SBA Office of Advocacy Tax Roundtable

February 19, 2020

On Friday, Feb. 21, the Small Business Administration (SBA) Office of Advocacy will hold a Small Business Tax Roundtable from 10:00 a.m. to 12:00 p.m. in the U.S. Senate Committee on Small Business & Entrepreneurship Hearing Room in Washington, D.C. Anyone who would like to participate in the upcoming roundtable discussion, should contact charles.jeane@sba.gov.

The topic for this roundtable will be a discussion surrounding the challenges of using the section § 199A deduction. The Tax Cuts and Jobs Act of 2017 included the new Internal Revenue Code § 199A to bring some parity for pass-through entities that cannot benefit from the significant reduction of the corporate tax rate. The deduction is effective for tax years beginning in 2018 and available until tax years beginning before December 31, 2025. It allows owners a 20 percent deduction of qualified domestic (QBI) business income, subject to significant limitations.

The deduction is both a tax benefit and a compliance challenge for small business. Unlike a simple reduction in a tax rate, which is clean and relatively easy to calculate, this deduction is complex. It requires multiple assessments and calculations, new information to be gathered and shared by each pass-through with its owners, and is subject to numerous significant limitations. The provision may also cause some business owners to consider changes in the way some businesses are structured so as to be positioned to better benefit from this provision. In short, the compliance burden is both complex and mandatory—all pass-through entities must now provide this critical information to their owners on a going-forward basis.

Office of Advocacy Roundtable meetings are open to all interested persons, except the press, to facilitate an open and frank discussion about issues of interest to small business. The purpose of these roundtable meetings is to exchange opinions, facts, and information and to obtain the attendees’ individual views and opinions regarding regulatory and policy issues impacting small business. The meetings are not intended to communicate or achieve any consensus positions of the attendees.

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