Committee Examines Burden of Tax Compliance for Small Businesses

Press Release

As we approach the Tax Day filing deadline, the Small Business Committee, under the chairmanship of Rep. Sam Graves (R-MO), today examined the challenges small businesses face complying with the tax code.

In addition, a new National Small Business Association (NSBA) tax survey was released in conjunction with the testimony of NSBA member Tim Reynolds, a small business executive. The survey shows that a majority of small businesses spend 40 hours preparing to file their taxes, while 40 percent spend a costly two full workweeks on the process. These small businesses say tax complexity and compliance are factors in their day-to-day operation all year long.

The growing number of tax provisions means that small business owners must spend significant resources on compliance that could otherwise be spent growing their companies. Tax complexity is a big problem for small businesses: according to the Internal Revenue Service's own National Taxpayer Advocate, there were over 500 changes to the tax code in 2010 alone, an average of more than one per day. And high tax rates mean small firms have less capital to invest back into hiring or expanding.

"Tax season is tough on small businesses," said Chairman Graves. "Taxes are getting more complicated every year, and compliance is a huge drain on their resources. Jobs remain scarce, and the heavy burden of tax compliance is another obstacle to growth. This new NSBA survey of small businesses emphasizes that the complex tax code is not just a problem for Tax Day, but throughout the year. I appreciated the testimony of experienced small business representatives at today's hearing, and their insights on the concerns of America's 28 million small business owners."

Source