Congress is back in session, and we’ve got good news! Senators Smith and Lincoln yesterday introduced S. 3857, the “Bringing Opportunities to Our Small-Business Taxpayers (BOOST)” Act. This legislation is designed to help all closely held businesses continue to grow and thrive. For our S-CORP members, the BOOST Act contains an entire section devoted to S-CORP priorities, including provisions to make it easier businesses to convert to S corporation status and provisions to increase S-CORP access to capital by reducing ownership restrictions on S corporations.
Combined with previous bills introduced by Congressman Clay Shaw (H.R. 4421), Congressman Jim Ramstad (H.R. 2239), and Senator Orrin Hatch (S. 3838), S-CORP now has four major pieces of legislation focused on its priorities together with numerous champions positioned on the critical tax writing committees in the House and Senate. We’ll continue to work to ensure these provisions are considered by Congress when the next tax bill is debated. Many thanks to our friends on the hill, Congressmen Shaw and Ramstad and Senators Smith, Hatch, and Lincoln, for taking the lead on these important issues.
Tax Bill Outlook
Now that Congress is back, what’s the outlook for a tax bill? Yesterday’s Wall Street Journal makes clear that there’s still potential for legislative action on the tax front:
Down in polls and divided internally, Republicans want to block debate on domestic policy and shift attention to national-security issues that command more party unity. But census data last week highlighted the economic squeeze on many families, and House leaders are considering a pre-election bid to make permanent the $1,000 child tax credit and marriage penalty relief provisions enacted in 2001. Like most of the Bush administration’s tax breaks, these are due to expire at the end of 2010, when top rates for the wealthy and capital gains also will be in play. The strategy has been to wait until close to the deadline and then call up all of these issues at once, making it harder for Democrats to resist. But in the current political climate, the leadership could accelerate action on provisions for middle income taxpayers if it means preserving Republican control of Congress in November.
Other possibilities include Senate reconsideration of the so-called “trifecta” bill (estate tax, minimum wage, and tax extenders like the R&D tax credit). That legislation failed to gain the necessary 60-votes prior to the August break, but leadership staff indicates Senator Frist may move to reconsider that vote in September. In yesterday’s CongressDaily, Senator Frist discussed the possibility of adding the tax permanence provisions to the trifecta bill to gain the necessary votes:
Senate Majority Leader Frist also said he is looking for a chance to make permanent the child tax credit increase, tax cuts for married couples and the 10 percent tax bracket, although no decision has been made as to whether the Senate will vote on those provisions before it recesses for the elections. “I believe to get some certainty into people’s lives, we want to go ahead and make those permanent as soon as possible. Whether or not they will be brought up for a vote, it’s too early to tell right now,” Frist told reporters. Aides said Republicans are mulling whether to add tax cut permanency provisions to the so-called trifecta package, which includes a permanent reduction in the estate tax, minimum wage increase and tax extenders. They also might act on making tax cuts permanent as standalone legislation, these sources said.
In the meantime, the Senate Finance Committee is expected to hold a third hearing on tax reform issues later this month. So, while elections and security issues have taken center stage in Washington, tax issues important to S Corps and the small business community are continuing to percolate.