Amendment Introduced to Remove Proposed new S Corporation Tax

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As we had previously reported here the house recently passed a provision of the American Jobs and Closing Tax Loopholes Act of 2010 that would subject certain S corporation profits to self-employment tax.  On Monday, and amendment was introduced, possibly in response to a letter from the AICPA, that would remove this provision from the bill.

As reported today in the AICPA’s CPA Letter Daily email:

“The American Jobs and Closing Tax Loopholes Act of 2010 passed by the House last month and being debated in the Senate includes a provision (Section 413) that affects the self-employment tax treatment of certain small businesses and CPA firms set up as S corporations and limited partnerships. This new provision would require that certain S corporation owners and limited partners be subject to self-employment tax on their share of distributable profits in excess of salary/guaranteed payments for services. On June 9, the AICPA sent a letter to the Senate Finance and House Ways and Means committees urging them to reconsider the S corporation tax proposal, providing suggested modifications should Congress move it forward. On Monday, Senate Amendment 4342 was introduced to strike Section 413 from the bill. The AICPA sent a letter to all U.S. senators on Monday urging them to support the amendment, and many state CPA societies are weighing in with additional letters of support. “

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