Opinion: 5 tips for making entrepreneurs, IRS happier

Long hours and hard work come with small-business ownership, and few entrepreneurs would have it any other way. It’s the price they pay to live their American dream.

But not everyone welcomes overtime and extra effort to get the job done. The Internal Revenue Service is suffering “workload overload,” chiefly due to the increasing complexity and frequent changes in the U.S. tax code, national taxpayer advocate Nina Olson recently reported to Congress. That won’t surprise small-business owners, who bear the brunt of unending alterations to tax requirements.

Main Street and Washington differ on the solution. Olson says the IRS needs more money. President Obama agrees. His fiscal 2012 budget request for the agency jumped nearly 10 percent to $13.3 billion, partly to add 5,000 employees.

But the National Federation of Independent Business has been telling Washington for years that the solution is true tax reform. The IRS needs to realize that small businesses aren’t miniature versions of big corporations, and compliance with today’s tax rules costs them nearly 70 percent more on average than large firms pay.

Now may be a good time to offer some tax tips for the president and members of Congress to ease the burden on small-business owners and government tax writers.

Tip No. 1: Simplify the code. This could save time and money that entrepreneurs will use to rebuild their enterprises and help lower unemployment. Plus, it could reduce taxpayer errors, bringing in more revenue to trim the federal tax gap.

Tip No. 2: Keep tax rates low for small businesses.

Tip No. 3: Find a permanent solution to the estate tax that protects all family businesses for future generations.

Tip No. 4: Get rid of the alternative minimum tax. It has outgrown its original purpose and is gobbling up middle-class taxpayers’ earnings.

Tip No. 5: Allow self-employed business owners who buy their own health insurance to deduct 100 percent of their premium costs.

There are many additional repairs that could help, but by implementing these five tips quickly, Washington can restore certainty for America’s entrepreneurs, pave the way for greater code improvements and unburden IRS employees.

—Dan Danner, National Federation of Independent Business president and CEO[[In-content Ad]]