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NRF urges Congress to avoid repealing LIFO method
04 Jul '11
2 min read
The National Retail Federation sent a letter to all Members of the U.S. Senate and U.S. House of Representatives strongly urging them to oppose efforts to repeal the well-established, 70-year-old Last-In, First-Out (LIFO) inventory accounting method, saying the measure could put American jobs at risk during a fragile economic recovery.
“LIFO is a well-established inventory accounting method that has been in the law for more than 70 years. It is not a 'tax loophole,'” wrote David French, NRF Senior Vice President of Government Affairs, in the letter. “If LIFO were repealed, it would create a huge retroactive tax increase because of the accounting decision companies made decades ago. It would also cause retailers to have to direct scarce capital resources to new accounting systems, rather than investing in maintaining and growing their core business.”
In the letter, French says LIFO is a method of accounting under which income is measured by treating the most recently purchased inventory as the first to be sold and that it is the best accounting method for matching current costs with current revenue.
“Repealing LIFO will hinder our already fragile economic recovery,” said French. “Any changes to corporate taxes should be done in the context of overall corporate tax reform, not in a piecemeal fashion.”As the highest effective taxpaying industry in the United States – which is also responsible for one in four American jobs – retailers believe it would be much more appropriate to consider the viability of the LIFO method in the context of overall corporate tax reform that lowers the rates and broadens the base, providing a more level playing field for U.S. businesses.
“LIFO is a well-established inventory accounting method that has been in the law for more than 70 years. It is not a 'tax loophole,'” wrote David French, NRF Senior Vice President of Government Affairs, in the letter. “If LIFO were repealed, it would create a huge retroactive tax increase because of the accounting decision companies made decades ago. It would also cause retailers to have to direct scarce capital resources to new accounting systems, rather than investing in maintaining and growing their core business.”
In the letter, French says LIFO is a method of accounting under which income is measured by treating the most recently purchased inventory as the first to be sold and that it is the best accounting method for matching current costs with current revenue.
“Repealing LIFO will hinder our already fragile economic recovery,” said French. “Any changes to corporate taxes should be done in the context of overall corporate tax reform, not in a piecemeal fashion.”As the highest effective taxpaying industry in the United States – which is also responsible for one in four American jobs – retailers believe it would be much more appropriate to consider the viability of the LIFO method in the context of overall corporate tax reform that lowers the rates and broadens the base, providing a more level playing field for U.S. businesses.
National Retail Federation
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