The U.S. Senate passed a bipartisan bill Thursday to relieve auto dealers using the “last in, first out,” or LIFO, accounting method and impacted by the ongoing supply-chain scarcities plaguing the industry.
The Supply Chain Disruptions Relief Act’s House of Representatives companion bill must still be considered by the end of that body’s legislative session.
The National Automobile Dealers Association said that the Senate took up the bill after seeing that no business tax provisions were in the $1.7 trillion spending bill, which also passed in the Senate.
“Senate passage of the bill is great progress to provide dealers on LIFO much needed relief due to the pandemic and supply chain issues,” said NADA President and CEO Mike Stanton in a press release about the legislation.
NADA says that due to diminished inventories, dealers using LIFO face “major unanticipated tax liability due to circumstances beyond their control.”
The bill approved by the Senate this week would give the Treasury Department authority to allow dealers using LIFO extended time to replace inventories.