FBC submits comments to protect family businesses and farms from IRS overreach
Last Friday, after reviewing all 105 final, temporary, and proposed Treasury regulations issued from January 2016 through April 2017, the Treasury Department identified eight burdensome regulations for which it will propose reforms as required by President Trump’s April 25th Executive Order 13789. One of the regulations addressed by the review were the proposed Section 2704 Estate, Gift, and Generation-skipping Transfer Taxes changes initiated by former Treasury Secretary Jack Lew. The move drew backlash from small business and advocates nationwide.
This regulation would increase the number of family businesses and farms subject to the federal estate tax in addition to removing important tools business owners use to adjust for lack of control and marketability when valuing minority shares of a small business. President Trump’s EO identifies the Section 2704 changes as creating a burden on the taxpayer, increases complexity in the tax code, and beyond the statutory authority of the IRS.
Current Treasury Secretary Steve Mnuchin echoed our sentiments in the January 19, 2017 Senate confirmation hearing, stating “We need to make sure that people who own minority interest in operating businesses — that the valuation for tax purposes are reflected appropriately, and anybody who follows the markets knows that there is a significant difference between control and non-control and the IRS should follow their valuations.”
During the initial comment period for the proposed changes to Section 2704, FBC sent a letter signed by 119 small business associations and advocacy groups calling for Treasury to withdraw the regulations. 24 members of the Ways and Means Committee and 41 Senators wrote to Treasury on November 3rd and September 29th respectively requesting that the regulations be withdrawn.
Under Executive Order 13789, Treasury is directed to submit a final report to the president by Sept. 18, 2017, recommending specific actions to mitigate the burdens imposed by the identified regulations. The Family Business Coalition is pleased by the initiative of the Treasury Department to put an immediate halt to this pending expansion of the estate tax. We look forward the ultimate elimination of these regulations, which will create a more predictable playing field for family owned and operated businesses.
You can view the comments here or in the viewer below.