NRF: Cash from tax ‘carryback’ would help holiday survival

Washington, D.C. The National Retail Federation told a House committee on Wednesday that some retailers could be forced to lay off workers or close stores unless Congress moves quickly to pass “net operating loss carryback” tax legislation that would give them the cash they need to buy inventory for this year’s holiday season.

“Because retail sales have fallen so dramatically over the past year and access to capital has been so limited, retailers are struggling to find the cash they need to operate their businesses as the economy moves toward recovery,” NRF VP and tax counsel Rachelle Bernstein said. “If struggling retailers cannot finance inventories for the 2009 holiday season -- their greatest opportunity for revenue for the year -- they could go out of business.”

Extension of the NOL carryback period would provide an important source of capital to finance ongoing operations and retain employees, Bernstein added. “If NOL carryback is not enacted soon, tens of thousands of additional retail jobs will be lost.”

Bernstein testified Wednesday morning before the House Small Business Committee during a hearing on tax provisions set to expire at the end of the year.

Bernstein said Congress needs to pass H.R. 2452, the Net Operating Loss Carryback Act, which legislates that businesses suffering losses during 2008 or 2009 would be able to “carry back” those losses to offset profits from up to five years ago. The companies would then receive tax refund checks that would provide an infusion of cash to help keep doors open and workers on the payroll.

The five-year carryback period was included in the $787 billion economic stimulus bill signed into law by President Obama in February, but was limited to companies with up to $15 million in annual gross receipts and applied only to losses suffered during 2008.

Obama’s budget proposal for fiscal year 2010 would allow the five-year period to apply to companies of any size and to losses from either 2008 or 2009.