IRS helping with small businesses tax simplification
The Internal Revenue Service is taking a number of steps to make it easier for small businesses to comply with their tax obligations, the agency’s head said Wednesday.
“The IRS can and does contribute to tax simplification in important ways,” IRS Commissioner John Koskinen said at a House Small Business Committee hearing, which came less than a week before the April 18 tax due date.
The IRS does not play a direct role in simplifying tax laws, since that is the domain of Congress, the White House and the Treasury Department.
However, the IRS assists small businesses by simplifying forms, streamlining policies, providing regulatory relief, easing record requirements and offering voluntary compliance programs. For example, the IRS allows taxpayers to use a simplified method to claim the home-office deduction, Koskinen said.
The IRS Commissioner said that Congress can simplify the tax code for small businesses by passing legislation. He pointed to several proposals in President Obama’s budget, such as one that would increase the deduction for new businesses’ start-up costs.
House Small Business Committee Chairman Steve Chabot (R-Ohio) said the tax code needs to work “for small businesses instead of against them.”
“The complexity of our tax laws steals valuable resources – both time and money – from these businesses,” he said. “It hinders their ability to grow, succeed, and create the jobs we need.”
The Government Accountability Office told the committee last year that businesses with one to five employees face an estimated tax compliance burden of more than $4,000 per worker each year, Chabot said.
The top Democrat on the committee, Rep. Nydia Valazquez (N.Y.), said that everyone on the committee agrees that tax reform is important.
“A successful tax reform that simplifies the code will give small businesses greater certainty and allow them to spend their time and resources on what they do best,” she said.
She also said it’s important for Congress to provide the IRS with the funds it needs to help taxpayers, particularly small businesses.
Earlier in the day, small business and tax experts testified before a House Small Business subcommittee about the challenges they face in complying with tax law. Stakeholders urged Congress to pass legislation that would simplify state income tax requirements for employees who work in states where they do not live.
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