January Advocacy Roundup: When It Comes to Tax Reform, It Ain’t Over ‘Til It’s Over
January 31, 2018
Mark Lee, Policy Director, Government Relations, AEO
Considering the fast pace that the “Tax Cuts and Jobs Act” moved through Congress, it was widely accepted that there would need to be a bill of technical fixes to the landmark legislation. This month, Congress took the first step in that process.
On January 30, Representative Lynn Jenkins (R-KS), Chair of the House Ways & Means Subcommittee on Oversight, convened a Member’s Hearing titled: “Legislation to Improve Tax Administration.” Testimony for this hearing was limited to Members of Congress who have introduced or co-sponsored legislation to improve the administration of the Internal Revenue Service. During the hearing, House Small Business Committee Chair Steve Chabot (R-OH)testified in support of H.R. 3717, the “Small Business Owners’ Tax Simplification Act of 2017,” which AEO urged Congressional tax-writing committees to include as part of tax reform. H.R. 3717 was ultimately not included in the final tax reform bill.
H.R. 3717 addresses the explosion of the gig economy, fueled by rapid technological advances, which has created a nebulous understanding of what constitutes an “employee,” and under what circumstances entrepreneurs can claim benefits as employees of their businesses. Additionally, daily commerce has increasingly moved online. This creates a confusing and complicated set of hurdles for microbusinesses as they seek to grow and prosper. H.R. 3717, a bipartisan bill supported by both Chair Chabot and Ranking Member Nydia Velazquez (D-NY), will simplify the tax code for entrepreneurs and microbusinesses by:
• Aligning 1099-MISC’s and 1099k reporting requirements at $1,500. This will eliminate reporting gaps and provide certainty regarding income tax filings.
• Aligning four-month reporting deadlines with the logical end-of-quarter requirements, which will enable small businesses to satisfy all reporting requirements at once.
• Requiring the Secretary of the Treasury to standardize electronic signature rules to create certainty for everyday commerce.
• Enabling entrepreneurs and small business owners to participate in Cafeteria plans, and exclude self-employment income from Social Security Quarters Coverage offered to their employees.
• Allowing voluntary withholding agreements and voluntary training services to be offered to contractors without classifying these individuals as employees.
Though this is just a first step, we are encouraged to see the House Ways & Means Committee begin serious consideration of this non-controversial, yet vital, bill to bring simplicity and clarity to our nation’s entrepreneur and microbusiness community. As this process unfolds, AEO will continue to urge Congressional tax writers to include H.R. 3717 in any additional tax reform legislation.