U.S. Chamber Hails Small Business Tax "Fix"

WASHINGTON, D.C. - The United States Chamber of Commerce hailed today's House and Senate passage of the Installment Tax Correction Act (H.R. 3594) to protect small business owners' ability to sell their companies using the installment sale method of accounting.

"Today's congressional action has saved small business owners from the loss of billions of dollars in depressed sale prices of their businesses," said Bruce Josten, Chamber Executive Vice President. "We encourage the President to sign this measure to ensure small business owners have the flexibility they need to structure the sale of their businesses."

The legislation, introduced by Reps. Herger (R-CA), Sweeney (R-NY) and Tanner (D-TN), reverses the unintended consequence of an earlier bill that unfairly restricted the use of the installment method of accounting.

"It was not the intent of Congress to restrict or hamper small business owners' ability to cash out of their businesses," said Josten. "Flexibility is an important ingredient in structuring a sale of a small business. The earlier law has had the unintended effect of reducing the sales price of a small enterprise and in some cases killing the deal."

Frequently, small business owners use the sale of long-held businesses as the primary means of funding their retirement, Josten said. Small business owners will no longer have to pay the total tax liability up front, before the proceeds of the sale are received, protecting a successful retirement strategy.

Further, purchasing an existing business on the installment method, when bank financing is not available, has been the vehicle for many people, including women and minorities, to achieve financial empowerment.

"With this fix, many who would like to purchase a small business will no longer be denied the opportunity to do so," said Josten.

The U.S. Chamber of Commerce is the world's largest business federation representing more than three million businesses and organizations of every size, sector and region.

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