LIFO Coalition Response to the Administration on LIFO Repeal
Jade West, senior vice president-government relations for the National Association of Wholesaler-Distributors provided the following information on behalf of The LIFO Coalition.
There is a great deal of discussion today about the "fiscal cliff" the country is facing, with economists, Fed Chairman Ben Bernanke and the Congressional Budget Office all predicting a fiscal crisis and calling for action to prevent it.
Many Members of Congress are taking the threat seriously and bi-partisan groups of Members are meeting to discuss deficit reduction options and tax reform.
Action to address the fiscal crisis is critically needed, but the increased focus on the growing debt has put LIFO at its greatest risk in recent years. The President called for repeal again in his Fiscal Year 2013 Budget and pushed aggressively for repeal in deficit reduction talks last year.
Even LIFO repeal opponents in Congress do not believe that LIFO is safe. Congress will be looking for new revenues to address the debt and LIFO repeal would generate a significant amount of that revenue.
We need to act – now – to convince Members of Congress that LIFO repeal should not be a part of deficit reduction and/or tax reform legislation. If repeal is included in legislation, removing it from that legislation will be extremely difficult – if not impossible.
We have been at this point in the past, starting with the original threat to LIFO in 2006. We have been successful in saving LIFO for the last six years because of the involvement of the business community and the overwhelming business constituent contact with Congress. We can be successful again – if you act.
To save LIFO, businesses which rely on it need to communicate with their Senators and Representative ASAP. Please write to your Representative and Senators – today – to urge them to oppose repeal. If you have written to them in the past, please write again! Your employees are constituents and voters wherever they work, so please write to the Members of Congress from ALL of your locations.
Please provide information about your company, the number of workers – their constituents – you employ and specifics on how repeal would impact your company and workers. If repeal would force you to lay off workers, reduce salaries, stop funding health care or retirement programs, postpone a planned investment – let your Representatives know. With unemployment still crippling our economic recovery, a tax proposal that threatens jobs is much more likely to be rejected by Congress.
Finally, please point out that LIFO repeal would be an unfair and unprecedented retroactive tax hike – comparable to repealing the mortgage interest deduction and requiring taxpayers to pay back the tax savings they have properly and legally accrued using that deduction. Many Members of Congress are unaware of the retroactivity in LIFO repeal and oppose repeal when they learn of its retroactivity.
You can write to your Representative and Senators easily by using the grass roots tools on http://www.naw.org.
Please take action NOW. We will save LIFO only if Members of Congress understand it and the negative impact of its retroactive repeal on jobs and economic growth – and we make repeal too politically toxic for Members of Congress to support.
Please use the following talking points to help convey your message.
Talking points for LIFO e-alert:
I am writing to urge you to oppose any effort to repeal the last-in, first-out (LIFO) inventory method as part of any legislation to address the U.S. deficit and/or tax reform.
LIFO is NOT a "tax expenditure" or "tax preference" – it is an inventory accounting method that has been in the tax code for 70 years, which my company has used for [fill in the blank] years to calculate our income.
Repeal of LIFO would be an unprecedented retroactive tax increase – repeal would require my company to recalculate our income for all the years we have used LIFO and pay back to the government the tax savings we accrued by using LIFO. It would be the same as repealing accelerated depreciation or the home mortgage interest deduction and requiring taxpayers to pay back the tax savings they properly and legally accrued using those tax provisions.
LIFO allows my company to most closely match the cost of goods sold with the cost of replacement inventory – just as first-in, first-out (FIFO) does for the companies using that method – and if we do not have the capital to buy replacement inventory, we cannot stay in business.
[please provide information on your company, any information you are comfortable providing about your LIFO tax liability, and the impact of LIFO repeal on your company, i.e., will you reduce employment or refrain from hiring, postpone investments or expansions, etc.]