The Winners and Losers of Tax Day

The good news is that business is terrific right now for the professionals who are paid to prepare tax returns. The bad news is that the tax code that ensures their success is weighing down an essential sector of job creation: small business.

Ninety-one percent of small-business owners surveyed recently by the National Federation of Independent Business reported that they simply can’t navigate the twisted and tangled code; they are left with no choice but to shift the task to experts.

The just-released NFIB survey on taxes and spending found that small-business owners, by an overwhelming 85-percent margin, agree that the code is too complex and in dire need of being overhauled.

At the same time, these entrepreneurs view Washington’s ability to improve the voluminous law with deep skepticism. More than half—55 percent—have no faith that politicians’ changes to the internal revenue code will result in less complexity. Some actually fear that lawmakers will make things worse by tinkering.

Typically, small-business owners are an optimistic lot, but when it comes to trusting those elected to federal office, there is a clear disconnect between what they hear about tax reform during campaigns and action after the polls have closed.

While the famous ‘fiscal cliff’ deal brought needed permanency and certainty to much of the tax code, it actually increased the complexity of the code substantially. Small businesses may have an easier time planning for the future, but the tax code remains a complicated mess. In order for small-business owners to adjust to this situation there are a few easy steps that can make filing for taxes in 2014 more palatable.

Whether owners get their advice from professionals or manage to fill out their own returns, it’s important that they be sure to take advantage of temporarily extended provisions such as the Section 179 depreciation deduction, which was increased to $500,000 through the end of this year and is retroactive for 2012.

Although April 2014 seems far in the distance, it’s not too early to start paying close attention to how changes made this year to the code will affect future tax liability and requirements. Special notice should be paid to new rates and the requirements found in the new health-care law.

In addition, small-business owners need to become familiar with new estate tax rates and revised information reporting rules, especially the new Form 1099K that requires details about payment-card usage and third-party network transactions.

Right now, this is information that most small-business owners will take to their accountants. Maybe, someday, that extra step, and that extra expense, won’t be necessary. A simpler code would move small-business owners to the tax-day ‘winners’ column.

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About Dan Danner

Donald A. "Dan" Danner was named president and CEO of the National Federation of Independent Business, the nation's leading small business association, in February, 2009. Danner is only the sixth president in the history of the organization. Before rising to the top spot, Danner was executive vice president, overseeing NFIB's federal and state public policy and political activities as well as the organization's three 501 (c) 3 operations: the Research Foundation, Small Business Legal Center and the Young Entrepreneur Foundation. He came to NFIB in 1993 as vice president of the NFIB Education Foundation (now known as the Young Entrepreneur Foundation) and was named vice president of federal public policy in 1995. Previously, he was chief of staff to the U.S. Secretary of Commerce. Danner also worked in the White House Office of Public Liaison, where he was special assistant to the president and deputy director of the department. Before joining the White House staff, Danner was an executive with Armco Inc., a steel manufacturing company. He held leadership positions in sales and marketing, as well as state and federal lobbying on issues such as energy, environment, taxes and trade. He also served four years as vice president of federal relations at George Mason University. A native of Middletown, Ohio, Danner holds an MBA degree from Xavier University and an electrical engineering degree from Purdue University.
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