This week Congress winds up legislative business so that Members can go home and campaign for re-election. Following Election Day, both the House and the Senate will come back for a “Lame Duck” session of Congress. Depending upon the results of the election, it could be a very interesting session.
During the recess, S-CORP will continue educating congressional staff promoting and building support for the pro-S Corp bills introduced this Congress. If there’s an opportunity to include any of these provisions on moving legislation in the Lame Duck session, we want to be prepared!
Also of interest to S-CORP members, this week the Department of Treasury released “A Comprehensive Strategy for Reducing the Tax Gap.” As you recall, the tax gap (the difference between taxes owed and taxes collected on a timely basis) has been a major focus of Congress as it seeks to find revenue offsets of increased spending and other tax measures. S corporations were specifically targeted last year by both the Joint Committee on Taxation and the Treasury Inspector General in reports to simplify taxes and close the tax gap. S-CORP mounted an aggressive effort to oppose these proposals and so far we have been successful.
The latest Treasury report serves as a good warning that we must continue our efforts to educate Members about the great harm these proposals will have on America’s small and mid-size and family-owned businesses. While the report is fairly general, is does mention expanding the National Research Program audits (which already target S corps). It also confirms that the Treasury Department continues to consider options for tax reform and simplifying the tax code. SCORP is concerned that we will see a more specific tax gap plan come out of Treasury following the elections when potential tax increases will not be a political liability.
Finally, on the topic of tax increases, Tuesday’s Congress Daily PM reported that House Ways and Means Committee Ranking Democrat Charles Rangel (D-NY) noted that “everything is on the table” when it comes to tax increases. If the Democrats take control of the House this election, Congressman Rangel becomes the Chairman and will set the tax agenda in the House. As S-CORP members well know, an increase in personal income tax rates is a tax increase on S corporations . Just one more issue to keep on our radar screens.