At its annual meeting during the SEMA Show/Global Tire Expo, the Tire Industry Association passed three resolutions that include support of the pending Lawsuit Abuse Reduction Act, opposition to the Obama administration’s efforts to repeal the LIFO accounting method and strong support of the pending veterans hiring tax credit.
The Lawsuit Abuse Reduction Act would amend Rule 11 of the Federal Rules of Civil Procedure to require courts to impose appropriate sanctions on attorneys, law firms, or parties who file frivolous lawsuits and to require them to compensate parties injured by such conduct. Courts currently may, but are not required to, impose such sanctions.
Under the legislation, any monetary sanction imposed under Rule 11 would be paid by the parties to the suit. The motion has passed the House Committee on Judiciary and will be considered by the U.S. House of Representatives.
“The resolution affirms TIA’s support for this effort to reform tort law to reduce the number of lawsuits directed at the tire industry,” said Roy Littlefield, executive vice president.
LIFO (“last-in-first-out”) is an accounting method used both for financial statements and tax purposes. It is the most accurate means of determining inventory asset value and tax liability for certain businesses, TIA stated.
LIFO repeal would tax LIFO reserves, which are neither cash nor other assets, nor any permanent device for avoiding tax on purchases of lower-priced goods and materials. LIFO reserves record the amount the business has reinvested in inventories affected by inflation. The LIFO convention assumes that the inventories remaining at the end of the accounting year represent the costs of goods, supplies, and materials on hand at the beginning of the year or purchased earlier in the year.
The other most common inventory accounting convention is FIFO (“first-in-first out”), which assumes that inventories remaining at the end of the year represent the cost of goods, supplies, and materials purchased later in the year.
Tire Industry president Larry Brandt said, “Repeal would mean that LIFO taxpayers would have to find money to pay the tax by borrowing or by selling off assets. There is no adequate way to ‘split the baby’ on LIFO repeal: spreading out the recovery period for recapture of the LIFO reserves is still tax without revenues.”
Finally, TIA is working with the Department of Labor and members of Congress to develop a business/public sector/private sector plan to hire disabled and returning veterans. A financial incentive for this effort is the passage of legislation to expand and extend the Work Opportunity Tax Credit for three years for recently discharged veterans.
A father of a recently returned veteran of the Afghanistan campaign and a strong supporter of this resolution, Brandt said, “The proposed legislation would increase an existing tax credit for businesses to hire veterans with disabilities to $9,600 per long-term employed veterans to a maximum of $4,800 for all other service-disabled veterans.”
