LIFO tax relief bill for car dealers to be reintroduced

Kildee said he hopes the Senate’s early passage of the bill will help the new effort this year. But in the new Congress, with Republicans controlling the House and Democrats holding the majority in the Senate, the bill’s path is less clear.

“There’s a bit of uncertainty in Congress right now, so I think logically we should be able to move it, but obviously we can’t just rely on that.” I will have to.”

Last year, the bill was co-sponsored by more than 170 Democrats and Republicans in the House. Mr Kildee said he would try to get a similar level of bipartisan support.

“Then look for a suitable vehicle. If you have a tax package in motion, obviously that’s one way to do it,” he said. “I’d love to see it move sooner or later. If we see an opportunity to do this as an independent law, we’ll take it.”

Companies using LIFO (a tax deferral strategy used by about half of US new car dealers) maintain sufficient inventory levels at the end of the year to avoid potentially large income tax bills. need to do it.

However, production problems and microchip shortages related to COVID-19 have led to a significant drop in the influx of new vehicles to dealers from 2020, reducing inventories and making things worse in 2021.

For some dealers, the recapture of LIFO resulted in additional tax payments ranging from $100,000 to over $2 million during the 2022 filing season covering 2021 tax returns.

The National Auto Dealers Association, which has been lobbying Congress and the Biden administration to bail out LIFO on behalf of new car dealers, said: car news In December, it plans to work with lawmakers who supported last year’s bill to “gain momentum and pass the bill as soon as possible.”

Indeed, U.S. dealer profitability rose to record highs in 2020 and 2021. This is underpinned by tight inventories and high profit margins per vehicle. When asked if he faced criticism about the need for a LIFO bailout given the record annual profit, Kildee said there are always exceptions.

“That’s why we tried to emphasize that most auto dealers are small, family-owned, literally generational businesses rather than large, well-capitalized conglomerates, and that the event will be a big hit.” He said. “I get it.

Arrington said he was proud to work with Kildee to “provide temporary and targeted relief to those who, through their own fault, are unable to restock their inventory.”

“Enabling these small businesses to restock inventories and spread out their tax obligations will not only help stabilize prices, but will also keep workers employed while manufacturing and supply chains continue to recover. It also helps in

This article was optimized by the SEO Team at Clickworks SEO