House Passes Bill that Eases Tax Burden for Independent Agents

The Small Business Tax Fairness Act (H.R. 3832) recently approved by the House offers substantial tax relief and fairness for thousands of independent insurance agents and millions of other small business owners, said Independent Insurance Agents of America (IIAA) executive vice president Robert A. Rusbuld.

H.R. 3832 is designed to lessen the impact of a minimum wage increase. The small business targeted tax-cut package—estimated to cost $45.7 billion over five years by Congress's Joint Committee on Taxation—was approved by a 257-169 bipartisan vote last evening prior to House passage of the minimum wage bill.

The package would overturn a recently enacted ban on the use of the installment sales method by accrual-basis taxpayers and reduce estate and gift taxes. Also, it would accelerate the full deductibility of health insurance for the self-employed beginning in 2001, increase small business equipment expensing to $30,000, and provide several other targeted provisions.

By banning use of the installment sales method, the business seller is forced to pay all capital gains taxes upfront instead of when the money is received in subsequent years. This requirement has had a far-reaching, negative impact on sales of small businesses, with an estimated 260,000 closely held enterprises facing valuation drops and failed sales.

"Reinstating the installment sales method and cutting estate taxes are IIAA's two top tax reform priorities in this session of Congress," said Rusbuldt. "We are very pleased that House leaders have taken the first step to address the critical tax concerns of small business owners like independent insurance agents.

"With its approval by the House, small business tax relief and returning fairness to the tax code has cleared one substantial legislative hurdle, but it must navigate two other potential hazards—the Senate and President Clinton—before it becomes law," said Rusbuldt.

H.R. 3832 will now be merged with the minimum wage increase package (H.R. 3846). President Clinton says he will veto the combined package, asserting that the tax cuts should be much smaller.