ACRL College & Research Libraries News

College & Research Libraries News

Publishers’ Backlists and the IRS

A February 1980 Internal Revenue Service ruling (Rev- enue Ruling 80-60) which implements the U.S. Supreme Court decision, Thor Power Tool Co. v. Commissioner of Internal Revenue, 439 U.S. 522 (1979), may have a serious impact on the book trade.

Under the ruling publishers can no longer write down the value of their inventories for tax purposes. The resultant increase in taxes could be more than a million dollars, even for small and medium sized publishers.

The impact on library acquisitions will be critical. In order to avoid a tax penalty, publishers will have to either sell most of their back stock at less than cost, or destroy it. Books go out of print too quickly as it is, and librarians seeking replacement copies or trying to fill in gaps in their collections will face even greater obstacles if the ruling is allowed to stand.

Publishers may become extremely cautious in accepting contracts, with aüthors whose works are not certain to be best-sellers, especially in technical and scholarly fields. Those books that are published will be printed in fewer quantities and fewer second printings, forcing an increase in the price of individual copies.

Although the original Supreme Court decision involved power tools and not books, the IRS ruling extends the deci- sion to all warehouse inventories and makes it retroactive to the calendar year 1979. The Thor decision and the IRS rul- ing will have a detrimental effect on all types of libraries throughout the country and their capacity to serve the changing, daily needs of their various users.

According to ALA’s Washington Office, librarians, pub- lishers, and others are pressing for legislation which will ex- empt backlists from full value taxes. As a first step, bills are pending which will prevent IRS Ruling 80-60 from being applied retroactively to 1979. Senate bill 2805, introduced by Sen. Gaylord Nelson (D-Wisc.), is pending in the Senate Committee on Finance. Three similar measures are pending in the House Ways and Means Committee: H.R. 7390 and H.R. 7704, introduced by Rep. Barber Constable (R-N.Y.), and H R. 8154 by Rep. Ed Jenkins (D-Ga.).

Letters expressing your opinion on this issue should be sent to your representative and senators, to the Chair, Senate Finance Committee, Washington, DC 20510, to the Chair, House Ways and Means Committee, Washington, DC 20515, and to Sen. Daniel Moynihan (D-N.Y.), Washington, DC 20510, who plans to introduce a bill exempting publishers from the ruling. ■■