The National Tooling and Machining Association is working to convince the Internal Revenue Service that manufacturers should be allowed to deduct as an ordinary business expense the cost of implementing ISO 9000 quality standards.
The Fort Washington, Md.-based trade association said it became concerned about the deductions after obtaining an internal IRS white paper that took the position that ISO 9000 systems result in a long-term benefit and must be amortized over three years.
By contrast, the trade association wants its members to be able to deduct the expense of implementing ISO 9000 standards in a single year, a step that would improve a company's cash flow.
ISO 9000 is an internationally approved system for preparing operating manuals and documenting the steps that must be taken by manufacturers to attain consistent product quality. Becky Anderson, a spokeswoman for the trade association, said the group's members view ISO spending as a necessary and ordinary expense because they are under pressure from customers to become ISO-certified or lose their business.
IRS spokeswoman Tamara Ward said officials at the agency are reviewing the issue but have not made a final decision. In the meantime, the trade group is gathering data from members that will be forwarded to the IRS.
``The IRS is saying that they don't think that ISO is a big deal, but we are getting information that shows it costs $100,000 for the average small company to become ISO-certified,'' Anderson said in an interview with Crain's Cleveland Business a sister publication to Plastics News.
Companies are obtaining ISO certification, she said, to remain in business and not primarily for the long-term advantages cited by the IRS.
In a letter sent last summer to congressional leaders, National Tooling and Machining Association President Matthew Coffey said ISO 9000 certification ``has become a business necessity.''
``This certification doesn't give our members a leg-up on anybody,'' Coffey said. ``It just keeps them from being ejected from the game.''
Dennis Rosa, a quality systems product manager for CAMP Inc., a nonprofit economic development group in Cleveland, said one reason small manufacturers in particular are under pressure to implement the quality standards is the trend among large manufacturers to reduce the ranks of their suppliers.
Rosa said companies with ISO 9000 certifications may have a better chance of remaining on a large manufacturer's list of suppliers.