Small business tax relief bills introduced in Congress

Senate Finance Committee ranking member Charles E. Grassley, R-Iowa, introduced small business tax relief legislation on June 26 that he believes would give critical tax relief to small businesses – helping them to grow and create new jobs.

One day prior, U.S. Senators Olympia J. Snowe, R-Maine and Kent Conrad D-North Dakota, and U.S. Rep. Charles A. Gonzalez, D-Texas, introduced the Home Office Tax Deduction Simplification and Improvement Act of 2009, bipartisan, bicameral legislation to establish an optional home office deduction to help ease the burden of the complex tax code on American small businesses.

Small Business Tax Relief Act of 2009

“My bill will leave more money in the hands of small business owners so they can hire more workers, keep paying the salaries of their employees, and make additional investments that will lead to new jobs,” Grassley said. 

The Small Business Tax Relief Act of 2009 provisions include:

• Increase the amount of capital expenditures that small businesses could expense from $250,000 to $500,000
  
  
• Allow more small C corporations to benefit from the lower tax rates for the smallest C corporations
  
  
• Take the general business credits out of the Alternative Minimum Tax (AMT) for those sole proprietorships, flow-throughs and non-publicly-traded C corporations with $50 million or less in annual gross receipts
  
  
• Extend the 1-year carryback for general business credits to a 5-year carryback for small businesses
  
  
• Provide a 20% deduction for flow-through business income for small businesses, which are defined as flow-through entities with $50 million or less in annual gross receipts
  
  
• Lower the potential tax burden when a C corporation becomes an S corporation
  
  
• Expand the net operating loss provision contained in the stimulus bill

Home Office Tax Deduction Simplification and Improvement Act of 2009

The Home Office Tax Deduction Simplification and Improvement Act of 2009 would require the IRS to streamline its reporting requirements to clearly identify the portion of the deduction devoted to real estate taxes, mortgage interest and depreciation to further reduce the burden on the taxpayer.

Under current law, a home office tax deduction can be utilized by qualified individuals who use a portion of their home as a principal place of business or as a space to meet with patients or clients. Although recent research from the Small Business Administration (SBA) indicates roughly 53% of America’s small businesses are home-based, few of these firms actually take advantage of the tax incentive due to complex and rigid reporting regulations. The Home Office Tax Deduction Simplification and Improvement Act of 2009 would direct the Secretary of the Treasury to establish an optional, easy-to-use standard deduction to encourage greater use of the incentive.

The bill would also:

• Require the IRS to streamline its reporting requirements to clearly identify the portion of the deduction devoted to real estate taxes, mortgage interest, and depreciation
  
  
• Update the tax code to ease the burden of proof in claiming the deduction
  
  
• Allow the home office deduction to be taken if the taxpayer uses part of the home to meet or deal with clients regardless of whether the clients are physically present and allow for de minimis use of business space for personal activities so that taxpayers would not lose the ability to claim the deduction if they make a personal call or pay a bill online

This initiative has already received support from the National Federation of Independent Business (NFIB), the IRS National Taxpayer Advocate Service, and the U.S. Small Business Administration’s Office of Advocacy.

More Federal legislation news

Ohio legislation