In Washington, the battle this year for distributors will not be in Congress, according to Jade West, senior vice president-government relations of the National Association of Wholesaler-Distributors. Once again, in 2013 the focus will be on the regulatory arena.
West and Jim Anderson, NAW's vice president-government relations, provided MDM with an update at the recent NAW Executive Summit in Washington D.C.
The biggest news in the regulatory arena was the recent decision by a federal appeals court that recess appointments to the National Labor Relations Board in January 2012 were unconstitutional, which could call into question several new regulations introduced over the past year. “The NLRB decision was a huge thing,” West said. “It was big. … The court decision was broad and sweeping.”
West believes that if the decision goes to the Supreme Court, it would be difficult to overturn. And because of this ruling, a lot of the other regulatory issues concerning labor are on hold, including ambush election rules. Read the advisory from the NAW on this ruling.
Here’s their take on other major issues affecting distributors this year:
Health care: Don’t expect repeal of the Affordable Care Act, also known as Obamacare. “It has no chance in the Senate,” Anderson said. Instead NAW is closely following the pieces of the legislation that affect employers directly, most of which goes into effect in January 2014, including the employer mandate. The Internal Revenue Service recently released a proposed regulation that effectively implements the employer mandate and clarifies when and to what extent employers would have to extend health insurance. Read more about that in this brief from the IRS.
Distributors can also expect a final rule on the essential health benefits rule in the next month or two, as well as some news on the implementation of health exchanges. Small employers are especially impacted by the exchanges, which allow individuals and small companies to purchase insurance in a state-based marketplace, giving more choices for health insurance.
The NAW is also following efforts to eliminate the IPAB, or Independent Payment Advisory Board, which makes recommendations on Medicare spending.
Read this MDM article on The Practical Implications of Obamacare.
Corporate tax reform: The impact of potential corporate tax reform could be far-reaching. As West told MDM in 2012, the impact is broad because hundreds of businesses file under the personal income tax laws as Sub S corporations. They already got hit with tax increases in the fiscal cliff deal. “We are watching very closely to see what they do on tax reform,” West said. “… I’m not sure they will get real traction on a piece of legislation this year, but we are concerned they will do something on the corporate side that disadvantages the individual side of the code.”
LIFO Repeal: NAW continues to watch the potential repeal of a common accounting method used by many distributors, LIFO, which assumes that the last unit into inventory is sold first. LIFO evens out the effect of inflation because older inventory left in reserve is assigned a lower value. The repeal of LIFO has been considered off and on as a potential revenue source. “It’s always in the President’s budget,” West said. But she does not expect the issue to come up this year.
Because the amount of revenue LIFO repeal would generate slips every year, West said, it’s also possible that the appeal of doing so will lessen. “We have done a pretty good job getting enough of Congress to understand that it’s a retroactive tax. If you repeal it and ignore those reserves going forward, it doesn’t generate much revenue,” she said. “…We stay glued to it and never take our eyes off it.”
For more on these issues, visit the government relations section of the NAW website.
Please do not reprint MDM's content on your website without MDM's express permission as it is copyrighted material. To gain permission, email us, or call 1-888-742-5060. For information on PDF or print reprints, visit www.mdm.com/reprints. MDM welcomes inbound links from your site. Please cite Modern Distribution Management.
Download the Top 40 Industrial Distributor List
Get the Top 40 Industrial Distributors list in PDF, and you will be signed up to receive MDM Update, your free daily distribution news update by email.