Submit LIFO Preservation Comments to Your U.S. Congressman
The LIFO Coalition allows taxpayers to submit comments favoring the preservation of the LIFO Method to their U.S. Congressmen. All you need to do is to enter your name & zip code into a form (zip code used to send message to appropriate congressmen & senators). The message will be sent via email to your U.S. Representative and U.S. Senators.
Click the buttin-link below to submit your comment to help preserve the LIFO Method:
LIFO-PRO works closely with the LIFO Coalition to provide LIFO Repeal updates to website guests and LIFO-PRO clientele. The LIFO Coalition is an ad hoc group of more than 175 trade associations and companies representing hundreds of thousands of businesses. It was formed in 2006 to oppose proposals by the U.S. Congress to repeal or restrict the use of the LIFO inventory accounting method under U.S. tax laws. Members of the coalition represent a wide variety of businesses, including manufacturers, wholesaler-distributors, retailers and energy producers.
2016 LIFO Coalition Updates
We received an email from the LIFO Coalition on June 24 that discussed the retention of LIFO in the House GOP Tax “Blueprint”. The LIFO Coalition later released a statement regarding this topic on their website that can be viewed by clicking here: 06/2015 LIFO retention message
We received an email from the LIFO Coalition on February 27 discussing three items of ‘interest’. The message is summarized as follows:
Tax Foundation Paper- The Tax Foundation, one of the most well-respected “think tanks” in the area of tax policy, has recently released a series of papers analyzing the economic impact of tax reform proposals, especially those offered by presidential candidates. Earlier this week they released a new paper analyzing the economic impact of LIFO repeal, confirming what LIFO users have been arguing for a decade – LIFO repeal would cause economic harm & job losses. Based on their economic analysis, not only would prospective repeal of LIFO not raise significant new revenue for the government, “the elimination of Last-in, First-out accounting for write-offs of future inventory would reduce GDP by $11.6 billion per year and end up reducing federal revenue by $518 million each year.” While the paper does not estimate in dollars the economic cost of the retroactive tax that would be imposed by the recapture of reserves, it notes that: “Unless a special provision were made, LIFO repeal would also retroactively tax a company’s “LIFO reserve.” This additional tax could hit cash-strapped companies particularly hard & could result in 50,300 additional job losses in the short run.” Click here to view the full Tax Foundation report: Economic & Budgetary Impact of LIFO Repeal
LIFO repeal in the Obama budget- As expected, President Obama again included LIFO repeal in his annual budget proposal. Congress is not expected to act on the President’s proposal – in fact, the two Budget Committee Chairs are not even going to hold perfunctory hearings on it – but the Coalition did not want to ignore the proposal. We released a statement opposing the proposal, which has been posted on the website and circulated on social media: LIFO Repeal Once Again Misrepresented in White House Budget Proposal
Committee Hearing Exchange with Treasury Secretary Jack Lew- As you know, Obama Administration officials have repeatedly answered questions about LIFO repeal in testimony before Congressional Committees. As often as not, the Treasury Department officials demonstrate a clear and disturbing lack of understanding of LIFO – what it is, how it works, or the consequences of repeal. This year is no exception, and there was an exchange this week in a House Ways & Means Committee hearing between Congressman Mike Thompson (D-CA), a consistent leader on LIFO in the House, and Obama Treasury Secretary Jack Lew. Secretary Lew’s response to Mr. Thompson’s question is completely misguided and somewhat intelligible….rather than trying to decipher it for you, I am pasting the entire exchange below (from the unofficial transcript):
Thompson — My concern on LIFO repeal, as you know, is the retroactive aspect of it. I think if that were to happen it’s going to be very damaging to a lot of businesses who have been playing by the rules, abiding by the law, and they don’t move overseas. Just good business people right here at home trying to make a living and trying to employ people. And if this retroactive component is to take effect it would be very damaging to these folks. I know you passed out the letter you sent to the European Commission and in it you reference the DG for competition. One of your first concerns is that they are changing the procedure and imposing penalties retroactively. I just want you to know that those of us who represent districts that have LIFO companies, LIFO industries. We feel the same heartburn when you talk about retroactively collecting revenues and changing the tax code. So I’d really like to work with you to see if we can’t figure this out and just wonder if you consider the impact of this proposal on small businesses. They’re employers and have you considered ways it could be less disruptive or less burdensome on businesses, if they use LIFO in its existing condition.
Lew – I understand this is an issue of deep concern to businesses in your district and it is in common with other loopholes that we closed in the tax code, something that does impose a burden on those who have benefited from something we believe is something that needs to be fixed in the tax code. The danger of this provision is that it will be implemented over time and that businesses will have the ability to do some averaging so that it doesn’t hit all at once. We don’t view this as retroactive because it’s just a question of timing and not the incidence of the tax burden. So we would look forward to working with you on this. I think one of the reasons tax reform is so hard to do is that it does impose burdens as we close loopholes but we can’t lower the statutory rate if we don’t close the loopholes and make the average lower.
Thompson – I don’t disagree with you on that front, however, when you close a loophole and reach back and then try to collect these revenues from tax laws as they used to be before the change. I think that’s where the rub comes. It would be the same if we change the tax bracket at which you are taxed and went back 5 or 10 years and had you make that up. It just seems inherently unfair and would have a very negative impact on businesses, not just in my district. There are a number of people on this dais, and throughout Congress, who have LIFO companies and it would harm them and their communities.
We received an email from the LIFO Coalition on January 15th regarding a tax reform proposal that includes LIFO repeal. LIFO Coalition Executive Secretariat Jade West’s comments are below:
Good afternoon, everyone. As many of you know, Congressman Devin Nunes has just released a business tax reform proposal, a copy of which is attached. This legislation has been in the works for several years, and I met with the Congressman and his staff some time ago to discuss the impact of his approach on LIFO users.
The bill would repeal LIFO (and virtually all other business deductions), but provide for full 100% first year deduction of costs, including inventory. 100% expensing would obviously make inventory accounting methods irrelevant on a prospective basis, so transition rules on how to handle existing LIFO reserves would be critical. The Nunes bill does provide specific transition rules – as far as I know it is the first full-expensing bill to do so.
While it is unlikely that major tax reform will be considered this year, this bill could be important if it becomes a model for transition rules in other similar proposals.
I asked Coalition counsel Les Schneider earlier today for his assessment of the Nunes bill, and he advises that while future inventory purchases would be deductible in the year of purchase, the remaining basis in inventory held on the effective date of the new statute would be deductible over 8 years.
If you want to review these transition rules, or share them with your member companies to ask for their reactions, the rules appear on pages 27-28 and 43-44 of the attached bill, and are pasted below. I assume this proposal will be seen as far preferable to LIFO repeal with full retroactive recapture tax, but I would very much appreciate your reaction, and that of your members to the extent you reach out to them.
SEC. 5. ALLOWANCE OF TRANSITION BASIS DEDUCTION.
In the case of any property held by the taxpayer on December 31, 2014, and used in a trade or business of the taxpayer on such date, the following rules shall apply:
(1) BASIS.—The basis of such property shall be zero.
(A) IN GENERAL.—There shall be allowed to the taxpayer a deduction with respect to such property, other than land.
(B) AMOUNT OF DEDUCTION.—Except as provided in subparagraph (D), such deduction shall be determined for a taxable year by amortizing the basis of such property on the same schedule and method that applied to such property before the enactment of this Act.
(C) DISPOSAL OF PROPERTY.—Subparagraph (A) shall apply with respect to property held by the taxpayer on December 31, 2014, whether or not the taxpayer disposes of such property after December 31, 2014.
(D) INVENTORY.—In the case of inventory, the deduction allowed by subparagraph (A) shall be allowed in the taxable year of the taxpayer which includes January 1, 2015.
(2) CHANGE IN METHOD OF ACCOUNTING.—In the case of any taxpayer required by an amendment made by this section to change its method of accounting for its first taxable year beginning after the date of the enactment of this Act—
(A) such change shall be treated as initiated by the taxpayer;
(B) such change shall be treated as made with the consent of the Secretary of the Treasury; and
(C) the net amount of the adjustments required to be taken into account by the taxpayer under section 481 of the Internal Revenue Code of 1986 shall be taken into account ratably over a period (not greater than 8 taxable years) beginning with such first taxable year.
2015 LIFO Coalition Updates
We received an email message on March 26 from the LIFO Coalition Executive Secretariat, Jade West requesting that LIFO taxpayers contact U.S. Senators whom are members the Senate Finance Committee Working Group on Business Tax Reform to urge them to leave LIFO Repeal out of any further tax reform proposals. The LIFO Coalition message contains several links to PDF files that provide additional information including the names and complete contact information (phone & fax numbers & email addresses for multiple offices & office staff names) for the 14 Senators in this Working Group.
The Working Group Senators represent these states: Florida, Delaware, Georgia, Indiana, Maryland, Michigan (2 Senators), New Jersey, North Carolina, Ohio, Pennsylvania (2 Senators), South Dakota and Virginia and companies which have operations of any size and kind in one of these states are being asked to contact the applicable Senator in April.
The full text of the email message received from the LIFO Coalition is available to read at the following link:
2015 LIFO Coalition Action Request
2014 LIFO Coalition Updates
The U.S. Senate and House of Representatives have both issued specific tax reform proposals (in late 2013 and February 2014, respectively) that include LIFO repeal and recapture of LIFO reserves.
On April 29, we received an email message from the LIFO Coalition Executive Secretariat, Jade West, requesting all parties that want to stop the repeal of LIFO to contact their U.S House Representative to urge them to join other Representatives that have already agreed to sign a letter urging the Chairman of the House Ways and Means Committee to leave LIFO Repeal out of any further tax reform proposals. We forwarded this message to our clients. The full text of the message is available to read at the following link:
2014 LIFO Coalition Action Request
The full text of an email message sent by the LIFO Coalition 4/3/2014, which we forwarded to our clients, is available to read at the following link:
LIFO-PRO,Inc. Save LIFO Action Request- 2014
Additional Save LIFO Resources:
If you are interested in becoming a member of the LIFO Coalition, you may choose to join as follows:
- Join for free as a General Member
- Join for to become a Steering Committee Member ($5,000 membership fee to be added to the Steering Committee)
You may elect to become a silent member of the LIFO Coalition from either membership option; silent membership allows an organization’s LIFO Coalition membership to remain anonymous.
Click here to download the LIFO Coalition application as a Fillable Adobe Form: LIFO Coalition Membership Form
Click this link to visit the LIFO Coalitions website: LIFO Coalition Homepage