This unusually honest press release just arrived in email my in-box. I have seen many such “material impact” statements, but this one is exceptionally blunt. Thrifty announced that they will not have to pay taxes for 2011 and that it expects a refund for some of the taxes it paid in 2010. All this, because of the new tax law that was just passed by our Congress.
All the more reason to keep an eye on Washington. Granted, individuals escaped a major tax increase, but it would have been nice to have our tax liabilities wiped out for the coming year, wouldn’t it?
As a result of the passage of the Tax Relief Act, the Company is today revising its expectations for future federal income tax payments.
Under the Tax Relief Act, the Company will have the ability to deduct for federal income tax purposes up to 100 percent of the cost of rental vehicles placed in service from September 9, 2010 through December 31, 2011, as well as 50 percent of the cost of vehicles placed in service in 2012. As a result of this accelerated depreciation, the Company now expects that it will not make significant cash payments for federal income taxes in 2011. In addition, the Company noted that it currently has refundable federal income tax overpayments for the 2010 tax year totaling approximately $33 million. The Company expects to fully recover these overpayments in 2011 either as an offset to any potential federal income taxes payable, or through tax refunds. The combination of these factors will favorably impact the Company’s 2011 cash flow from operations, liquidity and overall cash position.
Charlie Leocha is the President of Travelers United. He has been working in Washington, DC, for the past 14 years with Congress, the Department of Transportation, and industry stakeholders on travel issues. He was the first consumer representative to the Advisory Committee for Aviation Consumer Protections appointed by the Secretary of Transportation from 2012 through 2018.
