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TxDMV Fines Dealer $200,000 and Revokes Their License

The TxDMV Board sent a clear message to dealers at the last board meeting by fining a dealer $200,000 and revoking their license despite an Administrative Law Judge (ALJ) asking for a fine of $35,200. That message was that the Board will not tolerate dealers misusing the temporary tag system. Here is some background information on the contested case that the TxDMV Board heard and its decision. 

On August 12, 2022, TxDMV staff issued a Notice of Department Decision to a dealer and denied the dealer access to the temporary tag system. Specifically, TxDMV staff alleged that the dealer had violated TxDMV statutes and rules by failing to make records available for inspection by a TXDMV representative during normal business hours on August 8, 2022, and by improperly issuing 347 temporary tags without corresponding vehicle sales during January 1 – June 30, 2022. The dealer requested a hearing, and on September 28, 2022, the case was referred to the State Office of Administrative Hearings, and TxDMV staff issued a Notice of Hearing to the dealer.

On February 23, 2023, an ALJ conducted the hearing on the merits. The ALJ closed the record on March 2, 2023, and issued the findings on April 26, 2023. The ALJ judge found that the dealer had failed to make records available for inspection by a TxDMV representative during normal business hours and that the dealer had misused the buyer's temporary tags or failed to comply with the requirements for issuance or recordkeeping of the buyer's temporary tags. The ALJ recommended that the board revoke the dealer's GDN license and assess a penalty of $35,200 against the dealer—$500 for the records violation and $34,700 for issuing 347 buyer's temporary tags without corresponding vehicle sales.

On May 10, 2023, TXDMV staff filed exceptions to the proposal for decision (PFD), arguing that a $200,000 penalty was more appropriate to address the improper issuance of 347 buyer's tags. TxDMV staff pointed to the two prior agreed orders, from 2017 and 2020, that the dealer had entered with TxDMV to settle previous allegations that it had misused temporary tags and argued that this showed a pattern of repeated temporary tag misuse over many years and despite multiple warnings. The ALJ considered the Exceptions and the Reply and issued an Exceptions Letter on May 26, 2023. The ALJ's Exceptions Letter did not recommend any changes to the Findings of Fact, Conclusions of Law, or the sanction recommendation in the PFD and stated that the PFD was ready for consideration by the TxDMV board.

On October 12, 2023, the TxDMV Board listened to the arguments of TxDMV staff and discussed prior enforcement actions related to temporary tags. The TxDMV Board agreed with TxDMV staff that $1,000 per violation was more appropriate with a cap of $200,000 and that the ALJ was incorrect in assessing only a $100 violation per tag. Since this ruling, TxDMV Enforcement has already pointed to this decision by the board during settlement negotiations, and dealers should be prepared to face stiffer penalties if they violate the terms of issuing temporary tags. TxDMV has provided a chart that you can see here, showing the appropriate usage for various tags and the requirements for using each tag. Finally, if you run into a situation where a temporary tag is expired, you should obtain a 30-day permit and not issue a second temporary tag.

TIADA has begun its tour around the state, bringing together members of the Texas Legislature, TxDMV, and other stakeholders to help dealers navigate the transition to the new temporary tag system. Please be on the lookout for announcements from TIADA inviting you to future events in your area.

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