Thursday, December 11, 2008

Tax Relief on the Horizon?

The National Marine Manufacturers Association (NMMA), which represents the United States' recreational boating industry, has announced its plans to lead a 71-member coalition in petitioning Congress for the extension of the net operating loss (NOL) carryback period from two to five years. The hope, the association argues, is that in doing so, Congress will "help businesses suffering from tough economic times."

An NOL is a period of time during which a company's expenses exceed its revenues, thus resulting in a negative taxable income. According to a press release from the NMMA, a company can currently opt to use its NOL to offset the taxes it owes on profits from the previous two years. It would like to see that period extended by three years. The rationale behind providing such a carryback period is simple: Businesses are required to pay taxes when they earn money, therefore, they are also are deserving of some form of tax relief if they begin to lose it.

"Congress has used NOL carryback relief in the past to help manufacturers, retailers, and companies across all sectors," NMMA president Thom Dammrich has explained. "We encourage legislators to use this tool again to enable these companies to retain jobs and avoid going out of business."

To that end, the association states that in the coming weeks, it (and its coalition partners) will meet with leaders in Congress and members of President-elect Obama's transition team to press for the extension. An extension aimed, as the NMMA puts it, at "ensur[ing] that the appropriate tax relief is enacted in a timely manner."

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