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Recently, TIA attended a program with Senate Republican Whip John Thune to discuss Republican legislative priorities and the state of the U.S. economy. Thune is a champion for TIA on small business issues such as estate tax repeal.
TIA fought to keep the estate and gift tax exemption at its current level rather than the significantly reduced level proposed this year, which would have cost successful small business and privately owned business owners and their key employees millions of dollars in taxes. TIA will be fighting in 2023 to make the current estate tax exemption permanent so that it doesn’t automatically get cut in half as of Jan. 1, 2026.
In 2022, TIA led the charge to fight the proposed elimination of the step-up in basis for assets going through an estate. This single proposal would have resulted in major new income taxes for the heirs of the owners of small and privately owned businesses.
TIA was able to help a number of key Congressional members understand that the impact of this bill would fall on millions of Americans – many of them middle or upper middle-income taxpayers and certainly not only the very rich.
Nearing the end of the 117th Congress, TIA called attention to the last-minute proposal advanced to tax all income in a pass-through entity not subject to payroll taxes, with a new 3.8% Net Investment Income Tax (NIIT). Bringing together a strong coalition, TIA played an important role in this new tax being excluded from the Inflation Reduction Act of 2022.
Last month, TIA educated the Department of Labor (DOL) on how its proposed rules, most recently the various iterations of the overtime rules and independent contractor rules, would impact small and privately-owned businesses, and successfully opposed proposals that would have been unduly burdensome or unwieldy for small businesses.
Recently, TIA educated members of Congress about the negative impact the various Social Security proposals would have on small and privately-owned businesses. These proposals would dramatically increase payroll taxes paid by the owners of small and privately owned employers because not only would the owners have to pay payroll taxes on their own income above a certain threshold (say $400,000), but the company would also have to match the extra payroll taxes for all employees over the income threshold. TIA will continue to monitor the fixes to shore up the Social Security system to make sure small and privately owned businesses are treated fairly.
There are serious issues before us in the 118th Congress. TIA stands ready.
TIA Sends Letter in Support of H.R. 23
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Dear Representatives Smith and Steel:
We write in strong support of the Family and Small Business Taxpayer Protection Act, H.R. 23.
This legislation would rescind the Inflation Reduction Act of 2022’s billions in funding for the Internal Revenue Service’s (IRS) expanded enforcement efforts, while retaining funding for the IRS to focus on improving taxpayer services and modernizing operations to serve taxpayers.
It is disheartening that Congress would earmark $45.6 billion (58%) for enforcement efforts while only providing $3 billion (4%) for taxpayer services from the $80 billion allocated to the IRS in the Inflation Reduction Act of 2022. Before considering how to penalize taxpayers, the agency should address the immense backlog facing the agency and how to better assist taxpayers with compliance.
In late August 2022, the Treasury Inspector General for Tax Administration (TIGTA) detailed how the IRS’s processing delays have prevented businesses from receiving key pandemic relief benefits.
More specifically, the IRS did not begin processing claims for qualified Sick and Family Leave Credits and Employee Retention Credit for 12 months. As of Dec. 23, 2022, the IRS reported the agency still has 1.91 million unprocessed individual returns to process.
More recently, TIGTA submitted a memorandum to Treasury Secretary Janet Yellen outlining the top management and performance challenges the IRS should consider for Fiscal Year 2023. Unsurprisingly, the first concern listed is “Improving Taxpayer Service.”
We appreciate the Family and Small Business Taxpayer Protection Act addresses these concerns and directs the IRS to spend resources to help and serve taxpayers rather than overwhelmingly focus on enforcement and penalties.
Sincerely,
Tire Industry Association and other trade associations
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