Columbia County District 4 Commissioner Alison Couch spoke before the Federal Ways and Means Committees earlier this week regarding the Tax Cuts and Jobs Act of 2017 .
This is her second time speaking before the committee with the first being in April 2023. She spoke to them about challenges facing small businesses, along with what the committee can do to support the small businesses and the problems they face.
“My goal was to bring awareness to the Ways and Means Committee regarding need for permanency of the 20% small business deduction, 199A,” Couch said. “Also to bring awareness to the federal regulatory burdens small businesses face, specifically surrounding the 1099-NEC AND 1099K thresholds.”
During her testimony, Couch stressed the importance of making the 20% deduction permanent, stating how much small businesses depend on it.
“As we get closure to critical parts of TCJA expiring this year, the clients my team and I support still lack the certainty of whether or not many of the provision that their businesses depend upon will be extended,” Couch said. “These include the 20% small business deduction and reduced rates for individual income tax brackets. Moreover, they are still faced with steep regulatory requirements imposed by taxing authorities that deplete much of their time and efforts.”
Couch, who owns Ignite Accounting and Business Advisors, said the businesses her company works with are other small businesses who make $3 million or less in annual revenue and have an average staff of 10 people. Because of this, the 20% small business deduction has greatly benefited them. She added that this deduction is a bigger benefit than others, such as section 199A.
“A recent … study on the macroeconomic impact of section 199A for small businesses found that 25.9 small businesses nationwide utilize this deduction and that it directly supports job creation in the small business sector,” Couch said in her testimony. “…another area of apprehension for small business clients is that if Congress does not act, the reduced tax rates for individual income tax brackets established under TCJA will increase. As members of this committee are aware, the 20% small business deduction is available to businesses that operate as pass-through entities, like s-corporations and partnerships. This means their business profit and the deduction flows through their business return and onto their 1040 and nets there to be taxed at the owners’ individual tax rates. In fact, 33 million small businesses in the United States are organized as pass-throughs. As I stated in my April 2023 testimony, business income is different from business owners’ income. I would like to stress that point yet again. Increased business income allows small business owners to reinvest in their small businesses’ employees. If Congress does not address changes in the personal income tax bracket set to expire at the end of this year, small businesses structured as pass throughs will be faced with a tax increase.”
Couch highlighted the thresholds on 1099NEC forms and 1099K forms, stating the $600 threshold on the 1099NEC hasn’t been adjusted in decades.
“I would ask you to consider a one-time adjustment of this threshold to account for the impact of inflation over the years where no adjustment has been made and then an annual adjustment thereafter,” Couch said.
As for the 1099K form, Couch said that threshold has been moving in the wrong direction.
“For the years 2023 and prior, payment apps and marketplaces have been required to send out forms to taxpayers who receive over $20,000 and have over 200 transactions,” Couch said. “For 2024 the threshold moved down to $5,000 and for 2025 (moved to) $2,500. The intention is to further reduce it to $600 for the calendar year 2026 and thereafter. For the years 2024 and after, 1099K requirements are based solely on dollar requirements with no consideration for the numbers of transactions. As the committee reviews the proposals to reduce burdens on small businesses, I urge your members to consider reversing course on lowering the 1099-k threshold amounts and instead work to increase them.”
Couch said she thought it went well when it came to speaking before the committee for the second time.
“Members of Congress were very engaged and provided a lot of good feedback after the committee meeting,” Couch said. “I also had the opportunity to co-host a national small business podcast and attend 1-on-1 meetings with multiple Congressman to discuss various objectives.”
The full hearing can be found on YouTube. Couch’s testimony begins at the 21 minute mark.
