The Texas Society of Certified Public Accountants (TSCPA) has a laundry list of recommendations to help ease the economic strain on businesses and individuals during the coronavirus pandemic, including by substantially increasing the capital loss limitation.
In an April 29 letter to the top taxwriters in the House and Senate, the TSCPA called for legislation to minimize or defer both individuals’ and businesses’ tax liabilities. The group said that temporarily increasing the capital loss limitation from $3,000 to $250,000 for taxpayers filing jointly would help lessen the economic effect of the coronavirus on taxpayers.
The $250,000 limit would help middle-income taxpayers without being “unduly” beneficial to high-income taxpayers, the TSCPA said, adding that the increase could help investors use the deduction, which they may otherwise never use. “This limit was set in 1978 and is out of date and out of touch with the real losses that are being suffered as a result of the current economic crisis,” the letter says.
Taxpayers also should be allowed to carry back current losses to the previous three years, according to the letter.
The TSCPA also wants Congress to increase the percentage depletion allowance for oil and gas producers from 15 percent of gross income to 25 percent. The letter notes that oil prices have plummeted over the past month, and that domestic producers have announced production cuts to deal with the low prices.
Reinstating the investment tax credit would also benefit domestic manufacturing, according to the TSCPA. A 10 percent refundable tax credit would go to those purchasing equipment manufactured in the United States with parts primarily sourced in the United States, the group explained.
“This will provide a tax benefit to the purchasers, regardless of their taxable income, as well as a benefit to the manufacturers, wholesalers, and retailers who will see an increased demand for the manufactured goods,” the letter says.
Adjusting the Small Business Loan Program
The TSCPA also asked federal lawmakers to expand access to the Paycheck Protection Program (PPP) to include 501(c)(6) organizations like itself.
The group said these organizations require more than just member dues to remain functional and pay salaries. “As conference and educational events are postponed or cancelled, and contributions become uncertain, finding funds to continue operations and maintain payroll is an increasingly dire issue,” the letter says.
Another way to improve the small business loan program would be to provide a refundable tax credit to businesses that maintain payroll until the end of the year, the TSCPA said. It argued that even after the eight-week period of providing salaries through the loan funding, the economy will remain weak, and that employers should have additional incentives to keep employees on the payroll. The TSCPA recommended a 20 percent refundable tax credit for wages up to $100,000.