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March 2, 2007

Small Business Lobbyist Groups Rally To Oppose Tax Gap Proposals

A recent article in Forbes discusses how small business lobbyists are strongly opposing some of the proposed measures to narrow the so-called tax gap purportedly caused in part by the underreporting of income by small businesses and sole proprietors. As the article explains, the National Federation of Independent Business, the U.S. Chamber of Commerce, the Small Business Council, and numerous other groups have created the Coalition for Fairness in Tax Compliance, which plans to block proposals that the Coalition says would unfairly burden small business owners and self-employed taxpayers by imposing onerous reporting requirements. The IRS estimates a tax gap of $345 billion, with $148 billion of that amount representing underreporting of income by individuals. Many of the proposed measures to close the gap involve a major expansion of reporting requirements for third party “middlemen.” For instance, stock brokers would be required to report not only what a customer sold his stock for but also what he paid for it, i.e., his or her taxable income, and auction sites such as eBay would have to report sellers who conduct more than 100 transactions per year. Finally, one of the proposals most vehemently opposed by the Coalition is a proposal that would require businesses that pay other businesses more than $600 a year to report the payment on a 1099, thus adding to the already current requirement that businesses report payments of more than $600 a year to unincorporated sole proprietors.

To read the Forbes article, go here.

[Gregory Duhl]

March 2, 2007 in Unincorporated Business News | Permalink

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