A new study on the effects of taxes on small and midsized businesses has found that tax compliance is especially challenging for them because they lack the resources or scale to comply with complicated tax laws.
The study, by the technology trade industry group CompTIA, surveyed 400 small and midsized businesses to learn how they cope with tax burdens. According to the study, small and midsized businesses wrestle with a number of costly and complicated tax provisions. Those surveyed cite payroll tax filings, alternative minimum tax requirements and employee retirement as some of the most difficult tax code provisions from a compliance perspective. In the last 10 years, 15 percent of small and midsized businesses report being subjected to a federal or state tax audit, adding to their tax compliance costs.
“Small and medium-sized businesses are the job creators in this economy,” said CompTIA president and CEO Todd Thibodeaux in a statement. “Unfortunately many of these same companies are forced to divert resources away from operating their businesses toward complying with ever more complicated tax structures. CompTIA is working on behalf of our members and in partnership with TECNA to address these issues head on and find solutions for small companies so they can thrive in a straightforward tax environment.”
Seventy-two percent of the small and midsized businesses polled cite a reduction in payroll taxes as important or very important to their business. Survey respondents also cited corporate tax rate reduction and capital gains tax reduction as crucial federal Tax Code changes that would have a positive impact on their businesses. Regardless of size, respondents all feel that the current Tax Code is burdensome and overly complicated. Despite issues with the current Tax Code, members polled advocated for a simplification of the current system, as opposed to migrating to a completely new system.
CompTIA members plan to advocate for changes in tax policies, IT workforce development and an increase in access to capital for small companies during its legislative fly-in taking place November 1-3 in Washington, D.C. For more information, visit www.TechVoice.org.
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