Letter to Hon. Janet Yellen, Secretary of the Treasury - Pandemic Related Supply Chain Interruptions

Press Release

Dear Secretary Yellen:

The pandemic and related supply chain interruptions have hit the auto industry
particularly hard. Making matters worse, many businesses that use the last-in, first-out (LIFO)
inventory method will face significant, unforeseen tax liabilities due to their inability to replace
vehicle inventory. There has been a major disruption of the global supply chain with slow-downs
and factory closures, particularly with semiconductors, leaving businesses with drastically lower
inventories. We are writing to ask for your assistance to grant temporary LIFO relief to
businesses that have severe inventory shortages because of the pandemic.

Businesses using the LIFO inventory method must maintain a minimum level of
inventory at year-end or risk recognizing excess gains that result in LIFO recapture. Supply
chain disruptions have made it virtually impossible for auto and truck dealers to maintain this
minimum level of LIFO inventory.

Fortunately Congress has anticipated this scenario. Temporary relief is available for
businesses that cannot maintain minimum inventory levels through no fault of their own, such as
a major foreign trade interruption under Section 473 of the Internal Revenue Code. We urge you
to exercise your authority as Treasury Secretary to provide this relief since the current
circumstances are the result of a major foreign trade interruption.

The automotive industry is facing an unprecedented inventory shortage, and it will take
many months to recover -- which will continue to impact local businesses, employees, and their
customers throughout our states and across the country. It is critical to the heath of the auto
industry that we help businesses maintain their cash flow and replace their inventory over a
period of up to three years as granted in Section 473. This will help give businesses time to
restock and replenish inventory, and keep assembly lines moving.

We respectfully urge you to grant Section 473 relief as expeditiously as possible to help
protect the auto industry and all its workers. Thank you again for your efforts to ensure a speedy
economic and automotive recovery.