NADA-backed effort on UNICAP was a big win for auto dealers
(Editor’s note: This is part five in a series of features on NADA convention workshops offered in San Francisco.)
McLEAN, Va. (Jan. 3, 2011) – Auto dealers who want to learn about significant federal income tax developments that may prove beneficial to their businesses, including new “safe harbor” UNICAP accounting methods, now have another reason to attend the NADA Convention & Expo in San Francisco next month.
The workshop, “UNICAP and Other Federal Tax Developments,” will look at attractive provisions in the Small Business Jobs Act of 2010 and several dealer tax issues related to the industry’s consolidation. However, its primary focus will be on the IRS’s November 2010 creation of two new optional UNICAP accounting methods in Revenue Procedure 2010-44 and what it means for dealers.
The workshop will be presented by IRS Motor Vehicle Technical Advisor Terri Harris and NADA tax consultant Robert Zwiers (Crowe Horwath LLP), both of Grand Rapids, Mich., on Feb. 6 and 7.
UNICAP refers to the Internal Revenue Service’s “Uniform Capitalization” rules that govern how businesses must treat costs related to their inventories. Prior to the IRS’s release of the new Revenue Procedure, the IRS “encouraged franchised dealers to change their accounting methods to conform to a very unfavorable IRS interpretation of the rules that it released in 2007,” says Paul D. Metrey, NADA Chief Regulatory Counsel for Financial Services, Privacy and Tax.
“The IRS’s release of Revenue Procedure 2010-44 was a major victory for new-car and -truck dealers,” Metrey says. “These new ‘safe harbors’ allow dealers to change to accounting methods that should prove significantly less burdensome than the accounting methods the IRS was encouraging dealers to adopt before the revenue procedure was released.”
“NADA worked with the IRS and Treasury Department on the issue for five years to create simplified and less burdensome methods of accounting for franchised auto dealers,” Metrey says.
From May through July 2010, NADA held three meetings with senior officials from the IRS and Treasury Department, which helped set the stage for the IRS’s creation of Revenue Procedure 2010-44.
“UNICAP is a complex set of accounting rules that generally require businesses to capitalize, instead of expense, certain direct and indirect costs related to their inventories,” Metrey says. “The new ‘safe harbor’ methods generally allow franchised dealers to elect to be classified as retailers who are not required to capitalize handling, storage or production costs incurred at their retail sales facilities.”
This workshop is one of four Executive/Dealer track courses. The other three workshops are “Best of 20 Group Ideas” presented by Lycia Jedlicki, an NADA/ATD 20 Group consultant; “Easy Steps to Family Business Succession” presented by Hugh Roberts and Dan Schneider of The Rawls Group; and “Real World Skills to Drive Real Results” presented by Bob Kostkan, an NADA University instructor.
Click here for the related NADA-TV report.
Click here for NADA’s brief summary of Revenue Procedure 2010-44.
About NADA: The National Automobile Dealers Association, founded in 1917, represents new-car and -truck dealers, both domestic and international.
Contact:
David Hyatt
Vice President
NADA Public Affairs
(703) 821-7120
dhyatt@nada.org
Charles Cyrill
Director of Public Relations
NADA Public Affairs
(216) 870-8837 (mobile)
(703) 821-7121
ccyrill@nada.org