Manzullo introduces small business tax relief bill

House Small Business Committee Chairman Don Manzullo (R-IL) introduced legislation September 21 to reduce taxes on small businesses and create U.S. jobs.

The Small Employer Tax Relief Act of 2005, HR 3841, includes 16 provisions that would deliver tax relief for small businesses while making the tax code more simple and fair for small employers. The main provisions of the bill would:

1. Provide self-employed individuals with a deduction for health insurance premiums in calculating federal payroll taxes;
2. Permanently extend small business expensing at $100,000;
3. Increase the deductibility of meals and entertainment expenses from 50 percent to 80 percent;
4. Phase out the alternative minimum tax for individuals through 2009;
5. Provide small business employers a tax credit for expenses for long-term training of employees in highly skilled small business trades;
6. Permanently extend the work opportunity tax credit and the welfare-to-work tax credit;
7. Increase the annual contribution limits to "simple" pension plans to match that permitted to 401(k) plans;
8. Provide a 15-year depreciation recovery period for replacing roofs of 15 years and make permanent the 15-year depreciation for qualified leasehold improvement property and qualified restaurant property;
9. Modify the depreciation rules for computer equipment, software, and vehicles;
10. Simplify estimated tax rules by reinstating the 90 percent of current year or 100 percent of prior year's tax liability for taxpayers to avoid a penalty for underpayment;
11. Amend the Internal Revenue Code to treat as a sole proprietorship (rather than a partnership) a business that is owned and operated by married taxpayers;
12. Increase the net self-employment income filing threshold amount ($400 under current law) to $1,000 and index it for inflation;
13. Provide an annual standard home office deduction of $2,500 (indexed for inflation);
14. Extend the time for making S Corporation elections;
15. Provide taxpayers the right to have an IRS examination take place at a site other than the taxpayer's home or business premises; and
16. Lower from 10 percent to 2 percent the penalty on employers who pay the correct federal tax deposit but make that payment in an incorrect fashion.