• NASE TaxTalk Expert, CPA Testifies to Congress on Paperwork Reduction
• Alternative Minimum Tax Repeal Introduced in the Senate
• NASE Member Recognized

NASE TaxTalk Expert, CPA Testifies to Congress on Paperwork Reduction

NASE TaxTalk expert and CPA, Keith Hall, testified to the House Government Reform Subcommittee on Regulatory Affairs last week during a hearing titled “Less is More: The Increasing Burden of Taxpayer Paperwork.” This marked the third time the NASE has testified before Congress this year. Hall focused on standardization and simplification of the home office deduction, worker classification regulations, and adjustments to the Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA) jurisdiction over the IRS. While the Paperwork Reduction Act aims to ensure that micro-businesses are not subjected to unreasonable regulations and paperwork, federal agencies have found ways to work around it and continue to issue burdensome regulations. “Paperwork for micro-businesses continues to increase and have a detrimental affect on the ability for the self-employed to successfully manage and grow their business,” testified Hall. “These businesses do not have human resource departments filled with accountants, attorneys or benefits administrators. The self-employed administer every aspect of their business and thus, must spend extra time addressing these regulations.” Hall praised the IRS for improving efforts to become more small business friendly and its commitment to minimizing paperwork. But he also said that allowing the OIRA to have some oversight of the IRS could promote less burdensome regulations. Hall called for more funding and additional staff for regulation review in the OIRA. “This burden imposed on micro-business is disproportionate to that of larger businesses because smaller firms cannot spread the overhead costs associated with hiring accounts and attorneys,” said Hall. “Every hour that is not spent filling out a form can be spent creating a new job and I believe that is what small business is all about.” Also testifying were IRS Commissioner Mark Everson and Administrator for the Office of Information and Regulatory Affairs John Graham. To read Hall’s complete testimony, visit http://advocacy.NASE.org.

Alternative Minimum Tax Repeal Introduced in the Senate

Finance Committee Chairman Charles E. Grassley (R-IA) and Ranking Member Max Baucus (D-MT) introduced a bill that would repeal the alternative minimum tax (AMT), though it is unlikely the bill would be passed on its own. If anything, the AMT would be modified in the short-term or considered during the federal income tax overhaul. S. 1103, the Individual Alternative Minimum Tax Repeal Act of 2005, currently has 14 cosponsors from both sides of the aisle, including Senator Jon Kyl (R-AZ), chairman of the Taxation and IRS Oversight Subcommittee. Kyl recently held a hearing on the effects of the AMT on the middle class effects. Voted into law in 1969, the AMT originated as a way to ensure the wealthiest Americans were not avoiding taxes through exemptions and deductions. According to the IRS, the AMT is a separate tax computation that eliminates many deductions and credits and creates a tax liability for an individual who would otherwise pay little or no tax. While the law sought to target a very small percent of the American tax payers, more than 3 million Americans now pay it because it was not indexed for inflation. The AMT has come to include many middle class Americans and is expected to include more in coming years. Temporary reconciliation legislation was signed into law in 2003 but the law will expire at the end of 2005. Elimination of the alternative minimum tax would be expensive, costing the government $611 billion in tax revenue between 2006 and 2015. Some senators want to include the AMT reform in the tax-cut reconciliation legislation this fall but the constraints on how many taxes can be cut or need to be implemented are strict. While legislators on both sides of the aisle have acknowledged problems with the AMT and support changes, it is unlikely that S. 1103 will be the vehicle to make that happen. The NASE will continue to follow tax reform issues like the alternative minimum tax. To read more about the AMT, visit http://thomas.loc.gov/ and search S. 1103. Let your Members of Congress know how you feel about the AMT through the online NASE Legislative Action Center at http://advocacy.NASE.org.

NASE Member Recognized

NASE member Chris Krupinski of CK Art and Design in Fairfax, Virginia, recently won a regional SBA award for Home-Based Business Champion of the Year. The SBA award nomination process began in November with an extensive application which was reviewed at both the district and national levels. The Home-Based Business Champion award recipient required success not only in one’s business but also an interest and desire in entrepreneurial progress and policy development.