Supply Chain Disruptions Relief Act

Bill: 117-s-4105
Sponsor: full_name: Sen. Brown, Sherrod [D-OH]
Introduced: 2022-04-28
Policy area: Taxation
Subjects: Accounting and auditing

Administrative law and regulatory procedures

Department of the Treasury

Income tax deferral

Motor vehicles

Tax administration and collection, taxpayers
Latest action: action_date: 2022-12-23
text: Held at the desk.

Summaries:
action_date: 2022-04-28
action_desc: Introduced in Senate
text: <p><strong>Supply Chain Disruptions Relief Act</strong></p> <p>This bill modifies the treatment of liquidations of new motor vehicle inventory as qualified LIFO (last in first out accounting method) inventory. It allows new motor vehicle dealers to elect to wait until the end of 2025 to replace their inventory for purposes of determining income attributable to the sale of such inventory during 2020 and 2021.</p>

action_date: 2022-12-22
action_desc: Passed Senate
text: <p><strong>Supply Chain Disruptions Relief Act</strong></p> <p>This bill modifies the treatment of liquidations of new motor vehicle inventory as qualified LIFO (last in first out accounting method) inventory. It allows new motor vehicle dealers to elect to wait until the end of 2025 to replace their inventory for purposes of determining income attributable to the sale of such inventory during 2020 and 2021.</p>

tv_txt: II 117th CONGRESS 2d Session S. 4105 IN THE SENATE OF THE UNITED STATES April 28, 2022 Mr. Brown (for himself, Mr. Scott of South Carolina , Ms. Cortez Masto , Mr. Marshall , Mrs. Murray , Ms. Lummis , Ms. Stabenow , and Mr. Portman ) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To treat certain liquidations of new motor vehicle inventory as qualified liquidations of LIFO inventory for purposes of the Internal Revenue Code of 1986.

1. Short title This Act may be cited as the Supply Chain Disruptions Relief Act . 2. Treatment of certain liquidations of new motor vehicle inventory as qualified liquidations of LIFO inventory (a) In general In the case of any dealer of new motor vehicles which inventories new motor vehicles under the LIFO method for any specified taxable year, the requirements of paragraphs (1)(B) and (2) of section 473(c) of the Internal Revenue Code of 1986 shall be treated as satisfied with respect to such inventory for such taxable year. (b) Additional relief (1) In general The Secretary shall, not later than the date which is 90 days after the date of the enactment of this Act, prescribe regulations or other guidance under which dealers of new motor vehicles with a qualified liquidation (determined after application of subsection (a)) of new motor vehicles for any specified taxable year may elect— (A) to not recognize any income in the specified taxable year which is solely attributable to such qualified liquidation, and (B) to treat the replacement period with respect to such liquidation as being the period beginning with the first taxable year after such specified taxable year and ending with the earlier of— (i) the first taxable year after such liquidation with respect to which such dealer does not inventory new motor vehicles under the LIFO method, or (ii) the last taxable year ending before January 1, 2026. (2) Failure to fully replace liquidated vehicles during replacement period If, as of the close of the replacement period, the taxpayer has failed to replace all liquidated vehicles with respect to a qualified liquidation to which paragraph (1) applies, the taxpayer shall increase gross income for the last taxable year of the replacement period by the sum of— (A) the aggregate amount of income that would have been required to be recognized in the liquidation year had the taxpayer elected to apply the provisions of section 473 of the Internal Revenue Code of 1986 and not made the election in paragraph (1), plus (B) interest thereon at the underpayment rate established under section 6621 of such Code. (3) Elections (A) In general Except to the extent provided in subparagraph (B), an election under paragraph (1) with respect to any specified taxable year shall be made by the due date (including extensions) for filing the taxpayer’s return of tax for such taxable year and in such manner as the Secretary may prescribe. Once made, any such election shall be irrevocable. (B) Certain elections treated as change in method of accounting In the case of an election with respect to a specified taxable year for which the return of tax has already been filed before the date of the enactment of this Act, any election under paragraph (1) for such specified taxable year may be made on the return of tax for the first taxable year ending after the date of the enactment of this Act and shall be treated for purposes of section 481 of the Internal Revenue Code of 1986 as a change in method of accounting initiated by the taxpayer and made with the consent of the Secretary. (c) Definitions For purposes of this section— (1) Specified taxable year The term specified taxable year means any liquidation year ending after March 12, 2020, and before January 1, 2022. (2) New motor vehicle The term new motor vehicle means a motor vehicle— (A) which is described in section 163(j)(9)(C)(i) of the Internal Revenue Code of 1986, and (B) the original use of which has not commenced. (3) Secretary The term Secretary means the Secretary of the Treasury or the Secretary’s delegate. (4) Other terms Except as otherwise provided in this section, terms used in this section which are also used in section 473 of the Internal Revenue Code of 1986 shall have the same meaning as when used in such section 473.

tv_txt: 117th CONGRESS 2d Session S. 4105 IN THE SENATE OF THE UNITED STATES AN ACT To treat certain liquidations of new motor vehicle inventory as qualified liquidations of LIFO inventory for purposes of the Internal Revenue Code of 1986.

1. Short title This Act may be cited as the Supply Chain Disruptions Relief Act . 2. Treatment of certain liquidations of new motor vehicle inventory as qualified liquidations of LIFO inventory (a) In general In the case of any dealer of new motor vehicles which inventories new motor vehicles under the LIFO method for any specified taxable year, the requirements of paragraphs (1)(B) and (2) of section 473(c) of the Internal Revenue Code of 1986 shall be treated as satisfied with respect to such inventory for such taxable year. (b) Additional relief (1) In general The Secretary shall, not later than the date which is 90 days after the date of the enactment of this Act, prescribe regulations or other guidance under which dealers of new motor vehicles with a qualified liquidation (determined after application of subsection (a)) of new motor vehicles for any specified taxable year may elect— (A) to not recognize any income in the specified taxable year which is solely attributable to such qualified liquidation, and (B) to treat the replacement period with respect to such liquidation as being the period beginning with the first taxable year after such specified taxable year and ending with the earlier of— (i) the first taxable year after such liquidation with respect to which such dealer does not inventory new motor vehicles under the LIFO method, or (ii) the last taxable year ending before January 1, 2026. (2) Failure to fully replace liquidated vehicles during replacement period If, as of the close of the replacement period, the taxpayer has failed to replace all liquidated vehicles with respect to a qualified liquidation to which paragraph (1) applies, the taxpayer shall increase gross income for the last taxable year of the replacement period by the sum of— (A) the aggregate amount of income that would have been required to be recognized in the liquidation year had the taxpayer elected to apply the provisions of section 473 of the Internal Revenue Code of 1986 and not made the election in paragraph (1), plus (B) interest thereon at the underpayment rate established under section 6621 of such Code. (3) Elections (A) In general Except to the extent provided in subparagraph (B), an election under paragraph (1) with respect to any specified taxable year shall be made by the due date (including extensions) for filing the taxpayer’s return of tax for such taxable year and in such manner as the Secretary may prescribe. Once made, any such election shall be irrevocable. (B) Certain elections treated as change in method of accounting In the case of an election with respect to a specified taxable year for which the return of tax has already been filed before the date of the enactment of this Act, any election under paragraph (1) for such specified taxable year may be made on the return of tax for the first taxable year ending after the date of the enactment of this Act and shall be treated for purposes of section 481 of the Internal Revenue Code of 1986 as a change in method of accounting initiated by the taxpayer and made with the consent of the Secretary. (c) Definitions For purposes of this section— (1) Specified taxable year The term specified taxable year means any liquidation year ending after March 12, 2020, and before January 1, 2022. (2) New motor vehicle The term new motor vehicle means a motor vehicle— (A) which is described in section 163(j)(9)(C)(i) of the Internal Revenue Code of 1986, and (B) the original use of which has not commenced. (3) Secretary The term Secretary means the Secretary of the Treasury or the Secretary’s delegate. (4) Other terms Except as otherwise provided in this section, terms used in this section which are also used in section 473 of the Internal Revenue Code of 1986 shall have the same meaning as when used in such section 473.

Passed the Senate December 22, 2022. Secretary