NAED is opposing the Department of Treasury’s proposed changes to Section 2704 (REG-163113-02) on estate and gift tax valuation discounts. These changes could increase how much you will owe in estate and gift taxes. These rules will significantly change family businesses’ succession plans and make it harder for family owned businesses to transition to the next generation. The changes proposed to Section 2704 would remove legitimate valuation discounts for estate, gift, and generation skipping taxes that businesses have used for the past two decades in order to prevent the IRS from overvaluing their businesses at death.
We are asking members to do two things to oppose the overreach by the Treasury Department:
- Send a letter to your Congressman and Senators asking them to cosponsor H.R. 6100 and S. 3436. These bills will tell the Treasury Department to stop working on this regulation and stops future regulations from having the same affect. You can also use NAED’s advocacy portal to email your Congressman and Senators directly.
- We are also asking businesses to submit comments directly to the Treasury opposing the regulations. Our friends at the Family Business Coalition have created a web portal to submit comments to the Treasury at www.NoEstateTaxHike.org. The portal includes a template for you to use to help draft comments and the guys at FBC are also available to help make sure your comments are effective. Comments are due to the Treasury Department before November 2, 2016.
NAED still supports full and permanent repeal of the federal estate tax, however we see these proposed rules as making the current estate tax worse than it already is and strongly urge members to help us fight against these proposed rules.
Meanwhile, Senator Marco Rubio of Florida has put out a press release on Senate bill 3436, explaining how it will work with the Family Business Coalition (which NAED is a member) to prevent expanding and raising the Estate Tax.
U.S. Senators Marco Rubio (R-FL), Jerry Moran (R-KS), and Jeff Flake (R-AZ) today announced the introduction of the Protect Family Farms and Businesses Act (S.3436), legislation that would prohibit the Obama Administration from implementing its proposed regulations to unilaterally expand and raise the death tax on family-owned small businesses.
All three senators also joined 38 of their colleagues today in urging U.S. Treasury Secretary Jacob Lew to withdraw the proposed regulations, writing that “they directly contradict long-standing legal precedent, create new uncertainty for taxpayers, and put family-owned businesses at a disadvantage relative to other types of businesses.”
“Small businesses are the backbone of our economy, and for many Americans, the family farm or business represents an opportunity to pursue the American Dream,” said Senator Rubio. “The Obama Administration’s attempt to unilaterally raise taxes on hardworking entrepreneurs is wrongheaded and will kill jobs. As one lumber manufacturer in Florida whose family has built a business over four generations said, ‘this type of rulemaking is devastating to our communities.’ We can’t allow that, any more than we can allow this end run around Congress. My bill will stop this harmful regulation from taking effect and protect workers in Florida from losing their jobs.”
“The Treasury Department should pursue policies that encourage the creation and growth of family-owned farms or businesses – not those that will increase the tax burden on families and make it more difficult to transfer ownership to the next generation,” said Senator Moran. “I have long sought a permanent repeal of the estate tax, and I will continue to work to protect American farmers and small businesses from burdensome tax policies.”
“This proposed regulation will circumvent Congress and make it more difficult for family-owned businesses and farms to survive after the death of a loved one,” said Senator Flake. “These businesses are the primary employers in many of our communities and we should be reducing the unsustainable regulatory burden on them, not adding to it.”
The legislation is supported by the Coalition of Franchisee Associations (CFA), the International Franchise Association (IFA), and the Family Business Coalition, a group of 115 associations jointly representing millions of small businesses from nearly every sector of the economy.
“This bill prevents implementation of the U.S. Department of Treasury’s proposed regulations which greatly restrict estate and gift tax valuation discounts. If implemented in their current form, these regulations will greatly damage the ability of franchisees to pass their businesses down to their children and grandchildren,” said CFA Chairman Keith Miller and Executive Director Misty Chally. “CFA supports the Protect Family Farms and Businesses Act as it recognizes the limitations that are placed upon today’s franchisees and prohibits the U.S. Treasury from restricting the transfer of a franchise to family members.”
“The International Franchise Association applauds the introduction of the Protect Family Farms and Businesses Act, S.3436, by Senators Rubio, Moran, and Flake, which would prevent the Treasury Department from unilaterally increasing estate taxes on family-owned businesses and making it harder for families to pass their franchise small businesses down to their children,” said IFA Vice President of Federal Government Relations and General Counsel Elizabeth Taylor. “Franchise small businesses are a crucial component of the nation’s economy with over 733,000 franchise establishments nationwide and over 47,000 units in Florida alone. If these regulations are enacted, it will hamper franchisees’ ability to continue to grow their businesses and create jobs in the future.”
“The Family Business Coalition strongly supports Senator Rubio’s legislation preventing the Treasury Department from hiking the death tax without the consent of Congress,” said Chairman Palmer Schoening. “The death tax hurts family business owners and farmers seeking to pass to the next generation. Changing tax laws should be left to the appropriate committees in Congress, not ceded to outside agencies.”
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