LIFO Coalition Asks Treasury Department To Provide Relief For COVID-Impacted Companies
On February 25, the LIFO Coalition, which MSCI is a member of, sent a letter to officials at the U.S. Department of the Treasury requesting that the department provide relief under IRC § 473 for certain businesses that use the Last-In, First-Out (LIFO) inventory accounting method and whose inventory supplies have been disrupted by the COVID-19 pandemic.
Multiple companies have reported a decrease in closing inventory as a direct result of global trade interruptions arising from the pandemic. As the letter explained, that outcome is because government actions to contain the spread of the virus have caused major trade interruptions that have made it impossible for a broad range of U.S. companies to acquire sufficient replacement inventory.
Under LIFO rules, a decline in the value of LIFO inventory could trigger a recapture tax. The letter argued that, without relief, “these COVID-related global trade interruptions will result in unanticipated and potentially significant tax liabilities for many U.S. LIFO companies at a time when they are still recovering from the impact of the pandemic.”
The LIFO Coalition asked that Treasury Secretary Janet Yellen publish a decision in the Federal Register providing relief for each class of goods and class of taxpayers that has experienced a qualified inventory interruption.
Stay tuned to Connecting the Dots for future information on this matter and learn more about the LIFO Coalition at http://savelifo.org.