|Jeffrey A. Porter, CPA, chair of the American Institute of CPAs’ (AICPA) Tax Reform Task Force, endorsed legislation in his testimony on July 22 before the Senate Small Business and Entrepreneurship Committee that includes AICPA recommendations that would relieve burdens imposed on small businesses by the tax code. |
“We believe the Small Business Tax Compliance Act of 2015 can ease compliance costs and improve the overall tax system for smallbusinesses across the country,” Porter testified. The bill, S. 1827, was introduced by Sen. David Vitter (R-La.), the chairman of the Senate Small Business Committee.
| Jeffrey A. Porter, CPA is on the right. |
Photo by Steven E. Purcell
Porter cited the tangible property regulations as one example of a recent challenging tax compliance burden that the Small Business Tax Compliance Act of 2015, would help correct. The regulations address how businesses should report the purchase and improvement of tangible property. “We appreciate that the Chairman’s bill includes a provision to increase the de minimis safe harbor threshold for most businesses from $500 to $2,500, and provides an opportunity for more small businesses to use the higher $5,000 threshold,” Porter said.
The penalty provisions in Chairman Vitter’s bill are also important to small businesses, according to Porter. “Penalties should deter bad conduct without deterring good conduct or punishing small businesses which are acting in good faith. Targeted, proportionate penalties that are administered in a reasonable manner encourage voluntary compliance with the tax laws. Good tax policy suggests that we avoid strict liability provisions and instead allow the IRS to consider the facts and circumstances of a particular business’ situation. Businesses that act in good faith should not be subject to the same rules as businesses trying to scam the system,” he said.
Other provisions of S. 1827 noted by Porter that are important to small businesses include:
- Permanence of tax provisions;
- Mobile workforce;
- Cash basis method of accounting;
- Removing computer equipment from the definition of “listed property;”
- Eliminating the top-heavy rule for retirement plans; and
- Providing full deductibility of health insurance.
Porter also emphasized to the senators that declining taxpayer service by the Internal Revenue Service is an important factor to small business owners. “It is imperative that small businesses and their tax return preparers be able to communicate with the IRS when preparing their taxes and addressing compliance issues,” Porter testified.