WASHINGTON — U.S. Rep. Dan Kildee on Monday plans to introduce legislation that would provide tax relief to dealerships that use the "last in, first out" inventory accounting method and have struggled to maintain inventory levels because of the global semiconductor chip shortage.
The bill would allow dealerships to wait until as late as 2025 for their inventories to be replaced to determine the income attributable to the sale of inventory during 2020 or 2021, giving dealers time to restock their inventories as the chip shortage eases and auto production returns to pre-pandemic levels.
"This is an anomaly. It's an unexpected, unplanned-for event that was out of the control of any of these dealerships," Kildee, a Michigan Democrat, told Automotive News. "We can accommodate that by allowing them additional years to replenish inventory and avoid a big tax event that the federal government never would have expected, nor would they, had it not been for this chip shortage."
Jodey Arrington, a Texas Republican, also is supporting the bill, which is specifically targeted to the auto industry.