Jewelers of America (JA), the national trade association for businesses serving the fine jewelry retail marketplace, has initiated a campaign to aggressively oppose a repeal of the last-in, first-out (LIFO) inventory accounting method, which President Barack Obama has proposed in his fiscal year 2010 budget. “This repeal would be a potentially fatal blow to companies in the jewelry industry that use LIFO,” said Matthew A. Runci, JA president and chief executive officer (CEO).

Jewelry businesses that use the LIFO inventory accounting method are able to record the sale of their most expensive inventory first, thereby decreasing profits and reducing taxes. By minimizing taxes, jewelers can also maximize after-tax cash flow. At a time when industry businesses are dealing with a liquidity crisis and credit has become difficult to obtain, cash flow is critical to the survival of many companies. LIFO is also a useful accounting method when the costs of inventory are rising, as theycurrently are in the jewelry industry. Runci noted that repealing LIFO now would negatively affect not only many retailers, but also jewelry manufacturers and diamond, gem and watch distributors.

JA has joined and will serve on the steering committee for the LIFO Coalition, a partnership of associations and businesses that oppose LIFO repeal, based in Washington, D.C. The association is also leading the opposition within the jewelry trade, providing information and materials to assist the American Gem Society (AGS), the Jewelers Board of Trade (JBT) and the Manufacturing Jewelers and Suppliers of America (MJSA) in fighting the repeal. “We plan to add the jewelry industry’s voices to others who are saying that now is not the moment to further harm companies struggling to recover from weak economic conditions,” Runci added.

With many legislators in their home districts during this period, the association is encouraging members of the trade to speak to their representatives directly, at town halls and other live, local meetings. Contact details for every member of the House of Representatives and the Senate can be easily found by going to www.usa.gov/Contact/Elected.shtml.