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Important vehicle, equipment tax benefits expired at year's end

January 3, 2014
By Mark Scarpelli, Chicago Metro NADA Director
 
Important tax benefits for dealers and their business customers expired at the end of 2013. Qualifying businesses no longer can immediately expense certain equipment and software purchases, but must depreciate the cost over several years. 
Under Section 179 of the Internal Revenue Code, businesses had been able to deduct a total of $500,000 of certain equipment purchases made in 2013, subject to certain restrictions and a phase out. Additionally, 50 percent bonus depreciation on equipment purchases had been in effect until the end of 2013. 
It is important to note that the availability and combination of these incentives are subject to complex rules. For example, the vehicle bonus depreciation is subject to certain vehicle type, business use and weight restrictions. Therefore, dealers are encouraged to speak with their accountants and should encourage their business customers to do the same regarding the expiring incentives.
In other news ...
• The U.S. Department of Justice on Dec. 20 filed a complaint in federal district court against Ally alleging disparate impact discrimination against African Americans, Hispanics and Asians and Pacific Islanders who obtained indirect auto loans. 
At the same time, the DOJ and the Consumer Financial Protection Bureau announced that Ally has entered into a proposed consent order to settle the complaint. If approved by the court, the consent order will, among other things, require Ally to pay $80 million in restitution to affected consumers and $18 million in penalties; file within 60 days a dealer "Compliance Plan" that must be reviewed and approved by both the CFPB and DOJ; and strictly monitor compliance of dealer participation rates. 
Notably, the proposed consent order does not require Ally to adopt a flat fee compensation system.
The NADA issued the following press statement in response: "(The) NADA fully supports our nation’s fair lending laws and the commitment of federal agencies to eliminate discrimination in the marketplace. Regrettably, in today’s announced enforcement action, the CFPB continues to withhold the secret methodology it uses to determine whether unintentional discrimination has occurred. 
"The public still does not know whether the Bureau takes into account legitimate factors that can affect finance rates — for example, a dealer’s ability, regardless of race, to lower the interest rate to meet a customer’s monthly budget. The CFPB’s failure to reveal its approach is particularly troubling given the repeated and recent requests from bi-partisan members of both houses of Congress for this essential information. 
"We are encouraged that today’s announcement does not mandate any form of a dealer flat fee compensation system. A flat fee system would eliminate consumers’ right to save money by negotiating lower interest rates with their local car dealers." 
In NADA news ...
• The NADA has named Steven Szakaly as its new chief economist.
"Steven brings several years of experience working in economics and the auto industry," said NADA President Peter Welch. "As the industry and economic environments continue to change, his analytical-thought leadership will benefit the membership as well as add to public policy discussions." 
Szakaly brings more than 10 years of forecasting and industry analysis experience to the NADA. Prior, he led economic forecasting at Cliffs Natural Resources in Cleveland, Ohio. He has worked with General Motors in powertrain forecasting in Detroit and was an economist with the Center for Automotive Research in Ann Arbor, Mich. 
Szakaly began his career as an associate economist with the Federal Reserve Bank of Chicago.
• Sixty-four workshops will be presented by 100 speakers at 174 sessions of the 2014 NADA Convention & Expo, Jan. 24-27 in New Orleans. 
"The workshop program is one of the great attractions of the NADA convention, and this year’s program is the most comprehensive and information-packed ever offered," said Kenneth C. Vance, chairman of the NADA’s Dealership Operations Committee, and a new-car dealer in Eau Claire, Wis. "Nearly half of the speakers are new to the convention workshop program." 
Organized by NADA University Online, the online education and training arm of NADA, the sessions are designed to give new-car and -truck dealers the information and training needed to succeed in an increasingly competitive and rapidly changing retail market. 
"There is no other one-stop-learning opportunity like this anywhere for dealers and their managers to gain the insights and ideas they need to drive up performance and profitability as soon as they get back to their stores," Vance added.
 
 

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