The IRS is underestimating the effect new estate and gift tax rules could have on small businesses across the country, the Small Business Administration (SBA) warned.
The SBA's Office of Advocacy submitted a letter to the Internal Revenue Service Tuesday sharing their concerns.
According to the office, small business owners said rules the IRS issued in August could impost higher costs than tax officials estimated. Business owners also said many of the requirements under the new rules are still unclear.
They told the SBA they were concerned about the elimination of valuation discounts that would make it more difficult to pass down family businesses across generations. Business expressed their concerns with the Office of Advocacy and a Treasury representative on a conference call in October.
“By eliminating valuation discounts, the proposed regulations would negatively impact succession planning for many small businesses,” the letter reads. “As an example, the IRS proposed regulations would result in increased estate taxes on the death of owners of small family businesses, possibly causing them to liquidate the business or sell large or controlling interests to non-family members outside of the business.”
The SBA's Office of Advocacy submitted a letter to the Internal Revenue Service Tuesday sharing their concerns.
According to the office, small business owners said rules the IRS issued in August could impost higher costs than tax officials estimated. Business owners also said many of the requirements under the new rules are still unclear.
They told the SBA they were concerned about the elimination of valuation discounts that would make it more difficult to pass down family businesses across generations. Business expressed their concerns with the Office of Advocacy and a Treasury representative on a conference call in October.
“By eliminating valuation discounts, the proposed regulations would negatively impact succession planning for many small businesses,” the letter reads. “As an example, the IRS proposed regulations would result in increased estate taxes on the death of owners of small family businesses, possibly causing them to liquidate the business or sell large or controlling interests to non-family members outside of the business.”