Switch To Accrual Accounting Would Increase Tax Burden
>Forty-six senators from 32 states signed a letter to the
leaders of the Senate Finance Committee this week saying that a proposed change
to accounting methods would hurt small business and should be dropped. The
switch to accrual accounting from cash accounting could raise more than $23
billion in additional tax revenue over the next decade, but the senators say
the change would be unfair and burdensome.
CFO Journal
said the change would essentially require some businesses to pay income taxes
on money they have not yet received, but anticipate in the future. Some
businesses have said they would need to take out loans to pay the higher taxes.
In their letter, the senators wrote, “Requiring more businesses to use the
accrual method of accounting would create unnecessary complexity in the tax law
and substantially increase compliance costs.”
Further Reading:
Accounting
Today
reports on the letter.
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