Nov 29, 2012
CompTIA Urges Congress to Avoid Fiscal Cliff, Address Tax Policy
Neglect of Tax Policies Will Harm IT Sector
WASHINGTON, DC – November 29, 2012 – CompTIA President and Chief Executive Officer Todd Thibodeaux delivered letters to both the U.S. House Committee on Ways and Means and Senate Committee on Finance urging them to address tax policy concerns during federal budget negotiations.
"We urge Congress to avoid the fiscal cliff and protect small and mid-size IT businesses in particular from the consequences of tax policies that will stifle our ability to grow and prosper. We stand ready to work with the Committee and Members of Congress to restore the health of our economy, while encouraging growth and prosperity for the IT industry,” said Thibodeaux.
The letter presented the eight key areas of CompTIA’s tax policy agenda, which include both federal tax issues and issues that concern interstate transactions:
1. “Tax Reform” and Small Businesses. Tax reform should not disproportionately impact small businesses and pass-through entities. Proposals to lower tax rates in exchange for limiting or eliminating tax benefits now available to small businesses and pass-through entities must be analyzed in view of the increased tax burden on such entities.
2. Research and Experimentation Tax Credit for Small Businesses. CompTIA supports legislation that would allow startup companies to offset a simplified R&E tax credit against payroll tax liability.
3. Bonus Depreciation. CompTIA calls on Congress to extend bonus depreciation at the 100% level. While the economy shows signs of slow improvement, small businesses need continuing support to grow their businesses and maintain and increase employment.
4. Small Business Expensing. CompTIA supports continuation of the 2012 limitation contained in Section 179 on small business expensing, whereby businesses can deduct the cost of certain asset purchases, as adjusted for inflation.
5. Compliance Simplification. CompTIA supports extension of annual tax reporting to a greater number of small businesses. Generally, employers are required to file Form 941 on a quarterly basis to report and pay over federal income tax withholdings, social security and Medicare tax. Very small employers are allowed to replace the four quarterly Form 941 filings with a single annual Form 944, but this only applies to those businesses with an annual liability of $1000 or less. Adjusting the existing $1000 limitation to a higher threshold would save small businesses substantial tax compliance costs.
6. Internet Taxation. While many states have been concerned about the loss of revenue resulting from their inability to enforce payment of use taxes by residents who purchase products and services from an out of state vendor, CompTIA supports a robust small business exemption in any legislation proposed to require businesses to collect sales taxes on out of state sales. Small businesses are less capable of bearing the costs of a new tax compliance requirement.
7. Business Activity Taxation. While the physical nexus (having an office or place of business in the state, or employing workers that operate within the state) continues to control sales and use tax collections, some states are now seeking to tax any transaction that has an “economic nexus” to that state. CompTIA opposes imposition of business activity taxes under the economic nexus theory, because this places a particularly burdensome regime on the IT industry.
8. Digital Download Taxation. Consumers, vendors and taxing authorities need a consistent rule to determine which state/jurisdiction is permitted to impose a tax on the purchase of a digital product. CompTIA supports proposals that would restrict collection of sales taxes on digital goods and services to the jurisdiction encompassing the consumer’s tax address, while also prohibiting multiple and discriminatory taxes.
On November 13, CompTIA released a white paper on the impact the fiscal cliff would have on the IT sector, finding that small and medium-sized (SMB) IT businesses will experience “major trauma” if tax policies, among other issues, are left to expire or otherwise neglected.
CompTIA is the voice of the world’s information technology (IT) industry. Its members are the companies at the forefront of innovation; and the professionals responsible for maximizing the benefits organizations receive from their investments in technology. CompTIA is dedicated to advancing industry growth through its educational programs, market research, networking events, professional certifications, and public policy advocacy. Visit http://www.comptia.org/home.aspx or follow CompTIA at http://www.facebook.com/CompTIA and twitter.com/comptia.
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