House and Senate Join Forces to Change New Small Business Tax Ruling
The small business committee chairmen from the U.S. Senate and House have joined forces to ask Treasury Secretary Lawrence Summers to rethink the recent release of Revenue Procedure 2000-22, which requires small businesses with average annual gross receipts of over $1,000,000 to use the accrual method of accounting.
Previous law provided a threshold of $5,000,000 in annual gross receipts before the accrual method was required. C-corporations that want to use the cash basis of accounting are still eligible to so if their gross receipts are under the $5,000,000 threshold.
Raising the gross receipts threshold will pose "an undue burden on small businesses," according to Jim Himi, legislative affairs manager for the National Federation of Independent Businesses. "They are absolutely going to have to hire someone to do their taxes if they use the accrual method because it is too complicated."
The congressmen have requested Treasury Secretary Summers to reissue the revenue procedure as a proposed regulation thus opening the ruling up for public notice and comment.
See our previous article on this topic.