Paul L. Caron
Dean




Tuesday, June 1, 2010

Tax Extenders Bill Includes Small Business Tax Increase

Joe Kristan was the first to flag a particularly odious aspect of H.R. 4213, the American Jobs and Closing Tax Loopholes Act of 2010 currently making its way through Congress:  small businesses would be hit with a 2.9% medicare tax increase which would not apply to larger competitors: For a detailed discussion of the proposal, see pages 294-300 of the Joint Committee on Taxation's Technical Explanation.

https://taxprof.typepad.com/taxprof_blog/2010/06/tax-extenders-.html

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Comments

This bill unfairly singles out professionals that are S-Corporations. The IRS sees what is reported as officer compensation as well as shareholder distributions on each tax return. If someone appears abusive, assess that particular return.

Posted by: Mark Hammer, CPA | Jun 5, 2010 10:56:00 AM

John, then why not apply this to all S-Corps? Why hit only service professionals? We're talking about a provision that targets business who's major asset is the reputation of three of fewer individuals, not all S-Corps. Its not a small step towards eliminating any loophole, its a ploy by our current congress to raise taxes on those perceived as being "wealthy" (doctors, lawyers, accountants) while still allowing our president to keep claiming he has only overseen tax increases on individuals making more than $250,000 per year.

Posted by: Tyler | Jun 2, 2010 9:59:45 PM

Thank you for shining the spotlight on this! As a side note, having my blog referenced on Tax Prof is just about the best thing ever.

Posted by: Monica | Jun 2, 2010 9:27:46 AM

S Corp owner/employees have received unfair tax advantage for many years, by paying themselves unreasonably small salaries and harvesting substantial income as "corporate distributions". This provision is a small step toward eliminating this scam.

Posted by: John M | Jun 2, 2010 6:59:08 AM