Bill of Sale Requirements for International Registration Plan transactions

 

Effective July 1, 2022, Iowa Motor Carrier Services will require a bill of sale or equivalent documentation for the following transactions:
  • Title transactions under Iowa Code 321.20A.
  • Transactions to add vehicles to the International Registration Plan fleet under Iowa Code chapter 326.11, Iowa Administrative Code 761-500.4(2) (adding vehicles at time of renewal), and Iowa Administrative Code 761-500.9 (adding vehicles after the commencement of the registration year).

EXPLANATION
On January 1, 2022, the Iowa Department of Revenue implemented a new administrative rule to require a bill of sale, or equivalent documentation, to establish purchase price during a vehicle title transaction. The Iowa county treasurers have already implemented this rule.

While evaluating the new rule, the Iowa DOT revisited its authority under Iowa Code 326 to request additional documentation during vehicle transactions. This authority extends to all transactions under the International Registration Plan. Because fraud concerns are arising due to transactions that require a date of purchase/transfer, as of July 1, 2022, Iowa DOT will request bill(s) of sale for (1) title transactions that require payment of a fee for new registration (2) title transactions that have an exemption from fee for new registration and (3) transactions that add a vehicle to a fleet or add vehicle with transfer to a fleet where a date of purchase/transfer is required.
 

QUESTIONS AND ANSWERS

WHY IS THIS CHANGE HAPPENING?
This change is being made for three reasons:
  1. To comply with an administrative rule change from the Iowa Department of Revenue to require a bill of sale, or equivalent documentation, to establish purchase price during a title transaction.
  2. For consistency with county treasurer title transactions who have already implemented this rule.
  3. To combat increased fraud from applications containing false purchase or transfer dates to avoid registration fees that include penalty.

WHAT INTERNATIONAL REGISTRATION PLAN TRANSACTIONS ARE AFFECTED BY THIS CHANGE?
Two transactions will newly require bill of sale: (1) title transactions and (2) add vehicle and add vehicle with transfer transactions.

HOW WILL INDIVIDUAL CUSTOMERS BE IMPACTED?
As of July 1, 2022, individual customers will be required to provide bill of sale or equivalent documentation to support the purchase/transfer date for title transactions and for add vehicle and add vehicle with transfer transactions.

HOW WILL COUNTIES BE IMPACTED?
Counties should not be impacted by this policy. For title transactions, counties are already requesting bill of sale or equivalent documentation and motor carrier services adopting this policy will create consistency for our customers on title transactions.

HOW WILL IOWA DOT BE IMPACTED?
As of July 1, 2022, Iowa DOT motor carrier services staff will require a bill of sale or equivalent documentation before processing a title transaction or add vehicle and add vehicle with transfer transaction.

WHICH ADD VEHICLE TRANSACTIONS WILL REQUIRE A BILL OF SALE OR EQUIVALENT DOCUMENTATION?
Add vehicle transactions and add vehicle with transfer transactions will require a bill of sale or equivalent documentation if the transaction happens within one year of the purchase or transfer date. The only exceptions are if the add vehicle or add vehicle with transfer transaction is more than a year after purchase or transfer or if the Iowa Department of Transportation processed the prorate title transaction for the vehicle on or after July 1, 2022. If the Iowa Department of Transportation processed the prorate title transaction on or after July 1, 2022, a bill of sale or equivalent documentation was already required and is not necessary to provide again.

WHY IS THE BILL OF SALE OR EQUIVALENT DOCUMENTATION REQUIRED DURING AN ADD VEHICLE TRANSACTION WHEN THE VEHICLE HAS A COUNTY TITLE?
The purpose of requiring this documentation is to confirm the purchase/transfer date on the vehicle and that correct registration fees were paid. A motor carrier who is exempt from the fee for new registration during the title transaction may not have been required to provide a bill of sale to the county treasurer to verify the purchase/transfer date. The Iowa DOT has independent authority under Iowa Code 326.25 to examine and determine the genuineness, regularity, and legality of every application, including to verify the purchase/transfer date provided on the title included with the application. The one-year limitation is a policy decision to balance the Iowa DOT’s responsibility to protect against fraud versus any additional challenges to our customers.

WHAT EQUIVALENT DOCUMENTATION MAY DOT STAFF ACCEPT IF THE CUSTOMER DOES NOT HAVE A BILL OF SALE?
We are aware that sometimes the seller and buyer have not signed a formal bill of sale, but there are other documents that may be acceptable under the circumstances, including a craigslist ad, text messages between the seller and buyer, or a photocopy of the check used for the sale that clearly indicates the sale date and price. If there are questions about whether particular documentation meets the bill of sale requirement, motor carrier staff should contact their supervisor.

WHAT IF A CUSTOMER DID NOT PURCHASE THE VEHICLE BUT INHERITED THE VEHICLE OR THE VEHICLE WAS TRANSFERRED IN SOME OTHER MANNER?
The purpose of the bill of sale requirement is to either verify purchase price or to verify the transfer date to confirm that a customer is abiding by Iowa’s continuous registration requirements and that all required fees are being paid. This purpose applies equally to situations where a customer inherited the vehicle, or the vehicle was transferred in some other manner. Staff will require documentation showing the date of transfer, which may include evidence of inheritance or an order in bankruptcy. If there are questions about if particular documentation meets this requirement, please contact your supervisor.

FOR AN ADD-VEHICLE SUPPLEMENT, WILL STAFF REQUIRE A BILL OF SALE OR EQUIVALENT DOCUMENTATION WHEN THE CUSTOMER HAS PROVIDED A TITLE APPLICATION BUT THE VEHICLE DOES NOT YET HAVE A TITLE?
Yes, staff will require a bill of sale or equivalent documentation when the customer has provided a title application to support the add-vehicle and add vehicle with transfer supplement. The purpose of reviewing the bill of sale or equivalent documentation is to confirm the correct purchase/transfer date is provided and that correct fees have been paid. This purpose is met at the beginning of the transaction, which may be at the time the customer provides the title application.

WHAT IF A CUSTOMER DOES NOT HAVE A BILL OF SALE OR EQUIVALENT DOCUMENTATION AND ITS WITHIN THE ONE YEAR LOOK-BACK PERIOD?
Staff should work with the customer to identify possible documentation that would show the purchase/transfer date. We recognize that customers may not have a formal bill of sale and encourage working creatively to identify documentation that may help establish a purchase/transfer date. If staff is unable to identify documentation that may meet this requirement, staff should contact their supervisor to discuss available options.

WHAT IS THE LEGAL AUTHORITY FOR REQUIRING BILL OF SALE IN THESE TRANSACTIONS?
There is different legal authority that supports requiring bill of sale for title transactions where the customer must pay a fee for new registration versus requiring bill of sale for title transactions without a fee for new registration and add vehicle and add vehicle with transfer transactions.

For title transactions where the customer must pay a fee for new registration, Iowa Administrative Code now requires a customer to provide a bill of sale of equivalent documentation to prove purchase price.

For title transactions without a fee for new registration and add vehicle and add vehicle with transfer transactions, Iowa Code 326.25 allows the Iowa DOT to require additional information to verify the genuineness, regularity, and legality of every application made under the International Registration Plan. The purchase/transfer date is required information on these transactions and the bill of sale or equivalent documentation will allow staff to verify the date.

WHO WILL BE THE BEST CONTACT PERSON REGARDING QUESTIONS?
omcs@iowadot.us / 515-237-3268