WASHINGTON — The Tire Industry Association (TIA) is asking its members to contact their representatives and senators in Congress to urge them to retain the last-in, first-out (LIFO) method of accounting in any tax reform proposal.
LIFO is a cash flow assumption that allows U.S. companies to move the cost of products from inventory to the cost of goods sold.
Under LIFO, the latest costs of products purchased or produced are the first costs expensed as the costs of goods sold.
House and Senate tax-writing committees will meet to discuss tax reform legislation as early as mid-October, according to the Sept. 25 issue of TIA's Weekly Legislative Update.
"It is clear that tax writers are intently looking for 'pay-fors' — sources of new tax revenue that can be raised to offset the revenue that will be lost by the reduction of business income-tax rates," TIA said.
"In some cases, there are indications that a decision has already been made to include LIFO repeal in any tax-reform package," it said.
The tax increases caused by LIFO repeal would be very damaging both to employers and their workers, according to TIA.
Companies that use LIFO would be uniquely hurt compared with other taxpayers, according to the LIFO Coalition, to which TIA belongs.
LIFO users would face not only an immediate one-time retroactive tax increase but also an ongoing, permanent tax increase from the loss of LIFO, the coalition said.
"It is vitally important that these key tax writers hear from constituent businesses in their states/districts in the next few weeks, before a fully developed tax reform proposal is released," TIA said.
There are key members of tax-writing committees in Arizona, California, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Michigan, Minnesota, Nebraska, Nevada, New York, North Carolina, Ohio, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Washington and Wyoming, according to TIA.
"If you have operations in any of these states, we need your participation in this effort," the association said.
A list of senators and congressmen involved in tax legislation can be found online.