Scott, Colleagues Introduce Legislation to Provide Tax Relief for Auto Dealers
WASHINGTON – U.S. Senators Tim Scott (R-S.C.) and Sherrod Brown (D-Ohio) introduced the Supply Chain Disruptions Relief Act, bipartisan legislation to provide tax relief to auto dealers experiencing inventory shortages due to global supply chain issues.
“Auto dealers across the country have struggled to maintain inventory due to global supply chain constraints,” said Senator Scott. “This legislation will help stabilize the industry and support thousands of jobs in South Carolina by providing much needed tax relief to businesses in our state and around the country.”
“This legislation will grant much needed tax relief to auto dealers facing unique supply chain challenges,” said Senator Brown. “This bill will mean those dealers – that are often small, family-owned businesses – get a temporary break – and a chance to spend their funds on replacing their depleted inventories and investing in their workers.”
The bill would allow new vehicle dealers to delay the recognition of income triggered by the Last-In First-Out (LIFO) recapture for tax years 2020 and 2021, when dealers faced uncontrollable, pandemic-driven inventory shortfalls of new vehicles. Specifically, the bill 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;
- Expand the period to replenish inventory and compute LIFO reserve/LIFO recapture until the tax year ending before January 1, 2026; and
- Direct Treasury to provide regulatory guidance to enable dealers to calculate LIFO during the expanded replacement period.
The legislation has been endorsed by the National Automobile Dealers Association (NADA).
“NADA commends Senator Tim Scott and Senator Sherrod Brown for their continued leadership to ensure the reintroduction of the Supply Chain Disruptions Relief Act, important bipartisan legislation to address supply chain and semiconductor shortages during the pandemic that severely impacted vehicle production,” said Mike Stanton, President and CEO of NADA. “This legislation is identical to the bill from last Congress, which received overwhelming bipartisan support and passed the Senate without opposition in December. And it again provides the extended time dealers using LIFO need to replace their new-car inventories that were decimated due to uncontrollable pandemic-and supply chain shortfalls. NADA urges Congress to pass this technical and noncontroversial legislation as soon as possible to help the auto industry continue its recovery from drastic inventory shortfalls resulting from the pandemic and semiconductor shortage.”
In addition to Scott and Brown, the Senators joining as cosponsors of the legislation are: Tammy Baldwin (D-Wis.), John Barrasso (R-Wyo.), Marsha Blackburn (R-Tenn.), Richard Blumenthal (D-Conn.), John Boozman (R-Ark.), Mike Braun (R-Ind.), Shelly Moore Capito (R-W.Va.), Ben Cardin (D-Md.), Tom Carper (D-Del.), Bill Cassidy (R-La.), Chris Coons (D-Del.), John Cornyn (R-Texas), Catherine Cortez Masto (D-Nev.), Kevin Cramer (R-N.D.), Mike Crapo (R-Idaho), Steve Daines (R-Mont.), Tammy Duckworth (D-Ill.), Diane Feinstein (D-Calif.), Chuck Grassley (R-Iowa), Bill Hagerty (R-Tenn.), Maggie Hassan (D-N.H.), John Hoeven (R-N.D.), Cindy Hyde-Smith (R-Miss.), Ron Johnson (R-Wis.), Mark Kelly (D-Ariz.), Angus King (I-R.I.), Amy Klobuchar (D-Minn.), James Lankford (R-Okla.), Cynthia Lummis (R-Wyo.), Joe Manchin (D-W.Va.), Roger Marshall (R-Kan.), Jerry Moran (R-Kan.), Patty Murray (D-Wash.), Alex Padilla (D-Calif.), Gary Peters (D-Mich.), Jim Risch (R-Idaho), Mike Rounds (R-S.D.), Marco Rubio (R-Fla.), Rick Scott (R-Fla.), Jeanne Shaheen (D-N.H.), Tina Smith (D-Minn.), Debbie Stabenow (D-Mich.), Jon Tester (D-Mont.), John Thune (R-S.D.), Thom Tillis (R-N.C.), Chris Van Hollen (D-Md.), Raphael Warnock (D-Ga.), and Roger Wicker (R-Miss.)