner. He said that Freightliner
has an advantage because they can divert
transmissions from their truck operations to RV
chassis.
"It has caused us to shut down what is equal
to one entire production line," Perlot noted.
Perlot said Allison expects the shortage to
continue until March 1998.
Fire at Monaco Manufacturing Facility
Monaco Coach Corporation suffered a fire in August
in one of the buildings at its manufacturing
facilities in Coburg, OR. Two assembly line workers
were injured in the accident. Although the plant
itself was not significantly damaged, three motor
coaches in the "final finish'' production area
were lost and some others experienced smoke damage.
A preliminary estimate places damages at between
$1 and $2 million. The company believes it has
adequate insurance coverage for the loss.
Chuck Yeager Picks Up New Georgie Boy
Motorhome at Factory
General Chuck Yeager (center) accepts the keys to
his new Georgie Boy motorhome from Keith Corson (l),
president and chief operating officer for Coachmen
Industries, parent company of Georgie Boy. Tim
DeMartini from DeMartini RV Sales in Grass Valley,
CA, where General Yeager bought the motorhome, looks
on. General Yeager, who in 1947 became the first man
to fly faster than the speed of sound, picked up his
new Cruise Master motorhome at the Georgie Boy
manufacturing plant in Edwardsburg, MI, recently.
Fleetwood RV Revenues Down 2% in First
Quarter
Fleetwood Enterprises, Inc., has announced
preliminary sales for the first quarter which ended
July 27, 1997. Sales for the thirteen-week period
were approximately $729 million, off about 3% from
last year's first quarter sales of $751.2 million.
The company attributed a significant part of the
revenue decline to slower manufactured housing sales
which were off 3% to about $367 million, down from
the record sales of $377.1 million achieved in last
year's first quarter.
RV revenues were down about 2% in the first
quarter as fairly robust sales of towable products
were more than offset by slower motorhome sales. RV
group revenues totaled approximately $351 million for
the quarter compared to $357.9 million a year ago. In
the towable category, travel trailers sales of $119
million were 2% ahead, while folding trailer sales
jumped 40% to a first quarter record of nearly $24
million. Motor home sales were approximately $208
million in the first quarter, off about 7% from the
record volume achieved in last year's similar period.
Fleetwood president Kummer said, "RV sales
were somewhat sluggish early in the quarter, but
gained some momentum as the period progressed. We
feel very good about our 1998 models, some of which
we began shipping late in the first quarter, and are
encouraged by recent market share gains in motor
homes and folding trailers.''
Viking Presents 'Supplier of the Year' award
Viking
RV Co. recently presented its first-ever 'Supplier of
the Year' award. Co-recipients of the award were
Gentek Building Products, Inc., Elkhart, IN, and
Vytec, Inc., Granger, IN. (L to R) Dennis Sill
(Vytec), Robert Lavanture (Vytec), Gar Warlick,
operations manager for Viking RV Company, Russ
Oldfather (Gentek) and Gene Zakarias (Gentek).
National RV Holdings Breaks Record for
Second Quarter Sales and Earnings
National RV Holdings, Inc., reported its results
of operations for the second quarter ended June 30,
1997. Net sales for the second quarter of 1997
increased 111.7% to $69.2 million from $32.7 million
for the second quarter of 1996. Net income for the
second quarter of 1997 increased 79.6% to $3.1
million from $1.7 million for the second quarter of
1996. Fully diluted earnings per share were $0.46
compared to $0.34 in the second quarter of 1996. The
number of shares outstanding increased 32.9% over
last year.
Net sales for the six months ended June 30, 1997
increased 88.4% to $127.8 million from $67.8 million
in the first six months of 1996. Net income for the
six months ended June 30, 1997 increased 52.0% to
$5.5 million from $3.6 million in the first six
months of 1996.
Northwest Trailer Parts Completes
Acquisition of MHS Supply
Northwest Trailer Parts has
completed its purchase of MHS. Darryl Searer,
president of MHS, and Robert Morter, president,
Northwest Trailer Parts, signed the final documents
on August 4 in Elkhart, IN,
Morter said, "The two companies will spend
the next several months merging their operational
activities into a more uniform system designed to
increase customer service.
Rexhall's Numbers Down in Second-Quarter
Rexhall Industries Inc., reported second-quarter
results ending June 30, 1997. Revenues for the
quarter decreased to $16,215,000, a decrease of 15.8%
from the same quarter last year. Net income for the
second quarter of 1997 was $683,000, compared with
$828,000 for the same quarter in 1996. Earnings per
share were 24 cents in the second quarter of 1997 vs.
29 cents for the comparable period of 1996.
Bill Rex, president and chief executive officer,
said, "Revenues were down due to declined sales
in the East that were attributed to the restructuring
of the Indiana plant and the elimination of the
long-term interest reimbursement program once offered
to the dealers. Management believes all the
restructuring strategies will allow the Indiana plant
to be profitable.''
Researcher Predicts 82 million PCs Will be
Connected to Internet by the End of 1997
Driven by demand by businesses to stay in touch
with their customers, the number of personal
computers connected to the Internet will rise 71
percent this year to 82 million, according to a
report released recently by Dataquest, a market
research firm.
Until now, according to Dataquest, most of the
Internet's growth has come from consumers plugging in
through online services. Now, companies are tweaking
their internal corporate computer networks so that
they can communicate through the Internet with the
networks of their customers.
With these so-called extranets, companies can take
orders for products from customers, order raw
materials from suppliers, send billing invoices and
manage logistics.
By 2001, 268 million computers will be connected
to the Internet, Dataquest said.
RVing Made Easy Available From Valterra
Valterra Products, Inc., is marketing a booklet
that RV dealers can sell or give away to consumers to
help make RV ownership more enjoyable. According to
George Grengs, president, one of the great challenges
facing dealers today is how to "educate"
customers about the RV they just bought.
He said, "Most good dealers spend a minimum
of 1 1/2-hours 'checking out' the new owner. That's
enough to get them off the lot! Since there is so
much information coming in a quick burst, experience
shows that 90% of it is forgotten or misunderstood
before the customer gets his new pride and joy home.
Then he/she is back, involving the service department
with imagined malfunctions, or complaining about a
feature that doesn't work, but was really only ruined
because there was lack of knowledge."
Valterra has addressed these problems with a new
low cost booklet, RVing Made Easy, which is
inexpensive enough to be given to every new RV owner.
RVing Made Easy is authored by an RVer with more than
40 years of experience and is written in a clear,
concise style. Dealers have reported a significantly
favorable response from new owners who have read
RVing Made Easy and a dramatic drop in unfounded
complaints about new rigs from consumers. The
elimination of even one unnecessary "come
back" easily pays for the low cost of the
booklet.
For more information contact: Valterra Products,
Inc. 720 Jessie St. San Fernando, CA 91340 (818)
898-1671
New Campground Industry Magazine
The premiere issue of Outdoor Hospitality, a new
magazine focusing on the RV park and campground
industry, debuted in August. Sponsored by the
National Foundation for RVing & Camping and the
National Association for RV Parks & Campgrounds
(ARVC), this new quarterly magazine will be
distributed free of charge to owners, operators and
managers of RV parks and campgrounds throughout the
U.S. and supports ARVC's mission of "Outdoor
Hospitality Excell-ence Through Industry Unity".
Outdoor Hospitality is being published by
Imagination Publishing of Chicago, IL, a full-service
contract publishing house.
SMC Corp. Reports Second Quarter Results
SMC Corporation reported its results for the
second quarter of 1997. For the quarter ended June
30, 1997, net sales were relatively unchanged at
$49.0 million, compared to $48.7 million in 1996.
Second quarter unit sales decreased 2% to 444 units
from 455 units in the prior year. Net income
decreased to $164,000 from $1.6 million reported a
year earlier. 1997 second quarter earnings per share
were $.02 on 6.6 million shares outstanding, compared
to 1996's $.24 per share, on 6.7 million shares
outstanding. The decline in earnings resulted from
increased competition in the high line RV market and
from the company's investment in start-up operations
in Eastern Oregon.
For the six months ended June 30, 1997, revenues
were $99.1 million, up 8% from 1996 revenues of $91.8
million for the same period. 1997 year-to-date income
was $1.4 million, down 53% from 1996's earnings of
$2.9 million. Year- to-date earnings per share were
$.21 per share in 1997, down from $.44 per share in
1996.
Jay L. Howard, president of SMC Corporation, said,
"This quarter has been a difficult one for our
portion of the RV market. Retail unit sales in the
motorized Class A market are down over 12% over the
past three months, compared to last year. In spite of
that market decline, SMC was able to maintain its
sales momentum, reporting revenues at slightly above
last year. This difficult market, coupled with high
dealer inventories resulted in significant
discounting to dealers during the quarter to sell out
model year end products. However, we are encouraged
by a very successful FMCA show in early July, which
resulted in record sales for the company. We are
hopeful that the RV market is rebounding,"
FRVTA Adds Five More Students to Arthur
Yellen Scholarship Program
The Florida RV Trade Association (FRVTA) recently
added five additional students to the Arthur Yellen
Scholarship. This brings the total number of students
on the scholarship program to sixteen.
The scholarship began in the fall of 1990 and
since that time over 24 students have received an
undergraduate degree with the aid of the scholarship.
The scholarship pays students $500.00 per semester or
up to $1,000.00 per year. Students must attend a
Florida college full-time and must maintain a 3.0
grade point average.
Foremost Posts Record in Second Quarter
Foremost Corporation of America achieved record
operating income in the second quarter of 1997. The
figure was part of a solid performance that helped
mark the end of the first half of the year.
Net income from continuing operations for the
second quarter was $1.46 per share, including $.38
per share in realized gains. That compares with $.99
per share from continuing operations in the second
quarter of 1996, including $.09 per share in realized
gains. Net income from continuing operations for the
first six months of 1997 was $1.95 per share, with
realized gains of $.48 per share. That compares with
$.88 per share for the same period last year,
including realized gains of $.14 per share.
For the second quarter, Foremost's combined loss
and expense ratio was 91.3%, compared with 92.8% for
the second quarter of 1996. The six-month combined
ratio for 1997 was 96% and 100.7% for the same period
in 1996.
Monaco Coach Reports Record Second Quarter
Earnings
Monaco Coach Corporation released second quarter
earnings, reporting operating income up 34.8% as
compared to pro forma results for the same period of
1996.
Chairman and CEO, Kay L. Toolson, said, "The
second quarter was a very exciting period for our
company. We completed a successful secondary offering
of shares and began moving Indiana based motorhome
production into our new, 530,000-square foot facility
in Wakarusa, IN."
For the three months ended June 28, 1997, net
sales for Monaco Coach totaled $106.0 million. Gross
profit and operating income were $14.3 million and
$5.4 million, respectively. Net income and earnings
per share were $2.8 million and 58 cents per share,
respectively. Consolidated gross margin for the
quarter was 13.5%. For the six months ended June 28,
1997, net sales for Monaco Coach totaled $215.0
million. Gross profit and operating income for this
period were $29.4 million and $10.7 million. Net
income and earnings per share were $5.5 million and
$1.14.
Coachmen Industries Announces All-Time
Record Sales For Second Quarter
Coachmen Industries, Inc., posted all-time record
sales for the quarter ending June 30, 1997. Sales
totaled $169,368,233, an increase of 1.6% over 1996
second quarter sales of $166,715,051. Sales for the
six-month period ending June 30, 1997 were also an
all-time record. Sales for the period totaled
$327,474,044 compared with $315,355,074 for the same
period in 1996. This was a 3.8% increase over last
year.
Net income for the second quarter was $6,429,629.
The company now has achieved twenty-two consecutive
profitable quarters. The previous all-time record for
consecutive profitable quarters was seventeen. That
streak ended in 1978. Net income for the most recent
six-month period ending June 30, 1997 was
$10,948,663.
Eighty-four percent of sales were from RV-related
divisions while the remaining 16% from sales of
modular homes.
Park Trailer Manufacturers Upset By New
Texas Franchise & Lemon Laws
Recreation Park Trailer Industry Association
members attending a recent board meeting were briefed
on the impact of the recently passed laws in Texas
affecting Franchise and Lemon Laws.
As expected, a number of them stated that they
would be looking at their Texas business with a
critical eye to determine if changes would be
necessary prior to the September 1, 1997 effective
date.
Copies of the full law and the current rules are
available by calling the Texas Motor Vehicle Board at
512-505-5102 and requesting a complimentary copy of
the board's rules for manufacturers and dealers.
IRS Wins Fight Covering Taxability of
Extended Service Contracts
The U.S. Federal Tax Court recently handed down a
decision (Johnson, 108 TC # 22) which declares that
any funds placed in escrow by a dealer or their
warranty service company to cover future repairs from
an extended warranty service contract are immediately
to be considered as income for the dealership. Also,
any interest that the fund creates shall be recorded
as income on the day it is earned. The dealership in
this case was operating under the assumption that any
funds held in the escrow account or the interest they
would earn were not considered as income to the
dealership until the actual repairs were made to the
vehicle. The dealer also contended that only after
the contract's term was fulfilled, could any residual
funds left in the account be considered income.
- RVIA Releases 17th
Annual Survey of Lenders' Experiences
- RVIA has just released its 17th
Annual Survey of Lenders' Experiences.
The survey, which documents the scope of RV
lending activity at banks, finance companies, savings
and loans and credit unions during 1996, received
responses from 301 financial institutions
representing 11,452 financial locations.
In addition to the detailed analysis of lenders'
experiences with three types of RV loans -- direct,
indirect and wholesale -- the survey also provides a
demographic overview of RV buyers and borrowers.
James W. Pope, chairman, RVIA's Finance Committee
and vice president, Gree Tree Financial Services
Corp., said, "I am confident industry members
will find the survey results very promising, as the
total value of RV loans topped $11.8 billion
outstanding last year and 95% of lenders said they
would continue to provide RV financing in 1997.
"With the debut of Go RVing, the RV
industry's first national advertising and promotional
campaign, there is a heightened awareness among
consumers about the advantages of RVing which should
translate into increased dealer traffic. One question
weighing on prospective customer minds is, "how
will I afford what I like?" Availability of
affordable financing options can often make or break
a deal. Armed with this survey and your local lending
contacts, you can help turn prospects into bona fide
RV owners."
For information on obtaining the survey for
yourself or to provide to local lenders, contact RVIA
at 800-336-0154, ext. 311.
Transamerica Offers Asset-based Lending
Program to Manufacturers and Distributors
Transamerica Distribution Finance Corporation
(TDF) is introducing an asset-based lending (ABL)
program to complement its existing inventory finance
products. ABL allows manufacturers and distributors
to leverage existing assets, such as accounts
receivables, to supplement cash flow cycles.
Tom Corrigan, vice president for TDF's new ABL
unit, said, "It's common for manufacturers and
distributors who sell on open account to use outside
capital for short-term cash flow needs, especially
when offering extended terms to their customers. Our
ABL program will allow customers to maximize their
existing assets by using them to support revolving
lines of credit for a wide variety of purposes
including growth financing, recapitalization,
acquisitions, financing unusually large orders or
meeting seasonal liquidity needs."
To participate in the program, qualified
manufacturers and distributors simply provide TDF
with documentation of their assets on a pre-arranged
basis. TDF agrees to lend on a percentage of these
assets.
For more information on its asset-based lending
program call 1-800-292-2872.
Consumer Campground Satisfaction Results
Preliminary results of a 1997 survey of RV
consumers has been released by the University of
Michigan Survey of Consumers. The report measures
consumer satisfaction in the manufacturer, dealer and
campground segments. The consumer's satisfaction with
campgrounds and RV parks is measured as a comparison
to consumer satisfaction with hotels and motels.
Key survey findings related to campgrounds and RV
parks include:
- Among all consumers surveyed, 87% feel that
they are more or as satisfied with the value
received for the dollar at campgrounds than
at hotels.
- Among the RV consumers, between ages 18 and
34, satisfaction with the value received was
reported by 92% of the consumers. The lowest
value satisfaction level was 82% for those
between the ages of 35 and 54.
- 72% of the youngest age group were satisfied
with the level of amenities in a campground
as compared to those found in a hotel or
motel. The oldest age group, 55+, were most
satisfied with the amenities as compared to a
hotel or motel.
- Surprisingly, 70% of the 18-34 year-olds were
satisfied with the level of personal safety
at a campground as compared to safety at a
hotel or motel. 88% of the 55+ group were
satisfied with the level of personal safety
at the campground as compared to a hotel or
motel.
