LIFO Update - 8/16/11
Coalition comments filed with the SEC:
In late May, the Securities and Exchange Commission (SEC) issued a staff report discussing a possible method for the adoption of the International Financial Reporting Standards (“IFRS”) by the U.S., and invited comments on that report. In addition, when President Obama called for repeal of the Last-In, First-Out accounting method (LIFO) in earlier negotiations over a debt limit increase, there was increased mention of the SEC/IFRS issue by policymakers in Washington. In June, several new national associations like TIA joined an existing LIFO coalition to work together to prevent the elimination of LIFO.
The coalition has worked with both the SEC and the Department of the Treasury in an attempt to achieve a regulatory remedy to the threat of the elimination of the LIFO method that would result from full adoption of IFRS because of the conformity requirement.
Despite renewed discussion of LIFO/IFRS, there have been several recent news articles suggesting that the SEC is, in fact, a long way from a final decision on the adoption of IFRS. Links to two of the recent stories can be found at the end of this post.
In response to the increased discussion of IFRS, and although we do not have any reason to believe that the SEC will move on the issue in the near term, the coalition has filed comments with the SEC urging that LIFO repeal not be de facto accomplished by the SEC through a move to IFRS and asking for a carve-out for LIFO should the SEC move to adopt the international standards. The coalition’s comments will soon be available on both the coalition and SEC web sites.
Special Deficit Reduction Committee:
As you all know, the four Congressional leaders have now named their designees to the 12-person committee tasked with producing a deficit reduction proposal by Thanksgiving. While we have made a great deal of progress in the last couple of months in terms of getting information about LIFO before members of Congress, we – like everyone interested in tax policy – will have to intensify our effort this fall to ensure that LIFO repeal does not become a revenue source in a deficit reduction proposal.
Links to Recent News Stories on LIFO:
http://www.reuters.com/article/2011/07/25/us-usa-tax-convergence-idUSTRE76O1N220110725
http://www.gfsnews.com/article/2546/1/gfs_alert/5d3b9ce0b36eaa38cd3413c6432758f9/21623137b213d5b6a7481011934fbe98