"Senate Proposal Pits IRS Against Small Businesses."
written by Dean Zerbe from Forbes.com |
Wednesday (06/16/10), after their catchall spending, tax break "extenders" and tax hike bill fell far short in a test vote, the Senate's Democratic leadership put forward a new version. Here are some of the Highlights:
- Little noticed $11 billion payroll tax increase on small business owners.
- Pass by the House as a "loophole closer," would increase the Social Security and Medicare taxes paid by the owners of S Corporations engaging in professional services with 3 or fewer key employees.
- Who would be hit?
- doctors
- dentists
- architects
- engineers
- consultants of all descriptions
A new, unworkable test that would exacerbate the problems small businesses already have with the IRS.
Under this new law the income may be subject to payroll taxes at the individual level.
The supposed reason for the change is to prevent self-employeed professionals from forming S Corps and taking almost all their earnings as profits to avoid the payroll tax.
New test, extra payroll tax will apply only in those cases where 80% or more of the income of the S corp is attributable to the services of of three or fewer key employees.
To see examples and read the full article, click here. |
