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S-CORP Legislation
S Corporation
Modernization Act of 2009 (H.R. 2910)
Introduced by House Ways and Means Member, Congressman Ron
Kind (D-WI) on June 17th, 2009, the S Corporation Modernization Act
of 2009 is designed to update and simplify the rules governing S corporations –
rules that date back as far as 50 years ago.
Specifically, the legislation:
- Enhances the ability of S
corporations to attract and raise capital;
- Makes it easier for
family-owned S corporations to stay in the family; and
- Encourages additional
charitable giving by S corporations and the trusts that hold them.
Joining Congressman Kind in introducing the legislation
were fellow Ways & Means Committee Members Wally Herger (R-CA), Allyson Schwartz
(D-PA) and Dave Reichert (R-WA).
Click here to read S-CORP’s letter to House Members
Click
here to read a section-by-section summary of the legislation
Click
here to read the full text of the legislation
S Corporation
Modernization Act of 2009 (S. 996)
Introduced by Senate Finance Committee Members, Senators
Blanche Lincoln (D-AR) and Orrin Hatch (R-UT) on May 7th, 2009, this
legislation is the Senate companion to H.R. 2910. This legislation contains
many of S-CORP’s long-time
legislative priorities including easing punitive restrictions that apply to
converted S corporations and punish the unwary, as well as increasing S
corporations’ access to capital by reducing ownership restrictions.
Given the current economic conditions, this legislation is
more important than ever to help ensure the success of America’s S
corporations.
Click here to read S-CORP’s letter Senate Members
Click
here to read a section-by-section summary of the legislation
Click
here to read the full text of the legislation
Small Business Tax
Relief Act of 2009 (S. 1381)
Introduced by Senate Finance Committee Ranking Member Chuck
Grassley (R-IA), on June 25th, 2009, the Small Business Tax Relief Act of 2009
contains a number of small-business friendly tax provisions, including one of
our S-CORP priorities –
built-in-gains relief. The legislation
includes:
- Reducing
the BIG holding period from 10 to 5 years;
- Providing
a 20 percent deduction for flow-through business income for businesses
with less than $50 million in annual gross receipts; and
- Increasing
Section 179 expensing, lowering corporate rates, exempting business
credits from the AMT, and other items.
It’s great to see that our S-CORP
champions on the Hill continue to recognize the importance of our S corporation
community to growth and job creation.
Click
here to read the full text of the legislation
As the eyes and ears of the S
corporation community, S-Corp tracks legislation and administrative policies
that would impact the ability of our members to grow and create jobs.
Below is a short summary of some of those bills and what S-Corp is doing to
ensure the views of America’s 4.5 million S Corps are represented.
Bill to amend the Internal Revenue Code of 1986 to allow individuals to defer tax on income reinvested in a partnership or S corporation (H.R. 2284)
Introduced by Congressman Erik Paulsen (R-MN) on May 6th, 2009, the bill amends the Internal Revenue Code to allow individual taxpayers an exclusion from gross income for certain items of partnership and S corporation pass-thru income up to $250,000 ($500,000 for married couples filing joint returns). The bill would:
- Give small businesses the ability to defer taxes on any business income they reinvest in their partnership or S corporation; and
- Ensure that small business owners are taxed only on the profits taken out of their business.
Click here to read the full text of the legislation
Click here to read Rep. Paulsen’s letter to President Obama about H.R. 2284
S Corporation Inventory Contribution Act of 2009 (H.R.4069)
Introduced by Congressman Phil Hare (D-IL) on November 16th, 2009, the S
Corporation Inventory Contribution Act of 2009 would extend section 170 tax
benefits to S corporations. The legislation:
- Creates an incentive for S corporations to donate excess inventory
or equipment to schools and charities;
- Allows S corporations to deduct up to twice the basis of the item
(not more than the retail value); and
- Limits the amount of such deductions for corporations other than C
corporations to 10% of aggregate net income.
Joining Congressman Hare in introducing the legislation was fellow
Illinoisan, Rep. Danny Davis (D-IL). Corresponding legislation in the
Senate (S.2841) was introduced by another member of the Illinois delegation,
Senator Roland Burris (D-IL).
Click here to read the full
text of the legislation
Click here to read the "Dear Colleague"
Click here to read S-CORP's letter of support
S Corporation Modernization Act of 2007 (H.R. 4840)
Introduced by Ways and Means members
Congressmen Ron Kind (D-WI) and Jim Ramstad (R-MN) on December 19, 2007, the “S
Corporation Modernization Act” is designed to simplify the rules under which S
corporations operate. Original cosponsors of H.R. 4840 represent
Districts across the country, including Representatives Stephanie Tubbs-Jones
(D-OH), Phil English (R-PA), Allyson Schwartz (D-PA), Sam Johnson (R-TX), and
Steve Kagen (D-WI).
The bill is endorsed
by an impressive group of business associations and includes reforms important to
keeping S corporations competitive both here at home and abroad, including:
- Modernizing the rules that apply to firms that have
selected S corporation status;
- Increasing the ability of S Corporations to access
needed capital; and
- Encouraging S Corporations to support charity through
small business trusts.
With this number of Ways and Means
members supporting these important reforms, we are hopeful that Congress will
take up this legislation this year.
Click here to read the full
text of the bill
Click
here for a section-by-section summary
S
Corporation Modernization Act of 2008 (S. 3063)
Introduced
by Finance Committee members Senators Blanche Lincoln (D-AR) and Orrin Hatch
(R-UT), the “S Corporation Modernization Act” is a companion bill to the Kind
legislation and would greatly simplify the rules under which S corporations
operate. Cosponsors of S. 3063 including Finance members Gordon Smith
(R-OR), Olympia Snowe (R-MN), and.
The bill
is endorsed
by an impressive group of business associations and includes reforms important
to keeping S corporations competitive both here at home and abroad.
Provisions included in the Senate bill have been long-time legislative
priorities for the S Corporation Association that would reduce the harm caused
by the built-in gains (BIG) tax and the so-called "sting tax;” protect the
unwary from overwhelming termination consequences from inadvertent mistakes;
and in addition to increasing the ability of S corporations to access their own
locked-up capital, the legislation would allow these companies to attract
capital from overseas.
This
legislation makes important and timely improvements to those rules, making it
easier to our members to raise capital, plan their estates, and create jobs.
Click here to read the full text
of the bill
Click
here for a section-by-section summary.
Click here for the S Corp press release.
Small Business Tax Modernization Act
of 2008 (H.R. 6601)
Introduced by
Chairwoman of the House Small Business Committee Congresswoman Nydia Velázquez
(D-NY) on July 24, 2008, the “Small Business Tax Modernization Act of 2008”
includes many provisions with the potential to benefit the S corporation
community.
Of particular
interest to S corporations, the bill would allow nonresident aliens to invest
in S corporations. This restriction, developed half a century ago,
prohibits S corporations from partnering with investors in other
countries. Lifting this restriction would enhance an S corporation’s
ability to access new sources of capital, which will in turn help generate new
investment and job creation in this country.
Click here to
read S-Corp’s letter to Chairwoman Velázquez
Click here to
read a summary of the bill
Click here to read the full
text of the bill
Small Business Growth and Opportunity
Act (H.R. 3874)
The “Small Business
Growth and Opportunity Act” was introduced by Congressman Steve Kagen (D-WI)
and Ways and Means members Congressmen Jim Ramstad (R-MN), Ron Kind (D-WI) and
Phil English (R-PA) on October 17, 2007.
The bill would reduce
from ten to seven years the period that a business must hold onto appreciated
property before it can be sold. Under current rules, S corporations that
sell their appreciated assets prior to the 10-year waiting period are subject
to the punitive built-in gains tax.
Other H.R. 3874
cosponsors include representatives from across the country, including
Congressmen Richard Baker (R-LA), Jerry McNerney (D-CA), Michael Conaway (R-TX)
and House Financial Services Committee member Congressman Dennis Moore (D-KS).
Click here to read the full
text of the bill
S Corporation Reform Act of 2006 (S.
3838)
Introduced by
Senators Orrin Hatch (R-UT) and Blanche Lincoln (D-AR), the “S Corporation
Reform Act of 2006” is a broad package of S corporation reforms that would
make significant improvements to the rules that govern how S corporations are
structured and operate. The bill includes a number of provisions to:
- Help improve capital formation
opportunities for small business ;
- Preserve family-owned businesses; and
- Eliminate unnecessary and unwarranted
traps for taxpayers.
Click
here to read S-Corp’s letter to Senator Hatch
Click
here to read a summary of the bill
Click here to read the
full text of the bill
Bringing Opportunities to Our
Small-Business Taxpayers (BOOST) Act of 2006 (S. 3857)
Introduced by
Senators Gordon Smith (R-OR) and Blanche Lincoln (D-AR) to provide tax relief
in a number of areas for small businesses, the BOOST Act also includes an
"S Corporation Parity" title. The parity provisions are important S
corporation reforms that make it easier for businesses to convert to S
corporation status and provisions to increase access to capital and reduce
ownership restrictions on S corporations.
Click
here to read a summary of the bill
Click here to read the
full text of the bill
S Corporation Reform Act of 2005 (H.R.
4421)
Introduced by Ways
and Means member Clay Shaw (R-FL), the “S Corporation Reform Act of 2005” would
make significant improvements to the rules that govern how S corporations are
structured and operate. The bill would:
- Increase access to capital by reducing S
corporation ownership restrictions;
- Reduce harmful double taxation by
easing transition rules for C corps that convert to S Corp status;
- Increase S corporation flexibility by
allowing multiple classes of stock and convertible debt; and
- Protect S corporations from crippling
taxes should they inadvertently violate their S corp. status.
The S Corporation
Association has worked with Mr. Shaw and other business groups with S-Corp
members to see this vital legislation enacted.
Click here to read the full
text of the bill
“Sting Tax Relief” in S. 2020, Tax
Relief Act of
2005
On November 18, 2005,
the Senate passed S. 2020 by a vote of 64-33. Section 402 of this bill is
similar to a provision introduced as part of the “S Corporation Reform Act of
2005” that would:
- Eliminate the rule that would terminate
a company’s Subchapter S tax status if it has excess passive income for
three consecutive taxable years;
- Increases the threshold for taxing
excess passive income from 25% to 60%; and
- Removes gains from the sales or
exchanges of stock or securities from the definition of passive income.
While left out of
H.R. 4297, the final version of the reconciliation tax bill, S-Corp continues
to work to include this provision in any moving tax bill this year.
Click here for
the top five reasons to “take the sting out of the sting tax.”
Click here
for a letter of support from trade associations
Click
here for a bicameral and bipartisan letter of support from Members of Congress
Small Business Opportunity and Growth
Act (H.R. 2239 and S. 965)
Introduced by
Congressman Jim Ramstad (R-MN) and Senators Gordon Smith (R-OR) and Blanche
Lincoln (D-AR), the “Small Business Growth and Opportunity Act” will allow S
corporations to liquidate unproductive assets held for a period of 7 years free
of the double tax burden of the “built-in gains tax.” This provision is
also included in the “S Corporation Reform Act.”
Click here for a
summary of the bill
Click here for the full text
of the bill
Click here
for Senator Smith and Senator Lincoln’s Dear Colleague letter
Small Business Flexibility Act (H.R.
4006 and S. 2462)
Introduced by Ways
and Means Members Clay Shaw (R-FL) and John Tanner (D-TN) and Senators Olympia
Snowe (R-ME) and Blanche Lincoln (D-AR), the “Small Business Flexibility Act”
allows start-up S corporations to elect taxable years other than the calendar
year. This gives S corporations greater flexibility to choose a financial
year-end that corresponds with their business cycle.
Click here for the full text
of the bill
Click
here to read S-Corp’s letter to the bill’s sponsors
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