Wednesday, September 28, 2022

Proposed Estate Tax Regulations Threaten Family Businesses

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WASHINGTON (Sept. 28, 2016) – The National Cattlemen’s Beef Association along with more than 3,800 organizations and family-owned enterprises sent a letter to Treasury Secretary Jacob Lew adamantly opposing and asking for withdrawal of the newly proposed estate tax regulations by the Department of Treasury. The proposed regulations under section 2704 of the Internal Revenue Code would permanently change estate planning for families that own a controlling interest in a privately-held entity. 

“The proposed guidance is one of the most sweeping changes to estate tax policies in the last 25 years and would be detrimental to active enterprises and family-owned businesses that employ millions of workers throughout the nation,” the letter reads. “In particular, these rules would impose significant new tax costs on family-owned businesses, diverting capital from business investment, costing jobs and threatening the ability of families to pass businesses on to the next generation of owners.” 

Danielle Beck, NCBA director of government affairs, said the regulations would eliminate or greatly reduce available valuation discounts for family-related entities, which in turn increase the tax associated with common transfers including inheritance.

“These proposed regulations would eliminate or greatly reduce marketability for family related entities, effectively discouraging families from continuing to operate or grow their businesses and pass them on to future generations,” said Beck. “Producers are often forced into selling land or cattle in order to pay the tax, and in some cases, are put out of business. The Administration is causing unnecessary economic harm to family businesses.”

NCBA urges the Department of Treasury to withdraw the proposed estate tax regulations.

 

 

Daines Encourages Administration to Abandon Proposed Estate Tax Regulations

Proposed Regulations Would Have Severe Chilling Effect on Family Farms and Businesses

 

BOZEMAN, Mont. — U.S. Senator Steve Daines today wrote to Treasury Secretary Jacob Lew encouraging the Treasury Department to abandon proposed regulations that would significantly increase the estate tax burden on family farms and businesses. The proposed regulations, if finalized, would contradict long-standing legal precedent and greatly discourage families from continuing to operate and grow their farms and businesses for eventual transfer to future generations.

 

“Treasury should pursue policies that encourage the creation and growth of family businesses and not propose regulatory changes that make it more difficult and costly for families to transfer ownership to future generations,” Daines wrote. “We thus request that Treasury withdraw the proposed regulations and ask that any regulations that Treasury may issue in the future more directly target perceived abuses in the valuation of transferred interests in family businesses.”

 

The letter was also signed by U.S. Sens. John Thune (R-S.D.), Orrin Hatch (R-Utah.)Pat Roberts (R-Kan.), John Cornyn (R-Texas), Johnny Isakson (R-Ga.), Chuck Grassley (R-Iowa), Mike Crapo (R-Idaho), Dean Heller (R-Nev.), Roy Blunt (R-Mo.), John McCain (R-Ariz.), David Perdue (R-Ga.), Tom Cotton (R-Ark.), Susan Collins (R-Maine), Cory Gardner (R-Colo.), Jerry Moran (R-Kan.), Mike Enzi (R-Wyo.), Marco Rubio (R-Fla.), Dan Coats (R-Ind.), Lamar Alexander (R-Tenn.), Richard Shelby (R-Ala.), John Barrasso (R-Wyo.), Mark Kirk (R-Ill.), Jim Inhofe (R-Okla.), Kelly Ayotte (R-N.H.), Roger Wicker (R-Miss.), Jim Risch (R-Idaho), Ted Cruz (R-Texas), John Boozman (R-Ark.), Shelly Moore Capito (R-W.Va.), Mike Rounds (R-S.D.), Deb Fischer (R-Neb.), Bob Corker (R-Tenn.), Tim Scott (R-S.C.), Joni Ernst (R-Iowa), James Lankford (R-Okla.), Jeff Flake (R-Ariz.), Thad Cochran (R-Miss.), Thom Tillis (R-N.C.), David Vitter (R-La.), and Ben Sasse (R-Neb.).

 

Full text of the letter can be found below. 

 

The Honorable Jacob Lew


United States Treasury Secretary

U.S. Department of the Treasury

1500 Pennsylvania Ave., N.W.

Washington, D.C. 20220

 

Dear Secretary Lew:

 

We write to express our serious concerns over proposed regulations (REG-163113-02) published on August 4, 2016, under Internal Revenue Code section 2704 (“proposed regulations”) that, if finalized in their current form, will significantly increase the estate tax burden on family businesses. The proposed regulations eliminate or greatly reduce the discounts for lack of control and lack of marketability for family farms and businesses and will thus discourage families from continuing to operate and build their businesses. We ask that the proposed regulations not be finalized in their current form as they directly contradict long-standing legal precedent, create new uncertainty for taxpayers, and put family-owned businesses at a disadvantage relative to other types of businesses.

 

In an October 3, 2014, letter, a number of us communicated to the Treasury Department and the Internal Revenue Service our strong opposition to any regulatory effort that would artificially inflate the valuation of estates and eliminate the benefits of estate tax relief legislation that was enacted on a bipartisan basis by the American Taxpayer Relief Act of 2012. By raising taxes on family farms and businesses, the proposed regulations represent a step back from the recently enacted permanent estate tax relief.

 

Treasury should pursue policies that encourage the creation and growth of family businesses and not propose regulatory changes that make it more difficult and costly for families to transfer ownership to future generations. We thus request that Treasury withdraw the proposed regulations and ask that any regulations that Treasury may issue in the future more directly target perceived abuses in the valuation of transferred interests in family businesses.

 

Sincerely,

Source:  National Cattlemen's Beef Association and Senator Steve Daines Office

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