Congressman Mike Thompson (D-CA) and Congressman Rick Berg (R-ND) joined today to introduce the Small Business Tax Simplification Act. This legislation would allow businesses with up to $10 million in gross receipts to be eligible for a more simplified tax filing method with the Internal Revenue Service (IRS).
"Simplifying taxes for small businesses is something that everyone can agree on," said Thompson. "I am proud to introduce this bipartisan legislation that will save small businesses' time, paperwork and headaches during tax season. Expanding cash accounting for small businesses will allow them to focus their efforts on what they do best--growing their business--and not on complicated accounting practices."
"The legislation I am introducing today, known as the Small Business Tax Simplification Act, will simplify the tax code for small businesses across our country," said Berg. "Instead of being bogged down with complex tax reporting requirements, this bipartisan legislation will allow businesses to use a simplified form of accounting that more closely matches the way a small business owner runs their business. This bill represents a commonsense change that would ease the burden of tax complexity for many small businesses."
Under current law, small businesses are required to use cash-basis or accrual accounting when filing their taxes with the IRS. For many small businesses, the cash-basis method can offer more flexibility in tax planning, since cash accounting is a simplified method that more accurately reflects the way a business collects income and claim deductions for investments.
However, only businesses with up to $5 million in gross receipts are currently permitted to use the cash-basis form of accounting. The Small Business Tax Simplification act would allow businesses with $10 million in gross receipts to utilize this method as well.
According to the most recent National Federation of Independent Business (NFIB) Small Business Problems and Priorities survey, tax complexity remains one of the top five major concerns for businesses. Dan Danner, President and CEO of the NFIB offered his support of the legislation.
"This expansion of the availability of cash accounting for tax purposes will help simplify tax filing and reduce the paperwork burden for many small businesses," said Danner. "NFIB and its members would like to thank Congressman Berg and Congressman Thompson for this common-sense approach to helping job creators operate as efficiently as possible during this time of economic recovery. It will certainly help make it easier for many small businesses to grow and create jobs."
Congressman Mike Thompson is proud to represent California's 1st Congressional District, which includes the Counties of Del Norte, Humboldt, Lake, Mendocino, Sonoma, Napa, and Yolo. He is a senior member of the House Ways and Means Committee and the House Permanent Select Committee on Intelligence. Rep. Thompson is also a member of the fiscally conservative Blue Dog Coalition and sits on the bipartisan, bicameral Congressional Wine Caucus.