UMA OPOSES DRAFT GUIDANCE FROM EPA AND U.S. ARMY CORP OF ENGINEERS
In a letter today from Utah Manufacturers Association, President Tom Bingham urged EPA and the Corp of Engineers to delay issuing a “Draft Guidance on Identifying Waters Protected by the Clean Water Act”. The letter follows:
As President of a statewide association of manufacturers in Utah representing nearly 1,000 manufacturers, I have an interest in preserving and protecting our nation's waters. However, manufacturers also require a regulatory program that is sensible and is based on credible regulatory proceedings. Unfortunately, the joint guidance that the EPA and the Army Corps of Engineers have proposed will expand their jurisdiction under the Clean Water Act (CWA) to all waters of the United States.
Expanding EPA's and the Corps' jurisdiction to all waters, whether intrastate or interstate, will create significant problems in permitting, increased costs for compliance and new land use restrictions. The guidance is also vague as to where the EPA's and the Corps' jurisdiction ends. While the guidance applies to wetlands, it is unclear as to how the EPA and the Corps will address other bodies of water such as snow packs. It will be a hindrance and an outright barrier to economic growth.
This guidance will likely be finalized and applied in the field before the agencies undertake rulemaking. It is imperative that stakeholders have sufficient time to address those issues of concern. We need to extend the comment period as the guidance raises a number of legal, scientific and economic concerns. Manufacturing companies like those represented by UMA will need additional time to thoughtfully review and comment on this proposed guidance.
Considering the many important issues addressed by the proposal and the economic interests at stake, it is imperative that EPA and the Corps not publish the proposed guidance.
IRS PROVIDES SECTION 9100 RELIEF FOR LATE-FILED NOL ELECTION
Ballard Spahr Tax Alert
A recently released private letter ruling has interest for any individual and corporate taxpayers who reported net operating losses (NOL) in 2008 or 2009. The ruling, LTR 201125014 (Mar. 22, 2011), grants a taxpayer an extension to elect to carry back NOLs for up to five years under a temporary provision enacted by the Worker, Homeownership, and Business Assistance Act of 2009.
The provision, Section 172(b)(1)(H) of the Internal Revenue Code (IRC), applies to taxpayers with NOLs arising in taxable years ending after 2007 and beginning before 2010 (that is, the 2008 and 2009 years of a calendar-year taxpayer).1 The taxpayer who applied for the private letter ruling missed the normal deadline to elect to carry back NOLs under the relief provisions of IRC Section 9100.
Why would a taxpayer make the extended carryback election? The obvious reason would be to offset taxable income recognized in the carryback years and thereby obtain a refund of previously paid tax. If the taxpayer operated at a loss in each of the carryback years, it would seem that no tax refund or other benefit could be obtained by making the election. However, a parallel alternative minimum tax (AMT) provision (IRC Section 56(d)(1)(A)(ii)) provides that taxpayers making the extended carryback election will be able to offset 100 percent of any NOL subject to the election against the alternative minimum taxable income of the year to which it is carried.2 Under the normal AMT carryback and carryover rules, only 90 percent of the NOL would be available for offset.
The statutory language does not limit the “full offset” of the NOL to AMT carryback years and, by implication, permits the “full offset” in carryover years. The IRS has confirmed this interpretation in Notice 2010-58, 2010-37 I.R.B. 326 (Aug. 20, 2010), Q&A-11.
Thus, the benefits of the extended carryback election continue for AMT purposes for all carryover years—up to 20 taxable years following the year in which the NOL arose (that is, conceivably, as far into the future as 2029). Even if a taxpayer is not currently subject to AMT, there is a good chance that it could fall under that regime during at least one year of the carryover period. For this reason, taxpayers unaware of the benefits of the election may wish to follow the lead of the taxpayer in LTR 201125014 and file a request to the IRS for Section 9100 relief in order to make a late filing of the extended carryback election.
NEW GREEN POWER SYSTEMS FROM HUMLESS
Utah Business
Humless, LLC. announced the general availability of its Humless Sentinel and Humless Roadrunner power systems. These clean energy products create a new class of green energy generator and power supply that is silent, portable and easy to use, with no dependence on fossil fuel.
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CHINA REPEALS CONTROVERSIAL TRADE RULE
Today in Manufacturing
Beijing repealed policy favoring Chinese producers in government purchases of computers and technology that triggered complaints by foreign companies ... continue
CALIFORNIA DELAYS CAP AND TRADE COMPLIANCE
Today in Manufacturing
Regulators said they would give major polluters another year to comply with a state program that provides financial incentives to emit fewer greenhouse gases ... continue
LEAN MANUFACTURING DEMANDS INTELLIGENT AP AUTOMATION
Today in Manufacturing
Most manufacturing organizations overlook applying them to their business processes to take efficiency to the next level ... continue
UNEMPLOYMENT BENEFIT APPLICATIONS STILL HIGH
Today in Manufacturing
Number of Americans seeking unemployment benefits was mostly unchanged last week, evidence the struggling economy isn't generating many jobs ... continue
WHEN IT COMES TO PUBLIC-PRIVATE SUPPORT OF U.S. MANUFACTURING, WE'RE 'PLAYING CATCH-UP'
Quick Manufacturing News
The idea of a national manufacturing strategy 'is hardly a radical concept.' Click to continue
BOEING -- NOT TAXPAYERS -- WILL PAY FOR COST OVERRUNS IN AIR FORCE TANKER PROGRAM
Quick Manufacturing News
Boeing was willing to break even or lose money on development contract to keep Airbus out of its home market. Click to continue
LINKING SAFETY, ETHICS AND ECONOMIC PROSPERITY
Quick Manufacturing News
Striving to 'do the right thing' can help safety professionals create sustainable safety programs that also have a positive impact on a company’s economic health. Click to continue
A PICKUP IN MANUFACTURING ACTIVITY IN THE MIDWEST
Chad Moutray NAM Shopfloor Blog
Two studies released today show that manufacturing activity is beginning to rebound in the Midwest. First, the Chicago Business Barometer from ISM-Chicago rose from 56.6 in May to 61.1 in June. Measures of production and new orders rose significantly in the month, with the production index up from 56.0 to 66.9 and the new orders growing from 53.5 to 61.2.
While still below the levels reached earlier in the year, these figures are a good sign that the Midwest is recovering from the supply chain disruptions and other factors which cooled production in March, April and May. As further evidence of this, the survey suggests that the average lead time for capital equipment purchases is up to 135 days, its highest point since June 2006.
In addition, manufacturers are seeing prices grow at a slower pace, with the prices paid index falling from 78.6 to 70.5. This is largely consistent with other indicators which show pricing pressures easing somewhat in June. Meanwhile, the index for employment fell somewhat from 60.8 to 58.7; while this still signifies job growth in the sector, it does indicate a slower rate of growth than previous months.
Two downsides from the survey are the backlog of orders and inventories, both of which fell below 50, indicating declines. (continue reading…)
MORE COMPANIES DECIDING TO RESHORE MANUFACTURING OPERATIONS.
Fortune
"US manufacturing appears to be on the cusp of an awakening – if not a full rebirth," and explores some of the reasons behind this trend. Among those noted in the article is the increased expense of manufacturing overseas, both in terms of wages and shipping costs, as well as the costliness of dealing with "weak links" in a global supply chain. At the same time, experts say, there are limits the trend's benefits. For example, while the benefits of manufacturing in China for export purposes have decreased, the Chinese consumer base for many companies has also increased, and if the company is producing goods in China for the Chinese market "then they're likely going to stay," experts said. Additionally, with ever-increasing use of automation, "there are sizeable limits over how many more jobs re-shoring would create."
MANUFACTURERS SEEK TO TRAIN MORE WORKERS TO FILL TALENT GAP
Fortune
"Applicants today, manufacturers complain, often do not have such elementary shop skills, let alone the computer skills and other knowledge required for more complicated and sophisticated manufacturing processes." Better training is necessary, they say, while also allowing that manufacturing may need to revamp its image to make it more appealing to students. According to the Manufacturing Institute, "over the next decade, the 20 occupations in the manufacturing industry that are expected to need the greatest number of workers will require at least some post-secondary education."
A nationally recognized certificate program could be part of that solution. "Emily DeRocco, president of the Manufacturing Institute, says that the certificate program 'will create a bigger pool of highly qualified people with skills that are portable' and help offset the looming shortage of well-trained workers due to the 2.7 million Baby Boomers expected to retire this decade."
ANOTHER POTENTIAL TAX INCREASE
Larry Scholer – NAM Shopfloor Blog
In his press conference yesterday, President Obama turned up the heat on congressional Republicans who are resisting efforts to raise taxes. Calling for a “balanced approach,” the President said, “The tax cuts I’m proposing we get rid of are tax breaks for millionaires and billionaires; tax breaks for oil companies and hedge fund managers and corporate jet owners.”
The President forgot to mention one tax increase that is on the table, namely a proposal to end the last-in first-out accounting method that many manufacturers use (LIFO). It’s a big tax hike too—$72 billion. But it’s all “just part of simplifying the tax code,” says the Administration.
Manufacturers have been using the LIFO accounting method for nearly 70 years. The gist of the method is the following: manufacturers can match their current sales revenues with current inventory replacement costs. By taking into account the cost of replacing inventory, LIFO results in a more accurate measure of the financial condition of a business and the amount of income that can be taxed.
Requiring manufacturers to stop using LIFO could have an immediate and negative impact. Not only would they be subject to higher taxes in future years, they would also be hit with a big one-time tax bill because they would have to pay tax on the so-called LIFO reserves they’ve built up over the years. So it’s not just a tax increase on future income—it’s a retroactive one as well. Such a tax increase would strain manufacturers of all sizes.
The LIFO proposal is meeting strong resistance on Capitol Hill and off it as well. For more from the NAM, see here.
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