advocacy

Weekly Legislative Update
January 30, 2025

  • Release Date: January 30, 2025

TIA Rallies Around 199A Permanence

TIA along with more than 230 trade associations came out in support of legislation to make permanent the Section 199A deduction. Appropriately named the Main Street Tax Certainty Act, the bill is set to be reintroduced tomorrow by Senator Steve Daines (R-MT) and Representative Lloyd Smucker (R-PA), two of the Main Street business community’s staunchest allies. 

The deduction was enacted in 2017 to encourage job creation and new investment by private businesses. It also helps private companies compete with public corporations. Without the deduction, pass-throughs would face rates up to 16 percentage points higher than their publicly-traded competitors. The challenge is Section 199A will expire at the end of this year absent congressional action.

Here is the full letter:

Dear Senator Daines and Representative Smucker:

TIA and the undersigned business groups strongly support your Main Street Tax Certainty Act of 2025, legislation to make permanent the 20-percent deduction for small- and family-owned businesses (Section 199A).

This legislation would provide certainty to the millions of S corporations, partnerships and sole proprietorships that rely on the Section 199A deduction to remain competitive. Pass-through businesses are the backbone of the American economy. They account for 95 percent of all businesses and employ 63 percent of all private sector workers.

They also form the economic and social foundation for thousands of communities nationwide. Absent their efforts, those communities would face a future of lower growth, fewer jobs, and more boarded up buildings.

?Despite its importance, the Section 199A deduction is scheduled to sunset at the end of 2025, even as the businesses it supports continue to struggle with rising prices, labor shortages, and supply chain disruptions. A recent EY study found the loss of Section 199A would put 2.6 million jobs at risk.

Making the Section 199A deduction permanent will help Main Street compete with large public corporations, lead to higher economic growth and more employment, and help prevent a significant tax hike on the very businesses we rely on to drive our economy.

Numerous studies by economists Barro and Furman, the American Action Forum, DeBacker and Kasher, EY and others found Section 199A permanence would result in improved parity for Main Street businesses and higher levels of economic growth.

The more quickly Congress acts to make Section 199A permanent, the sooner Main Street businesses can return their focus to economic growth and job creation.

We appreciate your introduction of this important legislation and look forward to working with you to see it enacted this year.

Sincerely, 

TIA and other trade associations

CTA Update

Legal Update

Immediately following the reinstatement of the nationwide injunction against the CTA by the Fifth Circuit, the government asked the U.S. Supreme Court to overturn that ruling and restore the filing deadline while the broader case remains pending. As SCOTUS Blog notes, the government’s argument focuses in part on whether federal courts have the authority to issue nationwide injunctions in the first place:

More broadly, [Solicitor General] Prelogar suggested that the justices could weigh in on the propriety of so-called “universal injunctions” – orders barring the government from enforcing the law anywhere in the country. Some of the court’s conservative justices – Clarence Thomas, Neil Gorsuch, and Brett Kavanaugh – have indicated in the past that the Supreme Court should address whether such injunctions are proper.

We’ll be keeping a close eye on those developments but as we noted previously, absent SCOTUS intervention, the nationwide injunction will remain in place at least through March 25th when the Fifth Circuit will hear oral arguments. 

Hill Update

Recently Representatives Harriet Hageman (R-WY) and Warren Davidson (R-OH) penned an excellent op-ed in the Wall Street Journal that calls on lawmakers to repeal the CTA altogether in the new Congress:

Republicans have introduced H.R. 8147, the Repealing Big Brother Overreach Act, which would take this unconstitutional law off the books and protect the privacy and freedom of small businesses and their owners.

The court that issued the injunction against the Corporate Transparency Act called it a “quasi-Orwellian” law that would “rubber-stamp a new form of federal power” with unprecedented mandates, undermine the U.S. system of federalism and set a dangerous precedent. A panel of the Fifth U.S. Circuit Court of appeals stayed the injunction, another panel reinstated it, and the appellate court will hear oral arguments in March.

Congress shouldn’t wait for the courts to rescue it from its own bad ideas. Our policies should unleash the entrepreneurs who fuel innovation, create jobs and keep the American dream alive. We shouldn’t shackle them, regulate them to death and doom them to failure.

With the 2024 filing deadline now behind us, it’s encouraging to see lawmakers keeping up the pressure and ensuring the CTA remains front and center. We look forward to seeing both repeal bills reintroduced in the new Congress and working with these Members to getting them enacted.

Treasury Database Hacked

One of the less-discussed shortcomings of the CTA is that it mandates the collection of tens of millions of pieces of sensitive personal information, and warehouses it all an agency with a spotty record of keeping that data secure. We got a timely reminder of those vulnerabilities, as reported by the Washington Post:

Chinese government hackers breached a highly sensitive office in the Treasury Department that administers economic sanctions against countries and groups of individuals — one of the most potent tools possessed by the United States to achieve national security aims, according to U.S. officials.

…Even unclassified documents can be very useful to a competitor like China, current and former officials said. A breach of OFAC, in particular, could lead to the disclosure of sensitive information about government sanctions deliberations. Before designating a target, OFAC compiles an “administrative record” that purports to show how the evidence collected meets the statutory or regulatory criteria for designation.

The records can include everything from open-source materials to “law enforcement sensitive” information and classified material provided by U.S. or foreign law enforcement, according to four former government officials.

When it comes to securing information collected under the CTA, FinCEN’s stance has essentially been “this time will be different.” Given the relative frequency of these breaches, that’s hard to believe. 

IRS Issues Guidance for the District of Columbia and States that have Paid Family and Medical Leave Programs

The Internal Revenue Service issued guidance on the income and employment tax treatment of contributions and benefits paid in certain situations under a state paid family and medical leave program, as well as the related reporting requirements. Rev. Rul. 2025-4 PDF provides guidance to the District of Columbia and states that have mandatory paid family and medical leave programs and for employees working in and employers operating in those states. Today’s guidance responds to requests to clarify the federal tax treatment of state paid leave programs that help pay employees who can’t work because of non-occupational injuries to themselves or family members, as well as sickness and disabilities.

Multiple scenarios

The revenue ruling explains multiple tax treatment scenarios for contributions to and benefits paid in certain situations under these programs, and the related reporting requirements.

For example, in general, employers can deduct the amount they contribute to mandatory paid family and medical leave programs as a payment of excise tax. Similarly, an employee may deduct the amount they contribute as a payment of income tax, if the employee itemizes deductions, to the extent that the employee’s deduction for state income taxes does not exceed the state income tax deduction limitation.

An employee who receives state paid family leave payments must include those amounts in the employee’s gross income. An employee who receives state paid medical leave payments must include the amount attributable to the employer portion of contributions in the employee’s gross income. This latter amount also is subject both to the employer’s and employee’s shares of Social Security and Medicare taxes. The amount attributable to the employee’s portion of the contributions is excluded from the employee’s gross income, and this amount is not subject to Social Security or Medicare taxes.

The revenue ruling provides additional guidance on other situations.

Transition relief

In addition, the revenue ruling provides transition relief to the District of Columbia, states, and employers from certain withholding, payment, and information reporting requirements for State paid medical leave benefits paid made during calendar year 2025.

This guidance will impact the District of Columbia and states administering paid family and medical leave programs, employers and workers contributing to such programs, and those who receive payments from these programs.

The IRS is soliciting comments on additional situations and aspects of state paid family and medical leave programs that are not covered in this revenue ruling electronically via the Federal eRulemaking Portal at https://www.regulations.gov type IRS-2025-0012 in the search field on the https://www.regulations.gov homepage to find this revenue ruling and submit comments); or (b) By mail to: Internal Revenue Service, CC:PA:LPD:PR (Revenue Ruling 2025-4 PDF), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, D.C., 20044.

TIA Launches Online Tool for Reporting Right-to-Repair Issues

The Tire Industry Association (TIA) is proud to announce a significant update to its website, introducing a new tool designed to amplify the voices of shop owners and technicians nationwide. The "Right to Repair - Report Your Issue" form empowers industry professionals to report instances where they face barriers to diagnosing or repairing vehicles, providing critical data to protect the right to repair for all.

With reports increasing of automakers restricting access to both wired (OBD-II) and wirelessly (telematics) generated diagnostic and repair information, TIA aims to document the real-world impacts of these restrictions on businesses, consumers, and the broader economy.

Why the Right-to-Repair Form Matters

The form gathers key information about repair challenges, including:

• Vehicle specifics: Make, model, and year. 

• Maintenance attempt details: What type of repair was being performed and whether diagnostic codes were accessible. 

• Barriers encountered: Lack of proper tools, unavailable OEM documentation, refusal to sell parts, or required software updates. 

• Current vehicle status: Whether the repair was completed, or the vehicle remains inoperable. 

TIA assures users that all submissions will remain confidential, and no identifying personal or business information will be disclosed when case studies are presented on Capitol Hill.

The form is now live and can be accessed at https://www.tireindustry.org/advocacy/right-to-repair-report-your-issue/