Snowe bill would defer taxes for shipbuilders

WASHINGTON – U.S. Sen. Olympia J. Snowe has introduced legislation to allow shipyards to pay income taxes on Navy ships only after they are delivered, instead of during construction.

“My legislation will restore fairness to the naval shipyard accounting statutes under which the six major U.S. naval shipyards pay taxes on the ship contracts they are awarded by the U.S. Navy,” said Snowe, a member of the Senate Finance Committee, which oversees tax law. “My legislation would permit naval shipyards to pay income taxes upon the delivery of a ship, rather than basing taxes on profit estimates conducted during the ship’s construction.”

Under federal law, shipbuilders are required to estimate their profits during the construction phases of the shipbuilding process, with taxes paid on those estimated profits.

Snowe’s bill would permit naval shipbuilders to use a method of accounting that would require tax payment when the ship is actually delivered to the Navy.