Washington Watch - May 9, 2012


Washington Watch - May 9, 2012

Call For Tax Reform Grows Louder

Calls by advocates and organizations for Congress to begin work on comprehensive tax reform, individual and corporate, have been tempered thus far; however, in the last two weeks a growing number of groups have voiced alarm that neither the Senate or House have indicated when they will begin work on what could be the largest piece of legislation in the second session of the 112th.  

On April 24th, the House Ways and Means Subcommittee on Select Revenues Measures held a hearing on tax cuts that either expired in 2011 or will expire 2012; unfortunately, the Committee intentionally did not include the 75 tax cuts that expired in 2010 in the hearing notice. Of those 75 tax, the health insurance deduction for the self-employed and the start-up deduction are two tax benefits that the NASE knows directly help the self-employed community. We continue to advocate strongly the extension of these two provisions.

Additionally, the NASE went on the record in support of the extension of the individual tax rate, currently set to expire at the end of 2012. As you know, the majority of the 22 million self-employed business owners file as individuals, and therefore, any change to the individual tax rate would significantly burden the self-employed community.  

We continue to advocate to congressional leaders the importance of addressing both individual and corporate tax reform in a methodical and deliberate process. Our gravest concern is that Congress waits to address the expired and expiring tax cuts in the “lame-duck” session and the subsequent bill is rushed and limited in scope.

The NASE will continue to work to educate lawmakers on the unique tax climate for the self-employed and encourage them to start the important work of tax reform, now, instead of later.

You can read the NASE’s statement for the record on the Ways and Means Subcommittee hearing here.

Student Loan Bill Offset Targets S-Corps

The Senate voted down a bill yesterday to keep student loan interest rates from rising for another year. Democrats in the chamber were looking too pay for the nearly $6 billion measure by closing a tax loophole for S-corps. The proposal would have made shareholders that are also employees subject to payroll taxes on dividends and shares of the company's profits.

Republicans were worried that the measure would make it harder for these businesses to create jobs, while Senate Democrats argued that the rule only applied to companies making $250,000 or more. 

Hearing On Identity Theft And Tax Fraud

The Treasury Inspector General for Tax Administration (TIGTA) recently reported that criminals are stealing identities at an alarming rate to receive fraudulent tax refunds.  For Processing Year 2011, the Internal Revenue Service (IRS) reported detecting approximately 940,000 tax returns potentially filed by identity thieves and prevented issuing $6.5 billion in fraudulent tax refunds. Yet, TIGTA found that fraudulent refunds acquired through identity theft are significantly greater than the amounts detected. 

The House Committee on Ways and Means held a hearing on this topic yesterday. Witnesses included officials from the IRS and Social Security Administration.

Read more background info on the problem here

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Courtesy of NASE.org