In testimony today before the U.S. Department of the Treasury and IRS, the Retail Industry Leaders Association (RILA) expressed substantial concerns about proposed regulations on the tax treatment of corporate debt and equity. The proposed regulations, issued on April 4, would change decades of relatively settled debt and equity concepts, impacting many long-standing corporate financing techniques.
“Retailers have concerns regarding the many aspects of the proposed regulations, but two areas, per se stock rules and documentation requirements, are deeply problematic and could force retailers to abandon common practices and incur substantially increased costs as a result,” said Dave Koenig, vice president for tax. “Increased costs means less money available for other things such as growing and adding jobs.”
In comments to administration officials RILA highlighted a number of concerns and offered constructive comments related to two areas of great concern, documentation requirements and per se stock rules.
Specifically, RILA urged the Department to extend the deadline for documenting loans from 30 days to the due date of the taxpayer’s return. Further, RILA recommended that that the cause exception be broadened and made consistent with other such exceptions within the tax code in recognition that even diligent and earnest taxpayers are likely to make mistakes as the adjust to the new complex rules. Furthermore, given the impact that the 72-month presumption would likely have on retailer cash management practices, RILA urged that the window be reduced to a more manageable 24 months.
RILA is the trade association of the world’s largest and most innovative retail companies. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad.