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Small Business Owners Encourage Congress To Expand Use of Cash Accounting(Targeted News Service Via Acquire Media NewsEdge) WASHINGTON, July 10 -- Rep. Tom Rice, R-S.C. (7th CD), issued the following news release: The Small Business Subcommittee on Economic Growth, Tax and Capital Access, under the chairmanship of Congressman Tom Rice (SC-07), today conducted a hearing on the issue of cash accounting, how it affects small businesses, and whether policies should be changed to allow small firms more flexibility in using an accounting method that best suits their operations. Before being elected to Congress, Congressman Rice worked as a tax attorney. According to a survey by the National Federation of Independent Businesses, 41 percent of small businesses use cash accounting, making it the preferred method of accounting for small businesses. Nevertheless, the Internal Revenue Code (IRS) requires that many small businesses in the United States use the more complicated accrual method of accounting for tracking cash receipts and disbursements. "Today's witnesses overwhelmingly believe that Washington should expand the use of cash accounting because the majority of small businesses prefer it for their business operations," said Chairman Rice. "The IRS prohibiting some small businesses from using cash accounting is a perfect example of a government barrier to private sector growth. As a tax attorney, I've dealt with small companies who spend too much time dealing with tax compliance requirements that are time-consuming and unnecessary. We should be doing everything possible to make it easier for small businesses to grow and create jobs. In addition, any tax reform proposal that Congress considers should protect and expand the use of cash accounting." Materials from the hearing are available on the Committee's website HERE (http://smbiz.house.gov/Components/Redirect/r.aspx?ID=444023-42302545). Notable Quotes: Sarah Windham, Senior Tax Manager of Dixon Hughes Goodman, LLP in Charleston, SC said, "Since their income can fluctuate widely from year to year, accrual accounting, coupled with our progressive tax system, would likely cause farmers to pay more taxes over time than a company in a different industry with stable income over the same time period. Cash accounting allows them to accelerate expenses or defer income giving farms the option to even out their taxable income comparable with long-term earnings of other industries." Terry Durkin, Owner of Durkin Associates in Burlington, MA said, "As Congress begins reforming the tax code, I urge you to keep in mind how essential cash basis accounting is to startup businesses, especially micro businesses. I believe Congress can do more to help them. Both Chairman Camp and former Senator Baucus's proposals are good first steps, but I strongly recommend that Congress go even further." Donald Williamson, Executive Director of the Kogod Tax Center at American University in Washington, DC said, "My testimony will describe and highlight the burden placed upon small businesses when the Internal Revenue Code requires them to be on the accrual method of accounting. However, even where the law permits a small business to use the simpler cash method of accounting, the general requirement to maintain inventory records creates burdens that may only influence by only a few months the timing of a small business's taxable income. Therefore, we urge Congress to not only expand the number of businesses eligible to use the case method of accounting but to also enact a "simplified" cash method of accounting for small business that would further reduce unnecessary record keeping and compliance burdens. We believe such simplification will neither adversely affect the accuracy of tax returns nor impact the ability of the IRS to collect tax." TNS30VitinMar-140711-4794432 30VitinMar (c) 2014 Targeted News Service |