Business Community Support for S Corp Mod
As we reported last week, a bipartisan group of tax writers in the House and Senate have introduced this year’s version of the S Corporation Modernization Act. The bills (H.R. 1696 & S. 711) are sponsored by Senators John Thune (R-SD) and Ben Cardin (D-MD) and Representatives Dave Reichert (R-WA) and Ron Kind (D-WI).
This week, a group of eighteen Main Street business groups wrote to Congress in support of the legislation, including the National Federation of Independent Business, the Associated Builders and Contractors, the Independent Community Bankers, and the American Council of Engineering Companies. As the letter states:
Main Street businesses are the growth engine of America’s economy and S corporations are the cornerstone of the business community. There are more than 4.7 million S corporations nationwide. They are in every community and every industry and they employ one out of every four private sector workers.
Yet many of the rules that govern the day-to-day management of S corporations date back more than half a century. These outdated rules hurt the ability of S corporations to grow and create jobs. Many family-owned businesses would like to become S corporations, but the rules prevent them from doing so. Other S corporations are starved for capital, but find the rules limit their ability to attract investors.
This year’s legislation is the ninth Congress in a row that the S Corporation Modernization Act has been introduced. Over the years, we have had great success getting many of the bill’s provisions enacted into law. Just last Congress, we saw the shorter built-in gains recognition period and the charitable basis provisions made permanent.
This year’s bill includes provisions that increase access to capital by reducing S corporation ownership restrictions, ease punitive restrictions that apply to converted S corporations and punish the unwary, and level the rules between S corporations and partnerships when their assets are passed on from one generation to the next.
With tax reform on the table, we are hopeful that these provisions can be included in the broader effort. The S Corporation Modernization Act has a strong history of seeing its provisions enacted into law and we’d like to keep that momentum going!