Small Business Issues

Issue Summaries for the 113th Congress

 
H.R. 684/S. 743, Marketplace Fairness Act of 2013
This legislation would give states the authority to manage their sales tax laws, closing the loophole that currently prohibits states from collecting sales and use taxes that are owed on purchases from out-of-state online vendors. Some states have incurred budget shortfalls as a result of sales taxes on online purchases going uncollected. AVMA is part of the Marketplace Fairness Coalition, which is comprised of more than 200 businesses and trade associations from across the country that supports federal legislation that will empower states to update their sales and use tax laws to level the playing field for all sellers.
 
 
Status: U.S. Rep. Steve Womack (R-Ark.-3) introduced H.R. 684 on Feb. 14, 2013, but the U.S. House has not yet taken up the bill. The Marketplace Fairness Coalition on June 28, 2013, sent a letter to House Judiciary Chairman Bob Goodlatte (R-Va.-6) and Ranking Member John Conyers (D-Mich.-13) urging them  to schedule a hearing on marketplace fairness. AVMA, along with more than 300 organizations, sent a letter to Goodlatte again on Jan. 7, 2014, calling on Congress once again to tackle the important issue of tax reform.

 

U.S. Sen. Michael Enzi (R-Wyo.) introduced S. 743 on April 16, 2013, and the Senate passed the bill by a vote of 69-27 on May 6, 2013. S. 743 was referred to the House Subcommittee on Regulatory Reform, Commercial and Antitrust Law on June 14, 2013.

 
AVMA Position: Support
Primary Contact: Gina Luke


 
H.R. 523 Protect Medical Innovation Act of 2013 / S. 232, Medical Device Access and Innovation Protection Act
This legislation would repeal the excise tax on medical devices that was implemented as part of the healthcare reform legislation, most commonly referred to as “Obamacare.” The tax went into effect on Jan. 1, 2013, and impacts medical devices that are listed with the Food and Drug Administration as “intended for humans.” While the tax is not intended for devices that are developed exclusively for veterinary medicine, it does impact veterinary medicine as veterinarians often use medical devices that are “intended for humans.”
 
Status: U.S. Rep. Erik Paulsen (R-Minn.-3) introduced H.R. 523 on Feb. 6, 2013, and it was referred to the House Committee on Ways and Means. U.S. Sen. Orrin Hatch (R-Utah) introduced S. 232 on Feb. 7, 2013, and it was referred to the Senate Committee on Finance.
 
AVMA Position: Support
Primary Contact: Dr. Mark Lutschaunig
 

 
H.R. 892, S-Corp Modernization Act of 2013
H.R. 892 would: make it easier for S-corporations to access capital, modernize the rules that apply to firms that have selected S-corp status, and ease and expand S-corps’ ability to make charitable donations. Though it is unknown what percentage of veterinary practices are S-corps, a 2011 study on tax law found that S-corps employ every one out of four workers in the U.S. private sector.
 
Background: An S-corp is a special structure of business ownership by which the business is able to avoid double taxation because it is not required to pay corporate income taxes on the profits of the company. All profits and losses are passed on directly to the shareholders of the company (currently limited to 35 shareholders). The shareholders then file individual tax returns and pay income taxes on whatever share of the profits they receive from the business, whether or not they are distributed. If the business has more than one shareholder, then the business must file an informational tax return to provide details of the corporate income of each shareholder. S-corps do not pay corporate taxes, which reduces their taxable gains, allows for write offs of start-up losses, and offers liability protection to shareholders.
 
Status: U.S. Rep. Dave Reichert (R-Wash.-8) introduced H.R. 892 on Feb. 28, 2013, and it was referred to the House Committee on Ways and Means.
 
AVMA Position: Support
Primary Contact: Gina Luke
 

 
H.R. 774, Small Business Start-up Savings Accounts Act of 2013
This legislation amends the Internal Revenue Code to allow businesses with 500 or fewer employees to be eligible to open a small business start-up savings account for the payment of certain business expenses, including the purchase of equipment or facilities, marketing, training, incorporation, and accounting fees. Contributions to the account would be capped at $10,000 per year and the total value of these accounts at any one time would be capped at $150,000. So long as money is used within five years of the first distribution, account holders would not be subject to fees or penalties. Account holders could use the funds for the costs of business creation or expansion, such as the purchase of equipment or facilities, marketing, training, incorporation or accounting cost.
 
Status: U.S. Rep. Cory Gardner (R-Colo.-4) introduced H.R. 774 on Feb. 15, 2013, and it was referred to the House Committee on Ways and Means.
 
AVMA Position: Support
Primary Contact: Gina Luke
 

 
S. 193, Startup Innovation Credit Act of 2013
This bill amends the Internal Revenue Code to allow a qualified small business to use a portion of its tax credit for increasing research expenditures as an offset against its payroll tax liability under the Federal Insurance Contributions Act (FICA). To qualify for the tax credit, a startup (a corporation, partnership, or S-corp) must be fewer than five years old and have less than $5 million in total revenues. The startup would be able to deduct the total amount it spent on research and development (R&D) up to $250,000 from its employment taxes the following year. The legislation allows qualifying companies to claim the R&D Tax Credit against their employment taxes, putting them against their W-2 instead of their income tax liability. That opens this tax credit up to new companies who do not have an income tax liability. Typically, a business deducts its R&D expenses from its taxable profits, which means that any startup that has not yet started making a profit would not be able to use the current R&D tax credit. If a startup is not yet making profit, it will still be able to reap a reward for investing in innovation by deducting its R&D spending from its employment spending.
 
Status: U.S. Sen. Chris Coons (D-Del.) introduced S. 193 on Jan. 31, 2013, and it was referred to the Senate Finance Committee.
 
AVMA Position: Support
Primary Contact: Gina Luke