Textile Association Asks for Increased De Minimis Amount in 'Repair' Regs

Guidance Regarding Deduction and Capitalization of Expenditures Related to Tangible Property

Comments of the Textile Rental Services Association ("TRSA")

Dear Ms. McMahon:

I am writing to you as President and CEO of the Textile Services Association of America (TRSA) 1800 Diagonal Road, Arlington, VA 22314 in support of the sections in the proposed regulations which establish a safe harbor allowing our members to elect to expense the total costs of any textile, uniform or dust control products having a value of $100 or less in the year that such products are placed in service.

I. About TRSA

TRSA is a trade association representing the entire textile services/commercial laundry industry. Our members provide clean linen, uniforms and dust control items to millions of customers every day. TRSA members in the United States employ approximately 200,000 workers and operate more than 1,500 facilities. Using modern technology and energy efficient equipment, TRSA members provide customers with clean goods that are processed in a manner that minimizes the environmental impact on water, air and solid waste disposal while reducing costs to our customers. By providing end users with a recyclable product processed with sophisticated technology, we are leaders in the effort to keep America "Green."

We estimate that TRSA members process more than 8 billion pounds of laundry every year. Our customer base includes restaurants, hotels, industrial plants, commercial facilities, transportation companies, health care institutions, manufacturers, service and retail operations, construction and others. The great majority of the textile, uniform and dust control items processed by our members cost $100 or less when purchased and are rented, including laundering and delivery, for a cost of under $2.00. As examples, our members typically purchase table cloths at a cost of $3.00 to $6.00 and rent those table clothes to customers for $.60 to $.70. Members purchase napkins for $1.00 to $2.00 and rent those napkins for $.08 to $.12. Members purchase uniforms for $35.00 to $55.00 and rent those uniforms for $1.10 to $2.20. Members purchase wash cloths for $.20 to $ .45 and rent those wash cloths for $.07 to $.10.

II. 2008 Testimony

On June 24, 2008, TRSA testified with regard to the proposed rule: Guidance Regarding Deductions and Capitalization of Expenditures Related to Tangible Personal Property. At that time, TRSA:

We appreciate the effort taken by the Department of the Treasury and the IRS in analyzing the comments regarding the 2008 proposed rule and making modifications as part of the proposed 2011 Rule to address the concerns raised. We believe that the 2011 version has significant improvements. However, we ask that the following issues be considered.

Many TRSA members have an established history of deducting the cost of textile items including table cloths, napkins, uniforms, sheets, towels, healthcare textile and dust control items and others for Federal income tax purposes. The IRS and the Courts have repeatedly recognized the validity of this practice. See Prudential Overall Supply v. Commissioner, T.C. Memo 2002-103.83 T.C.M.1545, 1553; Rev. Rul. 69-81, 1969-1 CB 137; Rev. Rul. 78-382, 1978-2 CB 111; Technical Advice Memorandum 00213004. Establishing a bright line De Minimis test will assist both tax payers and the IRS in applying the rules relating to this deduction.

Thank you for your consideration of these comments.