June 25, 2008
Dear Representative:
On behalf of the National Federation of Independent Business , the nation’s leading small business advocacy organization, we are writing to express our concerns with H.R. 6275, the Alternative Minimum Tax Relief Act. Small businesses strongly support relief from and repeal of the Alternative Minimum Tax, however, we are concerned that Congress is considering paying for this patch by imposing new burdens on small businesses.
The AMT was created to ensure that a small number of wealthy individuals could not avoid paying taxes. However, since that legislation was not indexed for inflation it now affects millions of taxpayers who were never intended to be subject to the tax. Because of these unintended consequences, we believe that this AMT patch should not be paid for.
Providing relief from the AMT is important to small business owners as more than half of those who were required to calculate the AMT owed the tax. Calculating this tax places an especially onerous burden on small businesses, with 88-percent relying on paid tax preparers and the average small business owner paying $74.24 per hour for the paperwork associated with tax compliance. It is important for Congress to provide timely relief from this tax, so that business owners can plan accordingly.
We are especially concerned about the provision requiring credit card reporting for all merchant transactions. This is a new reporting requirement with many unanswered questions and unintended negative consequences. The credit card processor will be required to collect Taxpayer Identification Numbers from all business owners and a failure to collect these numbers will lead to 28-percent withholding on the payments. Credit card processors do not currently collect these numbers, so a mechanism must be put in place to do so. If that system is not adequately established, a 28 percent withholding penalty could have an especially harsh impact on small business owners who face regular cash flow problems.
Providing relief from the AMT is a priority and especially important to small business owners. We urge Congress to pass the AMT patch in a timely manner without creating new burdens on small business.
Sincerely,
Dan Danner
Executive Vice President
Public Policy and Political
