S Corporation Reform

Background
 
S corporations operate in every business sector in every state. More than 55 percent of all corporations file as S corporations; the vast majority are small businesses, which are responsible for most new jobs created each year.

 

Various tax relief provisions for S corporations were enacted in 1996 and in previous years, but additional reforms are needed. The tax laws that govern these entities are too restrictive, complex, and burdensome. The current rules—adopted in 1958 when S corporations were created, and subsequently amended— are out of sync with modern economic realities; these rules impede the growth of small businesses and burden them with unnecessary administrative complexity.

 

U.S. Chamber Position
 
The U.S. Chamber successfully advocated enactment of several S corporation reform and simplification provisions in the American Jobs Creation Act of 2004 (Public Law 108-357). The Chamber will continue to support efforts to improve and simplify S corporation tax rules.