Washington, D.C. -- The National Retail Federation on Wednesday welcomed a letter from lawmakers urging the Internal Revenue Service to back off a proposed accounting rule change that could cost many retailers millions of dollars a year.
“Retailers already have one of the highest effective tax rates of any U.S. industry,” NRF VP and tax counsel Rachelle Bernstein said. “This move by the IRS would make that tax burden even higher and amount to a hidden tax increase. With the economy still recovering and retailers trying to create jobs, this is not the time to change a policy that has been in place for half a century.”
Several members of the House Ways and Means Committee, led by Representative Tim Griffin, R-Ark., today wrote to Treasury Secretary Jacob Lew asking that the IRS reconsider plans to modify regulations governing the retail inventory method of accounting. Used by many merchants, the method allows retailers to average out the cost of merchandise in inventory rather than tracking specific items. The committee members said the proposed changes would require creation of “costly new inventory tracking systems” and would cost retailers millions of dollars.
“Both effects would divert scarce resources from investments that could otherwise be made in additional jobs and economic growth for constituents in our districts,” the letter said. “We urge you to reconsider the disproportionate tax burden on smaller retailers that will result if the regulations are enacted as proposed.” The letter particularly noted that a small business regulatory analysis has not been performed as required by the Regulatory Flexibility Act.