Just before Congress left for the holiday break, Congressman Ron Kind (D-WI) introduced legislation to help improve the rules under which S corporations operate. The bill, H.R. 4840, is entitled the “S Corporation Modernization Act of 2007” and was cosponsored by a strong bipartisan set of members, including Representatives Jim Ramstad (R-MN), Stephanie Tubbs Jones (D-OH), Allyson Schwartz (D-PA), Phil English (R-PA), Sam Johnson (R-TX), and Steve Kagen (D-WI).
Congrats to the Kind office for introducing this important legislation and putting together this impressive list of cosponsors. Given that most of our S corporation challenges are tax-related, the fact that six of these cosponsors are also members of the powerful Ways and Means Committee is particularly important.
In addition to the S Corporation Association, seven other national business organizations have endorsed the legislation, including the National Federation of Independent Business, the American Council of Engineering Companies, the Associated Builders and Contractors, the Associated General Contractors of America, the National Beer Wholesalers of America, the Independent Community Bankers of America and the Printing Industries of America.
The bill itself includes reforms important to keeping S corporations competitive in coming years, including built-in gains reforms, expanding S corporation ownership through small business trusts and relief from the so-called “sting tax” passive investment rules. As the “Dear Colleague” letter Representatives Kind and Ramstad circulated yesterday outlining the legislation noted:
“Absent change, America’s 3.8 million S Corporations will be handcuffed with outdated rules that hinder their ability to grow and create jobs. That is why we recently introduced, along with our colleagues Reps. Stephanie Tubbs Jones, Sam Johnson, Schwartz, English, and Kagen, H.R. 4840, the S Corporation Modernization Act of 2007. Our legislation would make needed changes to the tax code to keep S Corporations competitive and would help ensure the continued success of America’s predominant small business model by:
· 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.
These reforms would improve the ability of S Corporations to broaden their ownership and remove impediments that prevent them from competing on a level playing field here in the United States.”
On the Senate side, Senators Lincoln and Hatch have been working on a companion bill. S-Corp is looking forward to seeing that legislation introduced in the coming session. Given the strong support of these offices on S corporation issues in the past, we believe it is safe to say the S corporation community has never had a more active and broad based set of friends on Capitol Hill.
How can you help? S corporations are going to need all the highly-placed friends they can find in the coming years. Let your members of Congress know how these reforms are important to the success of your business and your ability to continue to grow and create jobs, and ask them to cosponsor HR 4840 as well.
Congress returns this week following its Memorial Day recess. As expected, the Small Business tax package was signed into law along with the Iraqi War funding just before they left. This package included a number of S corporation reforms that we have been working on for years, and represents a significant improvement to the rules governing how S corporations operate.
Key reforms included relief from the dreaded “sting tax” as well as allowing trusts that hold S corporation stock to deduct their interest expenses, something other trusts have long been allowed to do. And while we did not get everything we sought in the bill, these new provisions are extremely welcome and we appreciate the members and staff who worked to make them happen.
Tax Bills on the Horizon
With the Small Business tax package behind us, it’s time to focus on what comes next. As we have observed, there are lots of actual and potential tax bills on the agenda for this Congress, and keeping track of them is becoming a full time job. Fortunately for S Corp members, that’s what we do. Here’s a list of tax bills to watch:
AMT Reform: Ways and Mean Chairman Rangel previously announced his plans to introduce a permanent fix to the growth of the Alternative Minimum Tax sometime this month. As we’ve written in past Wires, the threat to S corporations is the potential pairing of AMT relief with an increase in individual tax rates, a reduction in the thresholds at which those rates apply, and the change in the tax treatment of capital gains and dividends.
Energy Tax Incentives: Ways and Means is planning to take up tax legislation next week to provide new and expanded incentives for renewable energy sources. Offsets reportedly include denying the manufacturing income tax deduction to oil and gas producers as well as lengthening certain energy depreciation lives. Significantly, the offsets do not appear to include changes to the LIFO inventory accounting method for oil companies or others, at least in the House version.
Extending Family Tax Relief: The budget adopted last month allows part of the tax relief enacted in 2001 and 2003 to be extended past its current December 31, 2010 sunset. Whether Congress actually acts on this issue prior to the 2008 elections is very much up in the air, but the budget gives Congress the ability to move legislation to retain the 10 percent tax bracket, the $1000 child credit, the higher standard deduction and income tax rate thresholds designed to reduce the marriage penalty, and some sort of permanent fix to the estate tax rules. The budget does not make room for extending the lower rates on capital gains and dividends, nor the reduced rates on income taxes above the 15 percent bracket.
SCHIP: The Finance Committee will also consider legislation to expand the Children’s Health Insurance Program. The Senate has already voted to offset the cost of this increase through a tobacco excise tax during debate over the budget resolution.
Technical Corrections: As S Corp readers know, last year’s technical corrections package did not move forward based, in part, on concerns raised about increasing tax rates on exporters who have an IC-DISC. Ways and Means is working on another version, and the most recent word is the IC-DISC provision is still in the package. No word on timing of this package just yet.
Education Incentives: The Senate Finance Committee has been working on legislation to increase and reform the tax incentives for education. A proposed markup on legislation prior to Memorial Day was postponed, but this is a priority for Chairman Baucus, so expect something soon. On the House side, Chairman Rangel joined other Ways and Means members to introduce legislation to fund public school construction and rehabilitation with tax-free bonds. And several House members introduced legislation to increase tax benefits tied to the Hope Scholarship and the Lifetime Learning Credit.
International Tax Reforms: Earlier this year, Congressman Richard Neal (D-MA) introduced legislation (H.R. 1672) to change the tax treatment of dividends for certain hybrid foreign stocks. In May, the Senate Finance Committee held hearings on offshore tax evasion. And this week the Finance Committee will hold hearings on the impact globalization has on the American workforce, with a particular focus on the tax incentives that make up part of our Trade Adjustment Assistance programs. We expect these mutual concerns to coalesce into a package of international tax provisions — mostly revenue raisers — to accompany other tax legislation.
Housing: The implosion of the sub-prime lending market and the general rise in housing and land prices suggest that a housing tax bill or tax title could be considered by this Congress. The House Revenue Measures subcommittee held hearings last month that focused on the Low Income Housing Tax Credit, private activity tax-exempt bonds, and the historic rehabilitation tax credit.
Bottom Line: The combination of lots of tax bills together with the desire to offset any tax decreases with tax increases should make all taxpayers wary, especially those that, like S corporations, have been the target of unwarranted criticism in the past couple years.
It’s getting so you can’t tell the tax bills without a program. The Small Business Tax package that includes the S Corporation Reform tax title has been adopted by the Senate for the second time, this time as a Baucus/Grassley amendment to the Iraqi War supplemental.
An earlier version of this package was adopted as part of the effort to raise the minimum wage. Differences between the House and the Senate stalled that bill, and the House attached its version to the supplemental as a means of breaking the stalemate. What happens now is unclear. The supplemental is likely to be vetoed in its current form, while the minimum wage package is being held up in the Senate pending Senate Republicans demand of a pre-negotiated agreement over what the final bill will contain.
The S Corporation Association has weighed in strong support of these improvements to the rules under which S corporations operate. Our Chairman has written a letter of support to the tax writers, we have organized a coalition of business groups to support the provisions, our champions in the Senate have weighed in with their leadership, and our S corporation members have met with their Senators and Representatives to build support for these helpful reforms, including S Corp priorities of reducing the impact of the Sting Tax and expanding the ownership pool for S corporations.
In addition to the Baucus/Grassley amendment, S Corp Champions Senators Smith and Coleman have filed an amendment to harmonize all the effective dates for the S corporation provisions to January 1st, 2007. If our members are going to pay higher labor costs in 2007, it makes sense for all of the offsetting tax relief to begin this year as well.
Despite the current logjam, your S Corp team is confident that these reforms will wind up on the President’s desk this year, in a form that he can sign into law. In the meantime, we’ll keep advocating for these and more. Your advocacy is welcome as always.
Cato on Tax Gap
Cato’s Dan Mitchell has written an excellent summary of the tax gap issue, noting among other things that the U.S. enjoys the smallest shadow economy of any of our major competitors. As Dan writes:
“By global standards, the United States has very little tax evasion. According to the world’s leading expert, Friedrich Schneider of Austria’s Johannes Kepler University, the U.S. shadow economy accounts for just 8 percent of gross domestic product, which compares to an average of 16 percent for 21 major industrial countries he examined. Indeed, Schneider finds that the United States has the smallest shadow economy of 145 nations analyzed.
A comparatively modest tax burden is perhaps the main reason why American taxpayers are less likely to evade taxes than are their foreign counterparts. Table 1 shows that lower-tax nations such as the United States, Singapore, and Switzerland have the least tax evasion. With lower tax burdens, taxpayers have less incentive to hide their money from tax authorities.
However, some U.S. taxes have high marginal rates, which undermines compliance. One study found that a 1 percentage point increase in marginal tax rates is associated with a 1.4 percentage point increase in the underground economy.”
The S Corporation Association (“S-CORP”) today sent a letter to congressional tax writers advocating for the inclusion of S corporation reforms in the final small business tax relief package and for the need to make these provisions effective immediately.
Signed by the S Corporation Association, the Associated General Contractors, the Printing Industries of America, the Independent Community Bankers of America, the Association for Manufacturing Technology, America’s Community Bankers, and the National Roofing Contractors Association, the letter emphasizes the important role S corporations play in the growth of small businesses and the importance of easing the rules under which they operate.
“While the S corporation community has grown, many of the rules governing their operations have remained the same. The Senate-passed package of small business tax relief would address some of these rules, making it easier for S corporations to compete with LLCs and other business forms,” the letter notes. “While these provisions do not address all the challenges faced by S corporations, they are a significant step towards eliminating unnecessary and costly rules that hinder the ability of S corporations to grow and create jobs.”
S-CORP Chairman Tom McMahon observed that several of the provisions included in the Senate package have been long time priorities for the S Corporation Association. “Provisions to reduce the impact of the so-called “sting tax” and to expand the eligible population of S corporation shareholders are two priorities for our group and they represent positive steps in the long road towards establishing parity between S corporations and LLCs, ” McMahon said.
S-CORP Executive Director Brian Reardon pointed out that both history and the economics support making S corporation reforms part of the minimum wage increase. “S corporation reform was a big part of the tax package that accompanied the last increase in the minimum wage,” Reardon observed. “While S corporations appear to be disproportionately represented in industries that pay the minimum wage, the average S corporation has significantly fewer resources than the average C corporation to pay those increased labor costs.”
The S Corporation Association is the only association that speaks exclusively for the national interests of America’s 3.6 million Subchapter S businesses. S-CORP was founded in 1996.
In a bit of potential good news for small businesses, the Senate Finance Committee today adopted by voice vote an $8 billion package of small business tax incentives to accompany a planned increase in the minimum wage. Included in the package is a one year extension of the current Section 179 small business expensing limits, an extension of the Work Opportunity Tax Credit through 2012, and an extension of the shorter, 15-year depreciation lives for certain owner-occupied buildings. For S Corps, the package includes an entire title of big and small changes to the rules governing how S corporations operate, including:
- Easing the rules regarding passive investment income under the “Sting Tax”;
- Addressing concerns of S corporation banks; and
- Expanding qualifying beneficiaries of an Electing Small Business Trust
This title reflects lots of advocacy work on the part of the S-Corp Association and other interested groups in town. As S-Corp readers know, two top priorities of the Association are to eliminate the dreaded Sting Tax while allowing non-resident aliens to become S corporation shareholders. With a couple technical challenges, the Finance-passed provisions represent a significant step forward for achieving our goal of parity with LLCs. As our Chairman wrote to Senator Max Baucus today:
Provisions to reduce the impact of the so-called “sting tax” and to expand the eligible population of S corporation shareholders are two priorities for our group and they represent positive steps in the long road towards establishing parity between S corporations and LLC’s. We appreciate your work in including these priorities, and look forward to working with you in the future to address our Association’s other important challenges.
In addition to providing these much needed improvements to the S corporation rules, I would strongly encourage you to establish a uniform effective date for the S corporation provisions — beginning after December 31, 2006 — to ensure that this relief reaches our members in the same year as the minimum wage is increased.
Just where does the package go from here? The House minimum wage bill does not include any tax provisions, and careful readers of the Constitution understand that revenue bills must originate in the House. Meanwhile, a minimum wage increase without any small business tax relief is unlikely to pass the Senate… so, how do small business advocates get around the Constitution and enact much needed tax relief for America’s employers? As CongressDailye reports earlier today:
But Finance Chairman Baucus said it is now up to House and Senate Democratic leaders to resolve a dispute between the two chambers over whether the small business tax breaks should be linked to the minimum wage. “The Senate has made it clear: There aren’t 60 senators who will vote for the minimum wage [increase] unless it includes small business provisions,” Baucus told reporters after the markup. “But at this point, it’s up to Speaker Pelosi and [Majority Leader] Reid as to how they want to work this out.” The House passed a straight minimum wage bill, and House Ways and Means Chairman Rangel has indicated he intends to enforce the House’s constitutional prerogative to initiate tax legislation. “The Senate as a whole still has the opportunity to pass a clean minimum wage bill,” a Rangel spokesman said today.
One possible solution is for the Senate to wait for the energy tax bill scheduled to be considered by the House this week, attach the Senate minimum wage and tax package, and send it back. Under the rules, a tax bill is a tax bill, and there would be no constitutional challenge to the resulting package.
Today, the Chairman of the S Corporation Association Advisory Committee, James Redpath, submitted testimony on S Corp reform to the Senate Committee on Finance. The Senate Finance Committee held the hearing on small business tax relief as part of its preparation for Senate consideration of the minimum wage increase. As Jim pointed out in his testimony:
I am concerned that many of the companies that will bear the impact of this increase in labor costs are closely-held or family-owned businesses structured as Subchapter S corporations. My goal is to provide you with a first hand account of how to offset some of this new labor cost to small businesses by improving the outdated rules currently governing S corporations.
Jim goes on to highlight some of the S Corp priorities that would most improve the ability of today’s S Corp to compete and create jobs, including provisions to ease the burden of the built-in gains and sting taxes, increase their access to capital, and level the rules applying to S Corps and LLCs. The current tax relief plan, as outlined by Chairman Baucus, would reduce revenues by $8 to $10 billion over the next five years and include:
- A one-year extension of Section 179 small business expensing;
- A one-year extension of the lower, 15-year depreciation rules for retail businesses;
- A permanent extension of the Work Opportunity Tax Credit; and
- A higher, $10 million threshold for businesses wishing to use cash accounting.
Chairman Baucus also made clear that this tax relief would be fully offset by other tax increases, but he declined to be more specific. (While we’re told that none of the so-called revenue raisers we’ve worked to oppose will be included — raising payroll taxes on S Corps, LIFO repeal, etc — we’re going to keep working with our allies in the business community to ensure they don’t surface on this bill or any other.) Moreover, the Chairman indicated that they were open to suggestions for other small business friendly provisions that might be included.
On that front, Senator Blanche Lincoln, the sponsor of several S Corp reform bills, spoke up and raised the importance of including S Corp reforms in this legislation, to which the Chairman replied, “Those are great suggestions.” We agree, and we’ll continue to work with Senator Lincoln’s office and other S Corp friends to get these provisions enacted…
One complication is the fact the House is passing a minimum wage increase without any offsetting tax relief. The House bill would increase the wage by the following schedule:
- From $5.15 to $5.85 60 days after the legislation is signed;
- From $5.85 to $6.55 one year later;
- From $6.55 to $7.25 two years later.
Since the Constitution says all revenue bills must originate in the House, we’re interested to see how the House reacts to the Senate-passed tax relief. It could simply refuse to take up the provisions, we’ll be sure to keep you apprised of any developments. Social Security Reform and S Corps
We’ve been hearing all sorts of rumors these days about the direction Social Security reform has taken. Robert Novak reports that Treasury Secretary Hank Paulson has offered an increase in the Social Security Earnings Limit as a means kick -starting reform talks. Our Treasury friends adamantly deny that rumor, saying the Secretary has done no such thing.
In reaction to these rumors, House Republicans yesterday reaffirmed their strong opposition to raising the cap. Meanwhile, the White House renewed its call for the creation of Personal Accounts to accompany Social Security reform. Maybe the earnings cap idea was just a trial balloon to kick start reform talks? If so, it looks like we’re back to square one, with the White House insisting on Personal Accounts and congressional Democrats refusing to talk until the President takes them off the table.
Just to be clear, raising or eliminating the Social Security earnings limit would represent a massive tax increase on individuals and businesses. For example, an S Corp with $120,000 in income would see its tax burden increase in 2007 by nearly $3,000. For perspective, that tax increase more than offsets any tax relief the business enjoyed from the 2003 Tax Relief Act.
The current cap for 2007 is $97,500. Wages up to that point are subject to payroll taxes, totaling 15.3 percent of wages and fund Social Security and Medicare benefits to seniors. Above that level, only the 2.9 percent Medicare tax applies.
Congress has about six weeks left of session before it leaves for the mid-term elections and a very full list of unfinished items on the agenda. Just on the tax front, there is possible action on:
- changes to the estate tax rules
- reform of our pension system
- extension of expiring tax provisions like the R&E tax credit
- a potential energy tax package
- and a possible increase in the minimum wage bill combined with small business tax provisions.
While we would never close the door on full consideration of each of these items, the closer we get to the election and a very probable lame-duck session of Congress, the greater the likelihood that some or all of these tax provisions will get rolled into a single, omnibus bill that includes spending and entitlement items as well. That’s the “read between the lines” take on yesterday’s CongressDaily report that Senator Frist is looking at attaching the estate tax compromise to the pension bill or other moving vehicle:
Senate Majority Leader Frist appears to have made little headway in securing 60 votes for a reduction of the estate tax, but talks are continuing with selected Democrats. If he cannot find a plan that can win enough Democrats to defeat cloture on a standalone bill, Frist is still holding out the possibility of inserting an estate tax reduction in the pension conference report or other unrelated legislation, sources said.
Here at S-CORP, we’re experts at turning lemons into lemonade. An omnibus bill means lots of opportunities for S CORP friends on the Hill to make sure S corporations and the policies they support are part of the package. With S-CORP supported provisions like the Sting Tax reforms and allowing IRAs to be S corporation shareholders still on the table, our goal is to get them into whatever piece of legislation is headed to the President’s desk.
Pension Reform Update
One bill that could head to the President’s desk is H.R. 2830, legislation to reform pension rules for private sector employees. This legislation has been stuck in conference between House and Senate negotiators since March, and the clock is ticking. Word is that if the conferees don’t resolve their differences by August, the bill may never get done. As CongressDaily reports:
Conferees have repeatedly missed deadlines for finishing the bill. They have been hung up over differences that include whether to give struggling airline carriers extra pension help and whether to allow employers to use the same firm to provide investment advice to their employees as they do to manage workers’ retirement assets.
Why is the pension bill of interest to S-CORP? By all accounts, it is viewed as the most likely vehicle for estate tax reforms and other tax provisions of interest to small and closely-held businesses. If the pension conferees come to an agreement in the next week, odds of a pre-August fix to estate tax rules rise accordingly.
Yesterday, by a vote of 244-185, the House approved the long-delayed tax reconciliation bill (H.R. 4297) following an agreement between House Ways and Means Committee Chairman Bill Thomas (R-CA) and Senate Finance Committee Chairman Chuck Grassley (R-IA) that a follow-up tax extenders bill may be attached to pension reform legislation.
The reconciliation tax bill includes a two-year extension of the reduced tax rate on capital gains and dividends, a one-year extension of alternative minimum tax relief for middle-income tax payer, a two-year extension of increased small-business expensing under section 179, and extension of the subpart F exemption for active financing income.
Fourteen revenue offsets are also included that raise $13 billion over the next 10 years. The Senate is expected to vote on the bill today. It needs a simple majority to pass the Senate, and a few Republican defections are expected, while a few Democrats are expected to vote for the bill.
For the Joint Committee on Taxation Estimated Revenue Effects Of The Conference Agreement For The “Tax
Increase Prevention And Reconciliation Act Of 2005”: http://www.house.gov/jct/x-18-06.pdf
Revenue Offset In Tax Cut Bill Impacts Domestic Manufacturing Deduction for S Corporation Manufacturers
S Corps engaged in production activities should probably take a look at Section 514 of the reconciliation tax bill. This section modifies the wage limitation for the domestic manufacturing deduction enacted in the 2004 American Jobs Creation Act. The Jobs Creation Act allowed manufacturers to take a deduction against qualified production income, but limited that credit to no more than 50% of the wages paid to all employees that year. H.R. 4297 would limit the deduction to workers directly involved with producing the qualified property. This change will definitely be an administrative challenge and could reduce the benefits of the deduction for companies with significant nonproduction wages.
The provision also includes a simplification measure repealing the special limitation on wages treated as allocated to partners or shareholders of pass-through entities. S-CORP Advisory Board Chairman Jim Redpath noted this is a “good simplification move for S corporations.”
S-CORP recently heard from Eric Solomon, newly nominated by the President to head up the Treasury
Department’s Office of Tax Policy, regarding their plans the issue final regs on Section 199. This provision is a big change to Section 199, and observers now expect that schedule to get pushed back.
S-CORP Continues Efforts on “Sting Tax Relief”
Despite the best efforts of S-CORP members and allies, the final reconciliation tax bill left out the Senate-passed provision to provide relief from the “sting tax” on excess passive income held by S corporations. The good news is that the Sting Tax provision continues to be in play, and is being considered for a second bill that is still being negotiated. The second bill is expected to include provisions that were removed from the reconciliation bill to keep that bill’s cost under the $70 billion cap set by the fiscal year 2006 budget resolution. The “trailer package” is expected to an extension of several popular business tax cuts, including the research credit, the work opportunity tax credit, the state and local tax deduction, and the above-the-line deduction for teacher classroom expenses.
S-CORP Board of Directors and Advisory Board Capitol Hill & Administration Visits
Last week S-CORP’s Board of Directors and Advisory Board held their annual Washington, DC meeting. We were privileged to meet with key Administration personnel to update them on our members’ priority issues: preserving the tax status of S corporations, fighting proposed increases on S corporations, and promoting initiatives that will allow S corporations to grow and prosper.
We briefed Members of Congress and their staff on the benefits of H.R. 4421, the S Corporation Reform Act.” We are pleased to announce that S-CORP Chairman Tom McMahon’s (Barker Company in Keosauqua, Iowa)
representative, Congressman Jim Leach (R-IA) quickly signed on as a cosponsor of the bill. We continue our efforts to increase cosponsors for this important legislation.
House and Senate tax writers failed to reach an agreement this week on a final tax reconciliation conference report (H.R. 4297), despite earlier predictions that a final bill would be unveiled this week. It appears that the final bill will include both the AMT relief the Senate wants and the extension of the lower rates on investment income the House wants, as well as provisions necessary to cover the out-year revenue losses of the lower rates. According to Senate Finance Committee Chairman Grassley, these items add up to $74 billion over five years, $4 billion more than the budget limit. Reports indicate that the substance and size of any revenue offsets to be included in the bill is the final sticking point.
House and Senate negotiators are also working on the form and substance of a possible second tax bill that would include various tax extenders, including the R&D tax credit, that could either move separately or attached to the pension bill currently in conference. These provisions were originally included in the House and Senate-passed bills but were pushed out to make room for the extension of the lower rates and the AMT relief.
S-CORP continues to work with key players in the Senate to ensure that the Senate-passed provision that would provide relief from the “sting tax” on excess passive income held by S corporations remains in one of these two bills.
Congress has returned from a weeklong recess and once again will attempt to finish last year’s tax business: a $70 billion tax cut bill (the “reconciliation” bill) and a pension reform bill. The S Corporation Association (“S-CORP”) continues to work with congressional tax-writers to include a Senate-passed provision to provide “sting tax” relief for S corporations subject to double taxation at the highest corporate rate in the tax reconciliation bill. S-CORP salutes Senator Blanche Lincoln (D-AR) for leading a bicameral and bipartisan letter that was sent last night to the House and Senate conferees.
The letter urges House and Senate conferees to retain the Senate language that, among other things, modifies the current excess passive income rules by increasing the threshold for taxing excess passive income from 25 percent to 60 percent and eliminates the rule that would terminate a company’s Subchapter S status for having excess passive income for three consecutive taxable years. Members signing the letter include Senate Finance Committee members Orrin Hatch (R-UT) and Gordon Smith (R-OR); Senate HELP Committee Chairman Mike Enzi (R-WY); and, House Ways and Means Committee Members Jim Ramstad (R-MN) and Phil English (R-PA) in addition to Small Business Committee Chairman Don Manzullo (R-IL).
S-CORP Chairman Tom McMahon said, “We are deeply grateful for the work of Senators Lincoln, Hatch, and Smith to pass legislation that will free S corporations from outdated and obsolete rules that either double tax our business income or lock up our capital and place us at a competitive disadvantage.” He added, “We are pleased that this provision has garnered bipartisan support and hope that Congress will soon pass a final conference report that will help America’s small and family-owned businesses grow and prosper free of the risks and constraints of the “sting tax.”
Congress will be in session for two weeks of legislative business before a two-week Easter recess. It is unclear whether the House Senate Conference Committee working on the final tax bill will be able to complete action on the bill in this time. Immigration and lobbying reform top the Senate’s priority list for Senate Floor action during this time period. The House agenda is more open and would allow time for consideration of a conference report.