AICPA Applauds Congress for Bipartisan Efforts to Provide Tax Relief to Businesses Unable to Maintain Inventory During Pandemic
Washington, D.C. (November 9, 2021) – The American Institute of CPAs (AICPA) is applauding efforts by Congress to provide tax relief to businesses that have been unable to maintain inventory during the pandemic. The AICPA, along with the National Automobile Dealers Association (NADA), has endorsed a bipartisan letter to the Department of the Treasury led by Representatives Dan Kildee (D-MI) and Jodey Arrington (R-TX) and signed by 91 House Members. The letter urges Treasury to provide tax relief for businesses using the last-in, first-out (LIFO) inventory accounting method who cannot maintain inventory due to the global supply chain interruptions during the pandemic.
Government restrictions implemented in response to the pandemic have severely limited manufacturing capacity, causing major disruptions in the global supply chain and making it extremely difficult for U.S. companies to replace inventory, which has resulted in a significant reduction in inventory levels. Sec. 473 of the Internal Revenue Code provides relief for eligible taxpayers that experience qualified liquidations of LIFO inventories and applies if a business has had an interruption in the ability to obtain replacement inventory due to a trade embargo or other international event.
The AICPA submitted two letters earlier this year, in April recommending a safe harbor method that alleviates the burden of paying additional taxes on the related income and eliminates the need to file amended tax returns to obtain section 473 relief, and in August providing details and examples of both the section 473 safe harbor method and the need for expedited relief to elect the section 473 safe harbor method.
“We’re grateful to Congress for the overwhelming bipartisan support on this important issue,” said AICPA Tax Executive Committee Chair, Jan Lewis, CPA. “Recent disruptions in the global supply chain have become a national problem that will hamper taxpayers’ ability to recover in the current economic environment and will subject them to unexpected tax liabilities. We join Congress in strongly urging Treasury to extend relief to businesses during this challenging time.”
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BACKGROUND:
The Journal of Accountancy: Interruption of LIFO inventories due to COVID-19 and Sec. 473 relief
Cosigners of the letter include:
Democrat Members: Dan Kildee (MI), Jake Auchincloss (MA), Cindy Axne (IA), Joyce Beatty (OH), Donald Beyer, Jr. (VA), Sanford Bishop (GA), Earl Blumenauer (OR), Suzanne Bonamici (OR), Brendan Boyle (PA), Anthony Brown (MD), Julia Brownley (CA), Matt Cartwright (PA), Jim Cooper (TN), Lou Correa (CA), Angie Craig (MN), Charlie Crist (FL), Madeleine Dean (PA), Peter DeFazio (OR), Antonio Delgado (NY), Debbie Dingell (MI), Michael Doyle (PA), Dwight Evans (PA), Vicente Gonzalez (TX), Josh Gottheimer (NJ), Brian Higgins (NY), Chrissy Houlahan (PA), Sara Jacobs (CA), Marcy Kaptur (OH), Derek Kilmer (WA), Ron Kind (WI), Raja Krishnamoorthi (IL), Ann Kuster (NH), Brenda Lawrence (MI), Kathy Manning (NC), Lucy McBath (GA), Betty McCollum (MN), Joseph Morelle (NY), Frank Mrvan (IN), Tom O’Halleran (AZ), Jimmy Panetta (CA), Chris Pappas (NH), Bill Pascrell Jr. (NJ), Scott Peters (CA), Dean Phillips (MN), Kathleen Rice (NY), Deborah Ross (NC), C.A. Dutch Ruppersberger (MD), Tim Ryan (OH), Mary Scanlon (PA), Kurt Schrader (OR), David Scott (GA), Brad Sherman (CA), Greg Stanton (AZ), Haley Stevens (MI), Tom Suozzi (NY), Eric Swalwell (CA), Dina Titus (NV), Norma Torres (CA), Lori Trahan (MA), Juan Vargas (CA) and Marc Veasey (TX).
Republican Members: Jodey Arrington (TX), Mark Amodei (NV), Tom Emmer (MN), Ron Estes (KS), Drew Ferguson (GA), Michelle Fischbach (MN), Chuck Fleischmann (TN), Jim Hagedorn (MN), Bill Huizenga (MI), Chris Jacobs (NY), David Joyce (OH), John Joyce (PA), Mike Kelly (PA), Young Kim (CA), Darin LaHood (IL), Doug LaMalfa (CA), Doug Lamborn (CO), David McKinley (WV), Carol Miller (WV), John Moolenaar (MI), Alexander Mooney (WV), Mike Rogers (AL), David Schweikert (AZ), Jason Smith (MO), Lloyd Smucker (PA), Pete Stauber (MN), Michelle Steel (CA), Jackie Walorski (IN), Brad Wenstrup (OH), and Roger Williams (TX).
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Contact: Veronica Vera
202-434-9215
Veronica.Vera@aicpa-cima.com