On January 17, 2002, the Texas Motor Vehicle Board passed a rule designed to give the MVD one more tool to attack curbstoning. The rule is known as the Foreign Dealer Rule and is directed at those foreign dealers who buy vehicles here in Texas on the pretext of exporting to Mexico and other countries, but instead illegally sell the vehicles on this side of the border in unfair competition with Texas dealers. Many of those Texas dealers, along with a group of Tax Assessor-Collectors along the border, proposed the proce?dure to the MVD staff that then wrote the rule and presented it to the Texas Motor Vehicle board. While the rule was aimed at the illegal Mexican dealer, the rule was worded to apply to sales to any person claiming to buy vehicles for exporting. This rule became effective March 7, 2002.

The rule requires auctions and dealers to do two things:

First, they should verify that the purchasing dealers name, license number, date of expiration, and physical location of licensee, name of person spoken to and date of the call. This note along with identification documents will satisfy the rules requirements. A list of those regional offices and their phone numbers can be obtained from the MVD.

"What is acceptable verification that the buyer is a legal dealer?"

The seller also needs to verify the identity of the person buying the vehicles. If the buyer claims to be the license holder, then he should be able to show identification confirming he is the same person named in the Mexican dealer's license. Acceptable identification documents would include, but are not limited to Mexican dealer's license, Mexican voter registration card, passport or other official identification cards, if the card contains a picture of the person and lists a physical address in the foreign home country.

"What is acceptable verification that the buyer is an agent of a legal dealer?"

An agent of a valid dealer should have a letter from the licensed dealer, introducing and verifying the person is his agent. Also, a copy of the license is still required. The buyer's agent should also be able to present the same personal identification. All verification documents for either the dealer of the dealer's agent should be copies and placed in the sales file.

"Do I get them to sign a Sales Tax Resale Certificate?"

No. The comptroller form entitled "Texas Motor Vehicle Sales Tax Resale Certificate" is used when a dealer wholesales to another Texas dealer.

There is another Comptroller form en?titled "Texas Motor Vehicle Sales Tax Exemption Certificate for Vehicles Taken Out of State" that is to be used anytime a vehicle is to be taken out of the state, whether sold wholesale or retail, or whether the vehicle is going out to another state or another country. This form is filled out, signed by the buyer and then kept in the selling dealer's sales file. A copy of this form is attached and may be photocopied for your use. We have not received word at this item if a blanket form is available for this form.

How do I stamp the title? Where do I stamp the title?

The title stamp is the most important aspect of this rule. Any auction or dealer who sells to foreign dealers should have a rubber stamp made, no less than 2 inches wide that contains the words "FOR EXPORT ONLY" and contains the selling dealer's or selling auto auction's General Distinguishing Number. A sample would look like this:

FOR EXPORT ONLY

P12345A

The title must be stamped in each and every blank reassignment on the back of the title and on the front of the title in a manner that does not block or obscure any of the writing on the front of the title.

"What is the purpose of the stamp?"

The purpose of the stamp is too able to identify and mark those vehicles that may no longer be sold legally in Texas. If the foreign dealer is legitimate, he will take the vehicles and the titles back to His home country and when the vehicles are sold there, they will be titled or registered in that country and the Texas title will not be seen again. However, if the vehicle is offered for sale on this side of the border, the stamp will alert the consumer as a possible problem with the deal. If the consumer still buys the vehicle and attempts to title the document, the stamp will alert the Tax Assessor-Collector that the vehicle was sold illegally here and will forward the title to this office. At that time MVD will contact the selling dealer to obtain the identity of the illegal buyer. This buyer's name will go into a database that will be shared with other dealers, auctions and other states so that buyer will find it very difficult to buy vehicles here again.

"What if I sell a single vehicle to a resident of a foreign country, not a dealer? Do I still stamp the title?"

Any time you sell vehicle retail, you know whether or not you are going to collect sales tax from that buyer. If the buyer tells you he doesn't pay sales tax because he is taking the vehicle out of the state or country, you will need to have the consumer fill out and sign the "Sales Tax Exemption for Motor Vehicles Taken Out of State." If they say they are taking the vehicle out of the country, then you should also stamp the title. Getting a good picture ID of the buyer will tell you what their residence address is. A copy of that ID and the front and back of the stamped title should go in your files. By stamping the titles, the dealer protects himself from potential fines for aiding and abetting unlicensed sales if that buyer sells the vehicles on this side of the border.

In fact, a valid licensed dealer in his home country. Second, they must Stamp the Title with the words "For Export Only" and the selling dealer or auto auction's General Distinguishing Number. A copy of the rule is attached at the end of this article.

"How do I verify that the buyer is a legal dealer?"

All dealers are presently required to verify that they are dealing with legitimate licensed dealers anytime they sell vehicles on a wholesale basis. If the buyer tells you he is a dealer in Mexico, the seller should ask to see his Mexican dealer license and make a copy of that license for his file.

"How do I know what the dealer license should look like?"

 Check with TX Dots MVD for a copy of the Mexican Dealer license.

What if they do not have a copy of their license with them? Can I still sell to them?

In the event a Mexican dealer does not have his license or a copy of his license, there is still a way to verify that they are, in fact, legal dealers. A call to the office of the Secretaria de Economia in Mexico may be made to verify that a license has been issued to a particular person. The call should be placed to the regional office who issued the license. The selling dealer should then make a note of the foreign dealer's home country and when the vehicles are sold there, they will be titled or registered in that country and the Texas title will not be seen again. However, if the vehicle is offered for sale on this side of the border, the stamp will alert the consumer as a possible problem with the deal. If the consumer still buys the vehicle and attempts to title the document, the stamp will alert the Tax Assessor-Collector that the vehicle was sold illegally here and will forward the title to this office. At that time MVD will contact the selling dealer to obtain the identity of the illegal buyer. This buyer's name will go into a database that will be shared with other dealers, auctions and other states so that buyer will find it very difficult to buy vehicles here again.

"What if I sell a single vehicle to a resident of a foreign country, not a dealer? Do I still stamp the title?"

Any time you sell vehicle retail, you should know whether or not you are going to collect sales tax from that buyer. If the buyer tells you he doesn't pay sales tax because he is taking the vehicle out of the state or country, you will need to have the consumer fill out and sign the Sales Tax Exemption for Motor Vehicles Taken Out of State. If they say they are taking the vehicle out of the country, then you should also stamp the title. Getting a good picture ID of the buyer will tell you what their residence address is. A copy of that ID and the front and back of the stamped title should go in your files. By stamping the titles, the dealer protects himself from potential fines for aiding and abetting unlicensed sales if that buyer sells the vehicles on this side of the border. The stamp does not affect the legitimate retail buyer who will title and register their vehicle in their home country. This is the only way we can make a serious dent in curbstoning.

"Will I be fined if I forget to stamp the title or verify a dealer?"

The purpose of the rule is to help eliminate curbstoners, not collect penalties on dealers who are unaware. The first time we catch a dealer not obtaining proper verification or not stamping a title he knows is going out of the country; he will receive a warning letter. However, the second time the dealer is caught; the dealer will be liable for a fine for aiding and abetting unlicensed sales. Dealers are liable for this penalty right now without this rule. If the same people come in every week or every other week to buy vehicles for cash, then they are obviously suspect as dealers.

"Does this rule apply to salvage vehicles?"

If the vehicle is old on a blue title, it needs to be stamped. A motor vehicle dealer should not be selling salvage unless they have a salvage license. Auctions and dealers who sell salvage to parties going out of the country may, but are not required, to stamp the salvage titles and salvage certificates at this time.

"What if I stamp the title by mistake? What do I do with the title then?"

First of all, you should ask for the identification of the buyer and make sure the buyer has assured you they are taking the vehicles out of the state before you do any stamping. If you should stamp a title by mistake, then you must obtain a title in your name for resale purposes. The title transaction must include a Statement of Facts advising that the surrendered title was stamped in error.