The Internal Revenue Service and the Treasury announced that they will work on creating detailed LIFO guidance for automobile wholesalers, manufacturers and dealers.The accounting issue confronting the automobile industry - which involves the proper treatment of the dollar-value, last-in, first out inventory method for pooling purposes of "crossover vehicles," which have characteristics of both trucks and cars - was selected for the Industry Issue Resolution Program.
In the 1980s, federal courts ruled that the LIFO pooling rules require taxpayers to account for cars and trucks in different pools. Since these rulings were handed down, the line between trucks and cars offered for sale has blurred.
Crossover vehicles include sport utility vehicles, minivans and pick-up trucks used as substitutes for cars - but it is not always clear how they should be treated for LIFO purposes. A request for guidance was submitted on behalf of the National Automobile Dealers Association to resolve the issues arising from vehicles that do not fit neatly into either the car or truck pool.
Since the program's inception in 2000, a multi-functional team has gathered to analyze relevant facts and recommend guidance for each issue selected.
The IRS reviews submissions at least semi-annually, and will complete its next review by March 31. Business associations and taxpayers can submit tax issues that they believe could be resolved through the IIR program at any time. More information is available at www.irs.gov.
