Three public policy resolutions have been
unanimously approved by members of the Tire
Industry Association (TIA). They involve
supporting the pending Lawsuit Abuse Reduction
Act and a veterans hiring tax credit along with
expressing opposition to the Obama
Administration’s efforts to repeal the LIFO tax
accounting method.
The Lawsuit Abuse Reduction Act, encompassed in
House Resolution 966 and Senate Bill 533, would
amend Rule 11 of the Federal Rules of Civil
Procedure to require judges to impose sanctions
on lawyers, law firms or other plaintiffs who
that file frivolous lawsuits. Courts currently
can – but are not required to – impose these
types of penalties.
Under the legislation, any monetary sanction
imposed under Rule 11 would be paid by the
parties to the suit. In July HR 966 passed the
House Committee on Judiciary by a 20-13 vote.
The amended bill (and the House Report-112-174)
has been placed on the Union Calendar to be
considered by the U.S. House of
Representatives.
“The resolution affirms TIA’s support for this
effort to reform tort law to reduce the number
of lawsuits directed at the tire industry,” says
Dr. Roy Littlefield, executive vice president.
The next resolution passed by TIA opposes the
administration’s contemplation of repealing
LIFO. LIFO is an accounting method recognized by
the Internal Revenue Code since 1939. LIFO
(“last-in-first-out”) is used both for financial
statements and tax purposes. It is the most
accurate means of determining inventory asset
value and tax liability for certain businesses,
according to Littlefield.
A repeal of LIFO would tax LIFO reserves. The
reserves are neither cash nor other assets, nor
any permanent device for avoiding tax on
purchases of lower-priced goods and materials.
LIFO reserves record the amount the business has
reinvested in inventories affected by inflation.
The LIFO convention assumes that the inventories
remaining at the end of the accounting year
represent the costs of goods, supplies and
materials on hand at the beginning of the year
or purchased earlier in the year.
PAGE 2
The other most common inventory accounting
convention is FIFO (“first-in-first out”), which
assumes that inventories remaining at the end of
the year represent the cost of goods, supplies
and materials purchased later in the
year.
“Repeal would mean that LIFO taxpayers would
have to find money to pay the tax by borrowing
or by selling off assets,” says TIA President
Larry Brandt. “There is no adequate way to
‘split the baby’ on LIFO repeal: Spreading out
the recovery period for recapture of the LIFO
reserves is still tax without revenues.”
Littlefield notes that “our resolution commits
the association to oppose all efforts to repeal
the LIFO accounting method option”.
TIA is also working with the Department of Labor
and members of Congress to develop a
business/public sector/private sector plan to
hire disabled and returning veterans. A
financial incentive for this effort is the
passage of legislation to expand and extend the
Work Opportunity Tax Credit (WOTC) for three
years for recently discharged veterans.
As a father of a recently returned veteran and a
strong supporter of this resolution, Brandt says
“the proposed legislation would increase an
existing tax credit for businesses to hire
veterans with disabilities to $9,600 per long-
term employed veterans to a maximum of $4,800
for all other service-disabled veterans.”
Littlefield explains that “our resolution
supports the ‘Returning Heroes Tax Credit’ for a
maximum of $2,400 for every short-term employed
veteran hire and $4,800 for every long-term
veteran hired and that this legislation would
make a difference in lives of many hard working
returning soldiers, sailors and airmen and their
families and would be an important way for
America to say ‘thank you’ for their shared
sacrifice.”
For more information, visit www.tireindustry.org.
