TIA passes resolutions regarding three national legislative matters

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.

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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.