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June 25, 2009: Bipartisan, Bicameral Legislation Aims to Simplify Home Office Tax Deduction to Better Assist American Small Businesses |
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WASHINGTON D.C. –
Today, U.S. Senators Olympia J. Snowe (R-Maine) and Kent Conrad (D-N.D.) along
with U.S. Rep. Charles A. Gonzalez (D-Texas) announced the Home Office Tax Deduction Simplification and
Improvement Act of 2009, bipartisan, bicameral legislation to
establish an optional home office deduction to help ease the burden of the
complex tax code on American small businesses.
Under current law, a home office tax deduction can be
utilized by qualified individuals who use a portion of their home as a principal
place of business or as a space to meet with patients or clients. Although
recent research from the Small Business Administration (SBA) indicates roughly
53 percent of America's small businesses are
home-based, few of these firms actually take advantage of the tax incentive due
to complex and rigid reporting regulations. The Home Office Tax Deduction Simplification and
Improvement Act of 2009 would direct the Secretary of the Treasury to
establish an optional, easy-to-use standard deduction to encourage greater use
of the incentive.
"With a morass of paperwork attributable to the home
office deduction, the time-consuming process of navigating the tangled web of
rules and regulations makes it unsurprising that so many small business owners
forego the home office deduction," said Senator Snowe, Ranking Member of the
Senate Committee on Small Business and Entrepreneurship. "By simplifying this
vital tax incentive, our bill will give small firms much needed relief from
burdensome tax rules, which in turn, will allow them to focus their efforts on
developing new, cutting-edge 21st century products and services and
creating new jobs."
"More than half of small businesses
in the country are based in the home, but the current home office
deduction rules are so complicated that many business owners take a pass. It is
our hope that we can help simplify this part of the tax code, and eventually see
this deduction actually become a tool to promote the growth of more small
businesses, and more jobs and economic activity, in America," Senator Conrad said.
"Home-based businesses are one of the fastest growing
segments of our nation, providing jobs and nurturing our economy." said Rep.
Gonzalez. "To maximize the job creation role that small businesses can play in
our economy, they need the right tools, which we are helping to provide by
simplifying the tax deduction regulations. Our bill provides the provisions to
help small businesses flourish. In this troubled economy, I encourage all those
eligible to take advantage of this key incentive that will make a positive
contribution to our economy by making the home deduction process easier for the
nearly 53 percent of American small businesses run from home."
In addition to instituting an optional home
office tax deduction, the Home Office Tax
Deduction Simplification and Improvement Act of 2009 would require
the IRS to streamline its reporting requirements to clearly identify the portion
of the deduction devoted to real estate taxes, mortgage interest, and
depreciation in order to further
reduce the burden on the taxpayer. The measure would also update the tax code
to ease the burden of proof in claiming the deduction. Specifically, it would
allow the home office deduction to be taken if the taxpayer uses part of the
home to meet or deal with clients regardless of whether the clients are
physically present and allow for de minimis use of business space for personal
activities so that taxpayers would not lose the ability to claim the deduction
if they make a personal call or pay a bill online.
The
Snowe-Conrad-Gonzalez initiative has garnered strong support from various
stakeholders including: the National Federation of Independent Business (NFIB),
the IRS National Taxpayer Advocate Service, and the U.S. Small Business
Administration's Office of Advocacy.
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