Bipartisan group of lawmakers urges Camp to reconsider small business tax reform

A Politico whiteboard post by Brian Faler reads:

A bipartisan group of 71 lawmakers is urging Ways and Means Committee Chairman Dave Camp to back off a proposal to require more companies to use a different form of accounting when calculating their taxes.

In a letter released today, they objected to having businesses with at least $10 million in gross receipts switch to accrual accounting from cash accounting.

The lawmakers, which include Reps. Mike Quigley and Blaine Luetkemeyer, worry that the switch could impose unforeseen costs on small business.

“Across sectors, small business owners are concerned at the possibility of complying with a more complex accounting system that requires them to report income before they receive the cash,” the letter says.  “Mitigating the one-time costs of switching accounting methods would be extremely difficult.”

The basic difference between the two methods is when transactions are recognized for tax purposes. Under cash accounting, taxes are paid on payments when they are received. Under accrual, they’re paid when the transaction is made, even if businesses don’t actually get paid until later.

The proposal was included in a draft proposal Camp released in March. His spokeswoman did not immediately respond to a request for comment.

— Brian Faler

Read the letter from the 71 lawmakers to Ways and Means Committee Chairman Dave Camp


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