Just in time for our annual Board meeting, S-Corp Champions Dave Reichert (R-WA) and Ron Kind (D-WI) introduced legislation to improve the rules governing S corporations! Entitled the S Corporation Modernization Act of 2015 (HR 2788), the legislation would help ensure that the more than 4.6 million S corporations are able to compete and thrive today’s economy.
Back in 2013, a coalition of key business organizations supported similar legislation, noting that 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 These outdated rules hurt the ability of existing S corporations to grow and create jobs. Many family-owned businesses would like to become S corporations, but are unable to get around some of the existing restrictions. Other S corporations are starved for capital, but find the rules limit their ability to attract investors or even utilize the value of their own appreciated property. HR 2788 would help address these challenges. Specifically, the bill would:
- Modernizing the rules that apply to firms that have selected S corporation status;
- Increasing the ability of S corporations to access much-needed capital; and
- Easing and expanding S corporations’ ability to make charitable donations.
In a joint press release, Rep. Reichert described his legislation in these terms:
“There are more than 95,000 S corporations in Washington State,” said Reichert. “And with 1 in 4 workers being employed by these small businesses nationwide, it is absolutely critical that we ensure these businesses have the tools that will promote their growth, not stifle it. This is a common-sense bill, and I am proud to introduce it with my colleague Mr. Kind. We must continue to support our small businesses and allow these proven job creators to access the capital they need to grow, compete, and get Americans back to work.”
Rep. Kind made the following comment:
“It is critical that we ease the tax burden on our small and family owned Wisconsin businesses who are driving our economic growth. Under this legislation, S corporations will be better able to access credit, invest in their business, and create the good paying jobs that we need.”
With the S-Corp Board in town, we’ll be up on the Hill visiting key tax writers and building support for modernizing the S corporation rules. Congress needs to pass tax extenders and give certainty to America’s employers, but it is also important for the tax writing committees to seek new provisions that help improve the tax rules governing Main Street businesses. The S Corporation Modernization Act of 2015 includes a number of those improvements, and we’re looking forward to working with our sponsors and other supporters to get them enact this Congress.