ABC May 18 opposed provisions in the
American Jobs, Closing Tax Loopholes, and Preventing Outsourcing Act (H.R. 4213) that could extend payroll taxes to S corporations and raise taxes on partnership interests transferred when services are performed in order to offset the costs of the 2009 expiring tax extenders.
In a letter sent to all members of the U.S. House and Senate, ABC expressed overall support for H.R. 4213, previously known as the Tax Extenders Act of 2009,
but strongly opposed the sections that would essentially shift the cost of the bill onto the business community.
Under one provision in H.R. 4213, any capital investment in an S corporation by an owner would be
subject to a new tax. ABC pointed out that few details have been released and Congress has not held a hearing on this amendment – which means a provision limiting the only tool available to S corporation owners to reinvest in their business, and by extension the economy, could be implemented without any discussion from the business community about the impact.
In addition, the bill contains a plan to raise revenue by increasing the taxes on partnership interest transfers, which will affect contractors that enter into joint venture agreements in which they are given a partnership interest in exchange for having provided services to the partnership.
“The construction industry already is strained by job loss, with unemployment at 21.8 percent,” ABC stated. “Adding new taxes to an already burdened industry is not conducive to expedient economic recovery.”
ABC offered its support for other provisions in the bill, including the deduction of state and local sales taxes; the research and development tax credit; and the 15-year straight-line cost recovery for qualified leasehold improvement, qualified restaurant buildings and improvement, especially if it is expanded to include new restaurant construction.
In addition, ABC May 13
sent a letter to Rep. Dan Lungren (R-Calif.) supporting the
Small Business Paperwork Mandate Elimination Act (H.R. 5141) which would repeal an expensive and burdensome new tax paperwork requirement in the health care bill.