NRF: Tax refund in unemployment bill will help save retail jobs

Washington, D.C. The National Retail Federation said Thursday it welcomes the passage of legislation that will bring recession-plagued retailers and other businesses more than $10 billion in cash by lengthening the period during which they can “carry back” current losses to claim a tax refund from previous years when they made a profit.

“This legislation will provide retailers with an important source of capital to finance their operations and keep employees on the payroll,” NRF VP and tax counsel Rachelle Bernstein said. “Because retail sales have fallen so dramatically over the past year and access to capital has been so limited, retailers are experiencing severe challenges in finding the cash they need to operate their businesses as the economy moves toward recovery.”

The vote comes as most retailers see between a quarter and half of their annual sales during the final quarter due to holiday spending.

“If retailers can’t find a way to finance inventories for the 2009 holiday season, many could be forced to close stores, lay off workers or even go out of business,” Bernstein said. “This will help keep that from happening.”

The House voted 403-12 on Thursday to approve Senate amendments to the Unemployment Compensation Extension Act of 2009, and sent the measure to President Obama for his signature.

The bill extends unemployment insurance benefits but also includes a provision added in the Senate that will expand businesses’ ability to “carry back” net operating losses suffered during the current recession in order to claim a refund from taxes paid in previous years.

Existing law allows companies to carry back a loss for up to two years. Economic stimulus legislation enacted in February expanded the period to five years for companies with up to $15 million in annual gross receipts, but larger businesses were still restricted to two years.