Seven lawmakers expressed concern in a Wednesday letter about a proposal by the U.S. Treasury and Internal Revenue Service that would alter the retail inventory method of accounting, saying the rule would impose new costs on retailers.
The lawmakers said the RIM method of accounting would “reverse a position that has been in the regulations for more than 50 years.”
“For retailers using RIM, most would be affected by these regulations and would have to create costly new inventory tracking systems to comply with the new regulations,” Reps. Charles Boustany (R-La.), Vern Buchanan (R-Fla.), Tim Griffin (R-Ark.), Ron Kind (D-Wis.), Kenny Marchant (R-Texas), Pete Roskam (R-Ill.) and Pat Tiberi (R-Ohio) said in the letter. “On a relative basis, the tax cost of these regulations would fall more heavily on smaller retailers because the type of vendor allowances affected by the regulations are virtually the only type of allowances that smaller retailers receive. Larger retailers may be able to use their greater bargaining power with their vendors to receive other types of vendor allowances with more favorable treatment under the Proposed Regulation.”
The legislators said the proposal “fails to include a small business regulatory analysis” under the Regulatory Flexibility Act, adding that the proposal’s conclusion that the RFA is inapplicable “is clearly incorrect.”
“We strongly urge you to conduct the appropriate regulatory flexibility analyses, especially with respect to small retailers that would be affected by this rulemaking, and in accordance with such analyses, we ask that you review the Proposed Regulations to minimize the recordkeeping and compliance costs,” the letter said. “In addition, we urge you to reconsider the disproportionate tax burden on smaller retailers that will result if the regulations are enacted as proposed.”