U.S. Chamber Urges Congress to Pass Legislative 'Fix' Sale of Small Businesses Unfairly Restricted

WASHINGTON, D.C. – The United States Chamber of Commerce called on Congress to correct the unintended consequence of recent legislation that limits small business owners' ability to sell their companies, in testimony before a Ways and Means subcommittee today.

"There has been a chilling effect on small business owners' ability to sell, following recent enactment of legislation covering the methods businesses use to account for the sale of assets," said Darryl Hill, owner and operator of the Savoy restaurant in Washington, D.C., and member of the United States Chamber of Commerce.

Testifying on behalf of the Chamber, Hill blasted a provision in the Ticket to Work and Work Incentives Improvement Act of 1999, which denies small business owners the ability to use the installment sale method of accounting when selling their business. "Small business owners are experiencing a dramatic reduction in sales price in order to execute a contract," Hill said. "Even conservative estimates of the cost show business owners could lose billions of dollars."

Frequently, small business owners use the sale of long-held businesses as the primary means of funding their retirement, Hill said. Under the recently passed legislation, small business owners are required to pay the total tax liability up front, before the proceeds of the sale are received, frustrating any retirement strategy.

"Congress must act now to reverse earlier bad policy and pass the bipartisan Installment Tax Correction Act, introduced by Reps. Herger (R-CA), Sweeney (R-NY) and Tanner (D-TN). Without this fix, many who would like to purchase a small business will be denied access to the opportunity," said Hill.

Small business ownership has been the vehicle for many people, including women and minorities, to achieve financial empowerment, according to the Chamber testimony. In many cases, this has been accomplished by purchasing existing businesses on the installment method. It is imperative that Congress restore this option.

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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