While most observers are reluctant to forecast any tax legislation prior to the November elections, there is legislation pending in Congress that, if enacted, would be a boon to small business and help jumpstart the economy.

As an accompaniment to National Small Business Week, the National Federation of Independent Business is urging consideration of the small business-friendly extenders introduced by U.S. Senators Olympia Snowe, R-Maine, and Mary Landrieu, D-La. Similar legislation has been introduced in the House.

The changes urged by the NFIB include extending Section 179 bonus depreciation to 100 percent, and increasing it from its current level of $139,000 to the 2011 amount of $500,000. The NFIB also recommends restoring the self-employed health insurance deduction to cover employment taxes, and shortening the holding period for built-in gains to ease access to capital for S corporations.

There is thinking that we might see some legislation to aid small business before the end of the year, according to Dean Zerbe, national managing director at alliantgroup and a former senior counsel and tax counsel to the Senate Finance Committee.

“The biggest thing now is the bipartisan Startup Act 2.0,” he said. The bill was introduced Tuesday by Senators Chris Coons, D-Del., Marco Rubio, R-Fla., Mark Warner, D-Va., and Jerry Moran, R-Kan. “It provides startups the tools to grow and create jobs.”

Among its provisions, Zerbe noted, is a refundable research and development tax credit for young startups less than five years old and with less than $5 million in annual receipts, designed to allow startups to offset payroll tax liability. An additional provision would make permanent the exemption of capital gains taxes on the sale of startup stock held for at least five years, so investors could provide financial stability at a critical juncture of firm growth.

Another legislative effort for small business is the Small Business Taxpayer bill of Rights Act, introduced by Senator John Cornyn, R-Tex., in April, Zerbe noted. It would lower compliance burdens for taxpayers, strengthen taxpayer protections, compensate taxpayers for IRS abuses, and improve taxpayer access to the Tax Court. “It has some good ideas that will be considered, if not now then down the road,” said Zerbe.

Although legislation could be addressed during the months ahead, “the safest bet is that we won’t see anything before the elections,” said Zerbe. “We may get to a point just before the elections, like in 2010, where members need to take something home to show they’ve been thinking about small business.”

“It’s clear that Chairman Camp understands that we need tax reform that helps not only corporations but small and medium-sized business,” he added. “My worry was that it would be all about large corporations, that small business would be forgotten, but Chairman Camp is very focused on not letting that happen.”

For its part, the IRS is marking Small Business Week by encouraging small business owners to check out two key tax credits: the expanded tax credit for hiring veterans, and the Small Business Health Care Tax Credit. It is also urging businesses to resolve past worker classification issues at a low cost by voluntarily reclassifying their workers under the Voluntary Classification Settlement Program.

Although Ben Franklin is said to have coined the expression that nothing is certain except death and taxes, today it is the uncertainty of taxes that is acting as a barrier to long-term investing in business. It looks as though we’ll have to wait until November—or later—to resolve the uncertainty.

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