Efforts to Power Up IRS Intensify
In last week’s Growth Without Barriers podcast hosted by Gregg Stebben, SBE Council president & CEO Karen Kerrigan explains a Biden Administration proposal that would allow the IRS to track the private financial transactions of Americans – the in-flows and out-flows associated with their bank accounts – with the stated purpose of improving taxpayer compliance. This issue has been a topic of previous Growth Without Barriers podcasts, and Karen again discusses the problems and dangers with this overly broad proposal, as it is a gross invasion of privacy, especially given the IRS’s poor record of protecting taxpayer information.
Karen and Gregg discuss the new move by congressional supporters and the Biden Administration to increase the proposed $600 threshold for tracking bank account in-flows and out-flows up to $10,000. Karen notes that the bump to the higher threshold will hardly reduce the scope and scale of this proposed IRS tracking and compliance scheme, as the problems remain the same. Furthermore, throwing tens of billions in more money and red tape into taxpayer tracking and auditing (at this scale) is not an effective or efficient way to increase compliance or collect more tax revenue.
Beyond the privacy, cost and complexity concerns, Karen and Gregg discuss the value of drowning IRS staff with massive amounts of new data. Moreover, while the Treasury Department claims that the data will be used to target only those taxpayers making $400,000 or more per year, Karen asks why the IRS would need financial and bank transaction data from the tens of millions of Americans making far less than that.
There is a smarter way to increase compliance, upgrade systems and support IRS staff without advancing the Biden proposal “loaded with unintended consequences,” says Karen. She notes a common-sense bill introduced by U.S. House Ways and Means Ranking Member Rep. Kevin Brady (R-TX) and U.S. Senate Finance Committee Ranking Member Sen. Mike Crapo (R-ID) titled the Tax Gap Reform and Internal Revenue Service (IRS) Enforcement Act.
Democrats Target 20% Small Business Deduction: Benefit gutted for certain SMBs
Karen reviews the Democrat’s tax increase plan that passed the House Ways and Means Committee (to pay for the $3.5 trillion spending package). Specifically, she goes into details about a measure to gut (or cap) the 20% deduction that passed as part of the Tax Cuts and Jobs Act (section 199A) for small businesses above a certain income threshold and how it would put many of these small business taxpayers at a competitive disadvantage to big public companies with regard to tax rates (46.4 percent versus 26.5 percent.)
See: Analysis Shows 199A is Essential for Parity, courtesy of the S-Corp Association.
NEW RESOURCE: The SEC’s Capital Raising Navigator Tool
Karen and Gregg offer nice reviews for this new resource developed by the Office of the Advocate for Small Business Capital Formation. They talk about the many useful features of the Capital Raising Navigator Tool, including how it can save startups, entrepreneurs and small business owners time and money in their efforts to research options for raising capital. The tool introduces users to various options and a glossary of terms (the jargon used in the capital raising space), and is presented in an interactive format based on the needs of the small business.
Karen says she is “very impressed” with the new tool and encourages entrepreneurs to check it out for themselves.
Listen in to this full episode of Growth Without Barriers here.