October 15, 2024
The Honorable David Schweikert, Chair
The Honorable Beth Van Duyne, Vice Chair
New Economy Tax Team
Committee on Ways and Means
U.S. House of Representatives
1139 Longworth House Office Building
Washington, DC 20515
Dear Chair Schweikert, Vice-Chair Van Duyne, and Members of the Tax Team:
On behalf of National Taxpayers Union (NTU), America’s oldest national taxpayer advocacy organization, I write to offer some brief comments on the role of tax policy in the New Economy that I hope the Tax Team will find useful. These comments are supplemented by several other comments NTU is filing with other Tax Teams as well as the full Committee.
As you are aware, many federal Tax Code provisions are connected to what could be called the New Economy. We remain especially concerned, however, that the Internal Revenue Service (IRS) has recently engaged in rulemakings that fail to appreciate the dynamism and entrepreneurialism of this sector. Accordingly, we wish to call to your attention several works from NTU and its research affiliate, the NTU Foundation. The following documents, hyperlinked, are just a few examples of our analysis concerning tax administration in the New Economy:
A February 15, 2024 letter to the Ways and Means Committee entitled, “IRS Oversight By House Ways and Means is Welcomed and Necessary”; see https://www.ntu.org/foundation/detail/irs-oversight-by-house-ways-and-means-is-welcomed-and-necessary;
June 21, 2024 comments to the IRS on the Proposed Digital Asset Proceeds From Broker Transactions (NTF 1099-DA); see https://www.ntu.org/library/doclib/2024/06/NTUF-s-Comments-on-the-Proposed-Digital-Asset-Proceeds-From-Broker-Transactions-NTF-1099-DA-.pdf;
November 13, 2023 comments to the IRS on Proposed Cryptocurrency Regulations; see https://www.ntu.org/foundation/detail/ntufs-comments-on-irs-cryptocurrency-regulations;
A September 4, 2024 NTU Foundation Issue Brief entitled, “IRS Compliance Costs Skyrocket Due to Digital Asset Taxation in the Bipartisan Infrastructure Act”; see https://www.ntu.org/foundation/detail/irs-compliance-costs-skyrocket-due-to-digital-asset-taxation-in-the-bipartisan-infrastructure-act; and
June 21, 2023 comments on the IRS’s Priority Guidance Plan; see https://www.ntu.org/publications/detail/ntu-comments-on-irs-priority-guidance-plan.
These are just a few of our analyses regarding tax administration and the New Economy. The final document mentioned above is of particular relevance today, given rising small business concerns with the Service’s enforcement approaches against micro-captive insurance. In 1986, Congress included line 831(b) in the U.S. Internal Revenue Code, allowing small businesses to self-insure against unforeseen risks which are traditionally not covered by mainstream insurers. Originally signed into law by President Reagan, these insurance opportunities were expanded by another act of Congress in 2015. Currently, however, many well-meaning small businesses have been hurt by the confusing language of 831(b), resulting in more than 1,000 small businesses to be audited or pushed into litigation. Given next year’s comprehensive discussion that will take place on extending the Tax Cuts and Jobs Act, Congress has the ability to adjust the definition of insurance in the Tax Code to make it more readily available and accessible to America’s small businesses. 831(b) is but one of many provisions that the IRS has interpreted in ways that are contrary to Congressional intent as well as notions of fair and equal treatment of taxpayers under the law.
We hope that the policies recommended above will assist you in your deliberations, and should you have any questions, we are at your service. Thank you for your consideration.
Sincerely,
Pete Sepp
President