Government Advocacy


NADA Chairman Rhett Ricart Addresses NADA Members in New Video

MARCH 27 -- NADA Chairman Rhett Ricart released a video in which he discusses the challenges facing dealers during the pandemic and highlights NADA's priorities, activities and resources available.

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U.S. House Passes CARES Act

MARCH 27 -- Today the U.S. House passed Covid-3, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, clearing the $2.2 trillion measure; the President is expected to sign the bill into law promptly. Congress acted with extraordinary speed: the measure was drafted in the Senate and approved by the entire Congress in just over a week.

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The bill contains NADA-supported provisions which we have previously summarized, such as the new guaranteed loan program for small businesses and the extensive tax relief for individuals and businesses. One aspect of the bill is especially noteworthy for dealers: in general, the new small business loan will be limited to businesses with 500 or fewer employees. 

Thanks to the many dealers, NADA directors and state and metro association executives who worked in support of this bill and the provisions favorable to dealers.

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NADA Blog: White House Provides Update on COVID-19 Pandemic

MARCH 26 --Today, the White House released an updated comprehensive list of tools and resources in the fight against coronavirus. They include a number of websites, contact information, declarations, and other information on donating supplies, government initiatives, declarations and other coronavirus information. Read more


NADA All Dealer Bulletin: Senate Passes Phase 3 Coronavirus Response

MARCH 26-- Late last evening, the Senate passed the nearly $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act. This bill, known as Phase 3, is extremely beneficial for dealerships of all sizes and includes generous and unprecedented provisions to help provide liquidity for dealerships and to help businesses keep their employees on the payroll. The House of Representatives is expected to vote on the Senate measure tomorrow; and the President has pledged to sign the bill into law quickly.

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NADA advocated for provisions included in the Senate bill, such as new federal funding to cover operational and payroll expenses for small businesses through June 30, deferring payroll tax payments for employers, and other important tax relief. NADA continues to advocate for the broadest possible business relief to help dealerships continue in operations and retain employees.

The following provides a preliminary summary of provisions of most interest to franchised dealers.

Small Business Loan Provisions

A completely new, temporary lending program to aid small business The bill will provide $349 billion to support  loans through a new Paycheck Protection Program, which Congress designed to keep employees on the payroll and save small businesses. The Small Business Administration (SBA) will stand up a completely new program that will only nominally be part of the existing SBA Section 7(a) loan program. To expedite the funding of the new loans, the Treasury Department and SBA will expand the number of participating banks and credit unions, and captive finance companies may also be included. 

Minimal eligibility requirements Any business operational on February 15, 2020, that paid salaries and payroll taxes will be eligible, but there is a limit of no more than 500 employees. Fortunately, the bill includes provisions to waive normal affiliation rules which should be applicable to many dealers. For dealers, there will be no test for total revenue.

Borrower certification to obtain loan Borrowers will be required to make a good-faith certification that the loan is necessary due to economic conditions caused by COVID-19 and that it will use the funds to retain workers and maintain payroll, lease and utility payments. 

Loans have terms NOT found in traditional bank loans Lenders will not require application fees, closing costs, collateral or personal guarantees. The maximum interest rate will be 4%, and the first six months' payments (principal and interest) will be automatically deferred. Finally, the lenders are not expected to perform credit analysis, because the loans will be 100% guaranteed by the SBA.  

Maximum loan amount The maximum amount will be 250% of an employer’s average monthly payroll (based on a 12-month look back from the date of the loan), but NOT MORE than $10 million. 

Permitted uses of the loan The loan can be used for “payroll costs,” which include salary, commission, or similar compensation (up to an annual rate of pay of $100,000 per employee); employee group health care benefits, including insurance premiums; retirement contributions; and covered leave from February 15, 2020, to June 30, 2020. Permitted uses also include payments of interest on mortgages, rent, utilities and interest on any other debt obligations that were incurred before February 15, 2020. 

Loans may be forgiven In general, borrowers will be eligible for loan forgiveness equal to the amount of certain expenses spent during an eight-week period after the origination date of the loan. These expenses are payroll costs, interest payments on any secured debt incurred prior to February 15, 2020, payment of rent on any lease in force prior to February 15, 2020, and payment on any utility for which service began before February 15, 2020.  

Percentage of employee retention related to amount of loan forgiveness The amount forgiven will be reduced proportionally by any reduction in employees retained compared to the prior year, and by the reduction in pay of any employee in excess of 25% of the employee’s prior-year compensation. However, to encourage employers to rehire any employees who have already been laid off due to the COVID-19 crisis, borrowers that rehire previously laid-off workers by June 30, 2020, will still qualify and not be penalized for having a reduced payroll during the loan period.

No effect on federal Income tax Canceled indebtedness under this program will not be included in the borrower’s taxable income.

Loan amounts not forgiven Any loan amounts not forgiven at the end of one year will be carried forward as an ongoing loan with terms of a maximum of 10 years at 4% interest or less. 

Tax Provisions Applicable to All Businesses

The CARES Act contains many dealer-friendly tax provisions that will assist dealers in maintaining liquidity during the disruptions caused by the ongoing coronavirus outbreak.  

Net operating loss (NOL) carryback Dealers will be permitted to offset losses in 2018, 2019 and 2020 against profits from the prior five years. NOL carryback was previously eliminated by the Tax Cuts and Jobs Act (TCJA) in 2017. This provision may provide dealers with losses in 2020 with substantial refunds. Losses that are used to offset pre-TCJA profits, which were taxed at a higher rate, will be refunded at pre-TCJA tax rates, providing an additional boost. 

Modification on losses for taxpayers other than corporations TheTCJA generally limited the amount of losses noncorporate taxpayers, including pass throughs, could claim to $500,000. Under the bill this limitation is suspended, allowing dealers to utilize excess business losses along with the new NOL carryback provisions to access critical cashflow.  

Qualified improvement property (QIP) technical fix The TCJA intended for businesses to deduct improvements made to retail property immediately under the TCJA’s bonus depreciation provisions, but due to a drafting error the depreciation lifespan was set at 39 years. This bill corrects this error retroactive to 2018. Dealers with significant outlays on QIP in previous years should consider amending their 2018 and 2019 returns to claim the deductions and receive a refund. 

Interest deductibility limit increased. The TCJA limited the deductibility of business interest to 30% of a dealership’s adjusted taxable income, except for floor plan financing interest, which remained 100% deductible. The bill allows businesses to deduct up to 50% of their adjusted taxable income for 2019 and 2020. Dealers should note that, coupled with the proposed IRS rules on the interplay between bonus depreciation and floor plan financing interest, if their total business interest, including floor plan financing interest, amounts to less than 50% of adjusted taxable income for these years, they may also be able to avail themselves of the bonus depreciation provisions in TCJA. Dealers unable to use full expensing in 2019 due to interest expenses between 30% and 50% of their adjusted taxable income may be able to generate refunds by filing an amended 2019 return.  

Employee retention credit Dealers who have been forced to close their business due to a government-mandated shutdown will be allowed a refundable payroll tax credit for retaining their employees. The credit is generally available to dealers whose operations have been fully or partially closed due to a government mandate and whose gross receipts have declined by more than 50%. For dealers with 100 or fewer employees, all employee wages qualify for the credit regardless of whether the business is shut down or not. The credit is limited to the first $10,000 of compensation paid per employee. This credit is available through the end of 2020. 

Delay of payroll taxes The bill allows businesses to delay the 6.2% employer portion of the Social Security payroll tax for the remainder of 2020. The delayed tax liability would then be paid back apportioned equally over the following two years.

As further details become available, NADA will release a more extensive summary of these provisions. For any questions, contact legislative@nada.org.

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Dealer Groups, ATD, Alliance for Automotive Innovation Urge Trump to Clarify Auto, Truck Sales as Essential

MARCH 24 -- Leaders of NADA, the American Truck Dealers (ATD), the National Association of Minority Automobile Dealers (NAMAD), the American International Automobile Dealers Association (AIADA) and the Alliance for Automotive Innovation sent a letter to President Donald J. Trump asking for clarification that vehicle sales are essential services that need to be maintained during the COVID-19 pandemic. Press release I Blog post

 


NADA Asks Congress for Swift Approval of Economic Stimulus Package

MARCH 23 -- NADA, auto manufacturers send a joint letter to congressional leaders calling for swift passage of an economic stimulus package to address the impact of the escalating COVID-19 health crisis.  Press release | Blog post | Read the letter


Homeland Security Issues Guidance Saying Auto Service Is Essential

March 19 -- The Department of Homeland Security Cybersecurity & Infrastructure Security Agency (CISA) releases guidance listing automotive repair and maintenance facilities as part of the "Essential Critical Infrastructure Workforce." Read the guidance


NADA Urges Action on COVID-19 Legislation

MARCH 18 -- NADA, industry groups, send a letter to President Trump, Speaker Pelosi, and Majority Leader McConnell urging action on COVID-19 economic stimulus legislation. Read the letter



NADA and Alliance Call on Trump Administration to Consider Dealerships Essential Businesses

MARCH 17 -- Given the lack of uniformity in how states and local municipalities taking action are classifying dealership sales, service and parts operations, NADA and the Alliance have requested that the U.S. government ensure that the nation’s motor vehicle fleet remains as safe and operational as possible by considering vehicle repair, maintenance and sales facilities as essential operations during the coronavirus outbreak. Blog post | Press release | Read the letter



NADA Coronavirus News

Stronger Together: Auto Industry Unites to Get Through COVID-19

POSTED ON March 30, 2020

The entire auto industry is pulling together to weather the COVID-19 outbreak in the United States and alleviate its long-term impact on auto retail sales.  
Be on the Lookout for Fake Coronavirus Tracking Sites Infecting IT Systems

POSTED ON March 30, 2020

Hackers are leveraging the popularity of these tracking maps to steal usernames, passwords, credit card numbers, browsing history, cookies and other information stored in users’ browsers.  
U.S. Chamber Issues Summary of New SBA Loan Programs

POSTED ON March 30, 2020

The CARES Act provides $2 trillion of stimulus to individuals, businesses, and hospitals and other impacted industries in response to the economic distress caused by the pandemic.  
White House Provides Update on COVID-19 Pandemic

POSTED ON March 26, 2020

Today, the White House released an updated comprehensive list of tools and resources in the fight against coronavirus.