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Accounting Issue for Automobile Dealers To Be Addressed by IRS Industry Issue Resolution Program

IR-2007-39, Feb. 22, 2007

WASHINGTON —   The Internal Revenue Service and the Treasury Department today announced that they will work to publish guidance for automobile wholesalers, manufacturers and dealers regarding the proper treatment of the dollar-value, last-in, first out (LIFO) inventory method for pooling purposes of crossover vehicles, which have characteristics of trucks and cars.

“The accounting issue confronting the automobile industry has been selected for the Industry Issue Resolution (IIR) Program, which provides guidance to help clarify complex tax issues. This program can provide a greater level of certainty for taxpayers, which is important in today's environment," said Large and Midsize Business Commissioner Deborah M. Nolan. "By following the guidance in the IIR, taxpayers can avoid time consuming audits on this issue."

Federal courts in the 1980’s 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, and it is not clear how they should be treated for LIFO purposes. A request for guidance was submitted by the law firm of Miller & Chevalier Chartered and the National Automobile Dealers Assn. (NADA) on behalf of the automotive industry to resolve the issue arising from vehicles that do not fit clearly into either a car or a truck pool.

Since its inception in 2000, the IIR program has resulted in resolution of many different tax issues cumulatively affecting thousands of taxpayers in many different lines of business. For each issue selected, a multi-functional team gathers and analyzes the relevant facts and recommends guidance.

At any time, business associations and taxpayers may submit tax issues that they believe could be resolved through the IIR program. IIR project selection criteria and submission procedures are outlined in Revenue Procedure 2003-36, which is available on the IRS Web site at The IRS reviews submissions at least semi-annually with the next review to be completed by March 31, 2007

Attached is detailed information regarding the issues the IRS considered during its latest review of IIR submissions.


Motor Vehicle Industry

Issue Description:  Clarification of LIFO Pools for Automotive Wholesalers, Manufacturers, and Dealers


IRS Contact:

David Horton
Director of Field Operations, HMT West
Heavy Manufacturing and Transportation


Phone #   313-234-1340

Submitted by: Miller & Chevalier Chartered and NADA on behlf of the automotive industry.






Motor Vehicle Industry



Issue Description: Application of IRC 263A for Franchised Automobile and Truck Dealers

Submitted by:  Crowe, Chizak & Co., LLC,  on behalf of NADA


Trucking Industry



Issue Description: Taxable Gross Weight of Truck

Submitted by:  Penske Truck Leasing Co., LP


Cross Industry



Issue Description: Electronically Filed W-2 Deadline

Submitted by:  National Payroll Consortium, Inc.


Issue Description:  Medical Insurance Paid by S-Corp for Greater than 2% Shareholder

Submitted by:  Christine Zinkand, self


Issue Description:  Separate Tax Identification from SSN

Submitted by: Luis A. Marhado, self


Issue Description: Business Reporting of Payments Made to Service Providers

Submitted by: Terry Hamilton, self


Issue Description: Royalty Payments and IRC 263A

Submitted by: Freed, Maxick, and Battaglia, PC


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Page Last Reviewed or Updated: 18-Aug-2012