The National Association of Manufacturers pushed hard for passage of five-year Net Operating Loss (NOL) tax relief this year as critical to promoting investment and aiding the recovery. The NAM certainly counts President Obama’s signing of H.R. 3545, the unemployment insurance bill with the NOL tax relief, as a big help to many manufacturers.

And retail too! Ian Swanson of The Hill reports that angle today in “Black Friday boom? Retail sales boosted by carry-back legislation“:

“We think it will have a benefit,” said Craig Sherman, vice president of government affairs for the National Retail Federation (NRF), which lobbied vigorously for the measure.

Sherman said the provision will help retailers by providing money to pay for adding inventory or to hire more workers to meet the masses of December shoppers. Without the change in tax law, firms could only carry back losses to the last two tax years. Given the recession, that didn’t help many retailers who had seen minimal or no profits over the past two years.

Even if the money isn’t yet technically available, Sherman said retailers are using the incoming funds as collateral to get loans from their banks.

The NAM’s webpage with background and documents on the new NOL law is here.

The National Retail Federation previewed Black Friday sales earlier this week with a survey and news release, “Black Friday Bargains to Attract Up to 134 Million Shoppers This Year.”

Latest tax developments …

From Reuters, “Tax loss carryback proposal gaining U.S. support“:

WASHINGTON (Reuters) – A proposal to expand U.S. companies’ ability to apply losses in 2008 or 2009 over the prior five years to get immediate cash is gaining traction in the U.S. Congress.

All companies, no matter what size, would be able to apply losses in one of those years to full year taxable income for the prior four years and to 50 percent of income in the fifth year, according to a summary of a plan backed by Senate Majority Leader Harry Reid and Senate Finance Chairman Max Baucus, both Democrats.

The NAM’s web materials supporting Net Operating Loss legislation are available here.

Bloomberg, “Nelson Says Senate to Extend, Reduce Homebuyer Credit“:

Oct. 26 (Bloomberg) — Senate leaders are negotiating to extend and gradually reduce an $8,000 tax credit for first-time homebuyers through 2010, Senator Bill Nelson of Florida said.

UPDATE (12:20 p.m.): The Washington Examiner today has a First-Time Homebuyers’ Guide insert with this story, “‘Good chance’ Congress will vote to extend tax credit,” interviewing Rep. Frank Kratovil (D-MD), a Realtor. Extend the credit, but not expand it, is the conclusion.

And can you believe that the great, obscurely visionary Mancunian band, The Fall, has paid tribute to the carryback tax provisions? Well, listen to this clip and say it isn’t so.

NAM President and CEO John Engler issued a statement this evening in support of the conference report on H.R. 1, the economic stimulus bill. The NAM supports the measure but is not issuing a “Key Vote” letter on the conference report:

The economic situation that our country faces is unprecedented. Nearly 600,000 jobs have been lost since the beginning of this year and almost 4 million jobs have been lost in the past year. Day after day, more companies are forced to reduce their workforce to stay financially stable.

Our member companies from around the country are telling us they agree with Congress and the Administration that decisive and immediate action is critically necessary to spur economic revitalization. They understand that the conference version of the American Recovery and Reinvestment Act is not perfect but they believe the overall plan is an acceptable balance of tax cuts and investment designed to help job providers and the people who depend on them.

We view this bill as a very positive first step in promoting our nation’s economic revitalization. It is clear to NAM members that more needs to be done to revive our economy and ensure durable economic growth in the future, particularly in light of the current credit crunch and liquidity problems faced by manufacturers. It is critical that Congress and the Administration further expand tax relief for struggling companies of all sizes, lower tax rates on overseas income reinvested in the United States, provide temporary funding relief for companies that sponsor traditional pension plans and provide additional incentives to jumpstart the housing market. We support this legislation and urge Congress to pass it without delay.

Manufacturers recognize that immediate action is needed to address the unprecedented challenges faced by all sectors of the economy. There is more work to be done, and we will continue to work with Congress and the Administration to advance follow-on legislation that will help all manufacturers and our nation’s entire economy get back on track and ensure job creation and sustainable economic growth.

In addition, NAM’s President sent a letter to the House and Senate reprising the above points and providing more detail on the manufacturing sector’s support for more tax provisions to encourage economic growth and jobs creation, i.e., a more robust Net Operating Loss provision (in the Senate version), a reduced “toll charge” to encourage companies to bring money back home from overseas, pension relief and a home buyer tax credit.

The economic situation that our country faces is unprecedented. Nearly 600,000 jobs have been lost since the beginning of this year. Almost four million jobs have been lost in the past year. Day after day, more companies are forced to reduce their workforce to stay financially stable.

(continue reading…)

Bloomberg, “Congress Cuts Big Business Tax Break in Stimulus Bill“:

Feb. 11 (Bloomberg) — House and Senate negotiators all but eliminated the biggest tax cut for businesses in the compromise agreement on an economic stimulus bill, Senator Max Baucus of Montana said.

The provision, a top priority of business groups including the National Association of Manufacturers and the U.S. Chamber of Commerce, would let companies convert losses into tax refunds.

The provision is the “net operating loss” relief, enumerated as a priority for manufacturers in the NAM’s recent “Key Vote” letter on H.R. 1. More from the Bloomberg story:

Monica McGuire, senior policy director in charge of taxation for the manufacturers’ association, said omitting the provision would diminish the legislation’s stimulus effect.

What McGuire termed the “gutting” of the relief provision “doesn’t contribute to an effective recovery package,” she said. “Restoring adequate tax relief for struggling companies is about helping a diverse range of industries from manufacturing to retail; no plants, no workers.”

From the Wall Street Journal, “Stimulus’s Winners and Losers”

WASHINGTON — Home builders, new-car buyers and manufacturers are among the major winners in a $838 billion economic-rescue bill passed in the Senate Tuesday while state governments and generously paid corporate executives will be the losers.

The Senate’s economic stimulus package contains several major amendments and saw an overhaul last week when Senate Democrats agreed to changes pushed by Sens. Susan Collins (R., Maine) and Ben Nelson (R., Neb.).

And…

Manufacturers, home builders and firms in other sectors that were unprofitable in 2008 and 2009 would gain the ability under the Senate bill to turn their losses into tax refunds. The bill allows them to use those losses to offset tax liability as far back as 2003.

The Senate provision is slightly more generous than a similar 5-year net operating loss carryback provision in the House bill. It would allow firms to carry back 100% of losses, while only 90% of losses would be eligible for the 5-year carryback under the House bill.

“Manufacturing is general is a cyclical industry, so net carryback loss is very important,” said Dorothy Coleman, vice president of tax and domestic economic policy at the National Association of Manufacturers. “Typically any industry that is cyclical would benefit from this.”