New Law Under Fire
A law enacted last year is under fire as House Republicans announced today that they would push to reverse the new accounting rules. The law in question requires taxpayers to pay capital-gains taxes from a business sale in an immediate lump sum.
The problem with the tax payout is that it affects all transactions, even those that cover several years. Lobbying groups for small businesses say this has had an adverse affect on the sale of businesses – reducing the sales prices of businesses by up to 20 percent in some cases. Others say that some sellers have been forced into debt by their tax bill.
A provision reversing last year’s law will be added to a package of small-business tax breaks next week. The Clinton administration and congressional Democrats realize the change is causing problems, but are reluctant to completely reverse the law.