Coalition speaks out on S Corp. taxation

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The National Association for the Self-Employed announced today that it hopes to prevent passage of legislation that would add to the tax code’s complexity and negatively affect its service sector S corporation members

The proposal is currently under consideration by the Committee on Ways and Means. S corporation members were recently exempted from a new 3.8 percent tax applied to most forms of investment income.

The specific details of the bill have not yet been released. However, legislation with similar goals has been introduced in the past. That bill would tax capital investments made by businesses engaged in the service sector, including investments in employees, such as training.

They also asserted that proposal also potentially contradicts a key policy decision made by Congress in the new healthcare reform law.

“This proposal would increase taxes on small business owners who are fully complying with the law. It will add to the tax code’s complexity by creating new categories of business activity that will have to be defined and litigated.

The self-employed and micro-business communities already face an overwhelming regulatory burden in complying with IRS regulations,” the organization said in a statement.