Dealer-backed LIFO tax relief bill reintroduced in Senate after House effort

WASHINGTON — U.S. Sen. Sherrod Brown, D-Ohio, plans to reintroduce a bipartisan bill Wednesday that augments an effort by two House lawmakers this month to help auto dealers who faced unavoidable and potentially massive tax bills in recent years.

The legislation — titled the Supply Chain Disruptions Relief Act — would provide tax relief to dealerships struggling to maintain inventory levels because of the global semiconductor shortage. It would give dealerships using the “last in, first out” accounting method up to three years to replace their inventory before having to pay taxes on inventory sales from 2020 or 2021 so they can restock as the chip shortage eases and auto production returns to pre-pandemic levels.

Brown’s bill is cosponsored by Republican Sen. Tim Scott of South Carolina and at least 22 other Democratic senators, including Joe Manchin of West Virginia, Raphael Warnock of Georgia and Michigan’s Gary Peters and Debbie Stabenow.

Its reintroduction in the Senate comes after U.S. Reps. Dan Kildee, D-Mich., and Jodey Arrington, R-Texas, revived the bill in the House on Feb. 1.

“This legislation will grant much needed tax relief to auto dealers facing unique supply chain challenges,” Brown said in a statement. “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.”

Zach Doran, president of the Ohio Automobile Dealers Association, said he appreciates the legislative effort and looks forward to working with Brown to get the bill passed.

“As a result of supply chain disruptions beyond the dealers’ control, LIFO recapture will trigger significant, unexpected tax liability, imposing massive tax bills on small businesses that could otherwise be used to invest in workers, EV infrastructure and replenishing vehicle inventory as it becomes more available,” Doran said.