07/19/2002
The NFIB Legal Foundation took its fight against the death tax to the U.S. Supreme Court today by joining an effort to overturn a decision by the 6th Circuit Court of Appeals that could unfairly raise - by as much as 40 percent - the tax bill for many small-business owners.
"It only makes sense that a death tax case would be the NFIB Legal Foundation's first case before the U.S. Supreme Court," said NFIB Legal Foundation Executive Director Karen Harned. "NFIB leads the Family Business Estate Tax Coalition in the legislative effort to make the repeal of the death tax permanent. This brief takes this important battle to the highest court in the land."
The NFIB Legal Foundation joined, among others, the S Corporation Association, the National Association of Manufacturers and the National Association of Wholesaler-Distributors in filing an amici curiae (friend of the court) brief asking the U.S. Supreme Court to hear the case, Gross v. Commissioner of Internal Revenue.
Specifically, the case affects the ability of S corporations - many of which are small businesses - to use "tax affecting" when determining the value of the corporations' stock. Tax affecting is an accepted valuation tool that ensures shareholders are fairly taxed during any transfer of S corporation stock, whether it is as a gift or part of the estate left to heirs upon the death of the stockholder. In Gross v. Commissioner, the IRS suddenly changes longstanding precedent and prohibits tax affecting, increasing the supposed value of the business and thus increasing the amount of tax owed.
"The death tax already is an unfair extra tax on small-business families," Harned said. "As a result of this case, not only does the tax man come at the worst possible time, he also retroactively changes the rules so he can take even more from the family. The NFIB Legal Foundation is working to protect against what could amount to a 40 percent increase in this unfair tax for the more than 140,000 NFIB members that are S corporations.
"It would be a great disappointment to small-business owners across America if the U.S. Supreme Court fails to hear this important case," Harned said.
The NFIB Legal Foundation is a 501(c)(3) organization created to protect the rights of America's small-business owners by providing advisory material on legal issues and by ensuring that the voice of small business is heard in the nation's courts. The National Federation of Independent Business (NFIB) represents the consensus views of its 600,000 members in Washington and all 50-state capitals. More information is available at www.nfiblegal.com .
CONTACT: Michelle Dimarob, (202) 554-9000
