US auto dealers seeking LIFO tax relief get more support with Senate bill
Brown’s action comes after U.S. Rep. Dan Kildee, D-Mich., introduced similar legislation in the House earlier this month.
Kildee’s bill would allow dealers to wait until 2025 for their inventory to be replaced to determine income attributable to the sale of inventory in 2020 or 2021, giving dealers time to restock as the chip shortages ease and auto production returns to pre-pandemic levels.
His bill would allow those dealers to file amended tax returns or offset tax owing on future returns to claim relief, according to an analysis by NADA. He would also ask the Treasury Department to issue regulatory guidelines to allow dealers to calculate LIFO during the extended replacement period.
Kildee’s bill is supported by at least nine House Republicans and 10 Democrats, as well as NADA, the American International Automobile Dealers Association, the National Association of Minority Automobile Dealers, the Michigan Automobile Dealers Association and the American Institute of Certified Public Accountants.
NADA and the Automotive Innovation Alliance — along with some Senate Democrats led by Brown and a bipartisan group of U.S. Representatives led by Kildee — have previously urged the Treasury Department to provide temporary LIFO relief under the 473.
“Treasury has indicated that it does not want to do this, and so Congress is moving forward, showing leadership to provide the meaningful relief needed to respond to the global supply chain crisis and all the aftermath. issues it has created,” Paul Metrey, NADA’s senior vice president of regulatory affairs, said Automotive News this month.
For some dealerships, the LIFO clawback resulted in additional tax payments of $100,000 to $2 million or more, and those bills were due last week for dealerships structured as flow-through entities or C corporations.
Zach Doran, president of the Ohio Automobile Dealers Association, applauded Brown’s efforts to provide “stability to small businesses dealing with extremely depleted inventory.”
“Granting temporary LIFO relief due to these pandemic-related conditions will strengthen the automotive retail industry and protect investment and jobs in the local economies they serve,” Doran said.