Measure would address supply chain disruptions during Covid
U.S. Sen. Jeanne Shaheen, D-NH, has joined a group of lawmakers to introduce the Supply Chain Disruptions Relief Act, which they say would provide tax relief to auto dealers experiencing inventory shortages due to global supply chain issues.
Auto dealerships often use the last-in-first-out (LIFO) inventory method, which can result in a large tax bill for dealerships that don’t maintain a minimum level of inventory at the close of the year, Shaheen said.
The bill would allow new vehicle dealers to delay the recognition of income triggered by the LIFO recapture for tax years 2020 and 2021, when dealers faced uncontrollable, pandemic-driven inventory shortfalls of new vehicles.
“Auto dealerships took a serious financial hit during the Covid-19 crisis, in part due to pandemic-related supply chain challenges, the senator said. “Many auto dealers across New Hampshire and throughout the nation are small businesses that continue to face real economic hardships due to the pandemic, which is why this bill would be an important tool to help give them a leg up.”
She said the legislation “would help provide much-needed tax relief for local businesses as they work to overcome Covid-related disruptions. I urge lawmakers on both sides of the aisle to join this effort so we can ensure no stone remains unturned that supports our nation’s economic recovery.”
Specifically, the bill, which has been endorsed by the National Automobile Dealers Association, would:
• Provide a statutory determination that the requirements for a qualified liquidation under Section 473 have been satisfied for new motor vehicle dealers that have had a reduction of new vehicles held in LIFO inventory; and
• Extend the period to replenish inventory and compute LIFO reserve/LIFO recapture through December 2025.