Statement by the National Association of Professional Insurance Agents (PIA) on the tax reform bill
WASHINGTON — The passage of H.R. 1, the tax reform bill, will benefit owners of small businesses, according to the National Association of Professional Insurance Agents (PIA).
When Congress began its work on tax reform at the beginning of 2017, PIA was encouraged by its historic opportunity to provide tax relief for small business owners and overhaul the complicated tax structure for taxpayers. Many PIA members own independent insurance agencies that are organized as sole proprietorships, partnerships, or Subchapter S corporations. Such small businesses do not pay corporate income tax. Instead, their income “passes through” the firm and appears directly on their owners’ individual tax returns, where it is taxed as normal income.
While the bill provides provisions that will result in savings for some pass-through entities, the benefit is limited by an income threshold that will prevent some PIA members from benefitting from the maximum new deduction available to certain pass-throughs. As such, many may opt to reorganize as C corporations, a process that costs money and presents logistical and compliance issues that could be overly burdensome to small businesses. Furthermore, the benefit for pass-throughs, even at its most generous, is not permanent, which leaves small business owners at a disadvantage compared to large corporations. Still, overall this legislation will be a net positive for most PIA members.
PIA will work with our members to maximize their benefit from this measure and will remain involved in the forthcoming regulatory process.