The Washington Wire Archive - The S Corporation Association

Progress on S-Corp SALT Parity Efforts

The House Select Revenue Subcommittee held a hearing today entitled “How Recent Limitations to the SALT Deduction Harm Communities, Schools, First Responders, and Housing Values.” Missing from the list are Main Street Employers, many of whom lost the ability to deduct the State and local taxes they pay on their business income.

That’s because tax reform subjected deductions on state and local taxes (SALT) paid by pass-through business owners to the same $10,000 cap as taxes paid on wages and property. Taxes paid by the business entities themselves, like C corporations, remain fully deductible.

Since most states tax pass-through businesses at the …

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admin2019-06-25T21:54:41+00:00June 25, 2019|

S-Corp Comments on Section 4960 Excise Tax

The S Corporation Association sent comments to the Department of Treasury today raising concerns that recent guidance it published has the potential to impose the new, Section 4960 excise tax onto private operating companies.

The tax is supposed to be targeted at big non-profits and universities that pay their executives and coaches salaries in excess of $1 million per year, but due to expansive definitions of “employee” and “related organization” included in the department’s guidance (Notice 2019-09), the tax could be paid by many family businesses with related foundations and other charities instead.

Worse, the new law is written in such …

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admin2019-05-29T14:58:59+00:00May 29, 2019|

Tax Foundation Needs to Fix Their Map

The Tax Foundation has updated some of their data on pass-through businesses last week, including this nice map with state-by-state data on the percentage of jobs from pass-throughs, which is helpful. As before, it shows that pass-through businesses employ the majority of private sector workers in every state of the country, including seven out of ten workers in Montana!

On the other hand, this map purporting to show the marginal rates paid by pass-through businesses by state appears to illustrate only a small subset of pass-through businesses, and those towards the …

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admin2019-05-22T16:21:50+00:00May 22, 2019|

Section 199A Deduction Needed to Provide Pass-Throughs Tax Parity with C Corporations

A new presentation on the Section 199A deduction from the Joint Committee on Taxation has gotten people’s attention, particularly this slide:

The slide prompted Senator Ron Wyden, the Ranking Member on the Senate Finance Committee, to observe, “These are not the struggling small business owners we were told this provision would benefit.”

The Ranking Member’s response is misdirected, however. The 199A deduction was not an effort to reduce taxes on small businesses, but rather an attempt to maintain tax parity for pass-through businesses of all sizes. Without 199A, Main Street …

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admin2021-08-16T14:01:56+00:00March 18, 2019|

The Legal Case for Pass-Through SALT Parity

Last week, Bloomberg published a report that got our attention. Entitled, “IRS May Knock down New York, Connecticut SALT Workarounds,” the article says the IRS is “likely” to issue regulations that invalidate SALT workarounds.

The reference to New York didn’t surprise us. It’s no secret the IRS is targeting the charitable workaround adopted by New York and other states – they already issued guidance last fall throwing sand in the gears of that one. But the pass-through SALT parity bills passed by Connecticut and Wisconsin are entirely different, both legally and politically.

Why can C corporations deduct all …

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admin2019-03-14T16:58:06+00:00March 14, 2019|