July 14, 2004
Action Alert: Tax Fairness Week
The Republican leadership of the U.S. House
of Representatives has dedicated next week
(July 19 – 23) “Tax Fairness Week”,
promising to focus on passing legislation
that promotes this theme. As part of a
rotating leadership theme plan, bills to be
debated under the Tax Fairness topic include
making permanent the marriage penalty relief
included in President Bush’s 2003 economic
stimulus package.
The NASE encourages the House leadership to
consider eliminating the self-employment tax
on health insurance premiums as a way to
make taxes and access to health coverage
more equitable for sole proprietors.
Currently, Schedule C filers pay
self-employment tax on their health
insurance premiums, while other business
entities are able to deduct this cost before
calculating their tax burden. H.R. 1873 in
the House would remedy this discrepancy, as
well as S. 2433 in the Senate.
Urge your Members of Congress to support
H.R. 1873 and
S. 2433 at the NASE
Legislative Action Center.
7(a) Loan Funding Restored in House Appropriations Amendment
An
amendment added to a House-passed
appropriations bill last week would restore
funding for the U.S. Small Business
Administration’s 7(a) loan program for next
year at last year’s level of $79.1 million.
Sponsored by Chairman and Ranking Member of
the House Small Business Committee, Don
Manzullo (R-IL) and Nydia Velázquez (D-NY),
the amendment received bipartisan support.
The 7(a) program is the country’s largest
source of long-term small business lending
for both the private and public sector,
providing 30 percent of the nation’s long
term loans – and for every 60 cents, the
7(a) program provides over $100 in loans.
Without the funding the amendment would add,
lenders would likely have to charge higher
fees to small business borrowers for loans.
The amendment (H.
Amdt 632) was added to a larger
appropriations bill, the
2005 Commerce-Justice-State Appropriations
Bill (H.R. 4754), which was passed by
the House later in the week. It now goes to
the Senate for approval.
Senate Majority Leader Proposes Premium Deduction
During a health policy speech last week in
Washington, Senate Majority Leader Bill
Frist (R-TN) proposed tax credits for people
who buy health insurance in the individual
market. In addition, he recommended phasing
in a cap on the tax exclusion for
employer-provided health insurance.
“I would allow people who purchase
individual health insurance coverage to
fully deduct before taxes the cost of their
insurance,” Sen. Frist said. “That means
people are treated equally. It’s a matter of
equity… What this will do is replace the
current inflationary and regressive tax code
provisions with a much fairer and a more
equitable system.”
His comments came during a discussion on the
rising costs of health care and the outlook
for consumer-directed health care plans,
sponsored by the
Alliance for Health Reform and the
Robert Wood Johnson Foundation.
The Senate is unlikely to take up this
proposal before the November elections
because of a full legislative agenda, but
the NASE encourages Sen. Frist to make this
and other consumer-driven health initiatives
a priority this year and next.
IRS Encourages Electronic
Payroll Tax Payments with Incentive
The
Internal Revenue Service is offering an
incentive to encourage enrollment in and use
of the Electronic Federal Tax Payment System
(EFTPS). Approximately 1 million employers
could qualify for a refund of a previously
paid federal tax deposit (FTD) penalty.
The EFTPS-FTD penalty refund offer allows
business taxpayers an opportunity to receive
an automatic one-time penalty refund if they
have been assessed a deposit penalty on a
Form 941, Employer's Quarterly Federal Tax
Return. To qualify for the offer, the
employer must:
-
use EFTPS
for one year (four consecutive
quarters),
-
make all
Form 941 payments on time and,
-
have
previously fully paid the penalty.
Using EFTPS
eliminates the vast majority of the errors
found on paper submissions. These errors on
paper coupons result in late or misapplied
payments and an FTD penalty. Beginning in
2005, the IRS will automatically determine
which employers have achieved the four
quarters of EFTPS compliance and reverse the
most recent full-paid FTD penalty minus any
outstanding taxes. No other action by the
employer is necessary.
EFTPS is a free service that gives
businesses, individuals, and tax
professionals the ability to make federal
tax payments electronically online, by phone
or with batch provider software for
professionals.
Taxpayers can enroll in EFTPS by visiting
EFTPS.gov or by calling EFTPS Customer
Service at 1-800-555-4477 to receive an
enrollment form by mail.
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