Senator Stabenow Makes Small Businesses Aware of New Tax Cuts
Senator Stabenow Authored Provision Making Health Care Tax Cuts Start in 2010
WASHINGTON- U.S. Senator Debbie Stabenow (D-MI) called on the leaders of H&R Block and Jackson Hewitt, the nation's two largest tax preparers, to take immediate action to help small business owners take full advantage of new tax cuts for companies that provide health insurance to their employees. Many small business owners may not be aware that they are now eligible to receive up to a 35 percent tax cut on the money they spend on health insurance premiums. Senator Stabenow authored the amendment, which was included in the healthcare reform law that made this provision take effect for the 2010 tax year. Nearly 1.2 million small businesses across the country could benefit from this provision this year.
"Over 100,000 small businesses in Michigan are providing health insurance for their employees, and this tax cut will help their bottom line this year," said Senator Stabenow. "I worked to make sure these tax cuts were available to small businesses right away, so they can continue providing insurance for their employees and their families. Now, we need to make sure that tax preparers are giving them the information they need to take full advantage of these new tax rules when they file their 2010 returns."
"Healthcare reform has been a job creator at my 100 year old downtown mom and pop garden store," said Mark Hodesh, the owner of Downtown Home and Garden in Ann Arbor. "The 30% tax credit we will receive this year was a god-send in view of the 300% health care cost increase we faced over the past 10 years and gave me the means to hire a new employee last spring. As it turned out 2010 was our busiest year ever and we wouldn't have been able to handle the increase without the new hire to help. The tax credit not only helped to create a job, it helped our business to grow."
According to a recent Forbes Magazine article, many of the major health insurance companies are reporting significant increases in small businesses offering health care benefits to their employees. Senator Stabenow joined Senators Reid, Durbin, Schumer, Baucus, Begich and Murray in sending the letter to the two companies.
The text of the letter sent is included below.
January 21, 2011
Alan M. Bennett
President and Chief Executive Officer
H&R Block World Headquarters
One H&R Block Way
Kansas City, MO 64105
Jackson Hewitt Tax Service Inc.
3 Sylvan Way
Parsippany, NJ 07054
Dear Mr. Bennett and Mr. Sanford:
As you prepare for the 2010 tax filing season, we request that you take all necessary steps to assist small businesses in taking advantage of the small business tax credit that was enacted as part of the Affordable Care Act in 2010. Businesses with fewer than 25 workers and average wages of less than $50,000 will be eligible this year to tax credits of as much as 35% for the health insurance that they provide for their employees. The credit will rise to a maximum of 50% in 2014.
The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. More than 4 million small businesses, or 83% of all small businesses in the United States, will be eligible to receive the tax credit in 2010. Over 10 years, the tax credit will be worth $40 billion to our nation's small employers. We feel it is important that we do all we can to ensure that no one overlooks this credit and that is why we are reaching out to you and asking for help.
When this credit was enacted in 2010, the IRS notified eligible businesses that they would be entitled to this credit. The IRS also recently announced how eligible tax-exempt organizations -- which do not generally file income tax returns -- will claim the credit during the 2011 filing season. Despite this outreach, a recent survey by the Small Business Majority found that more than half of those surveyed were still not aware of the tax credit.
The IRS has given an example of the benefits that will be received by a typical small business. For example, a restaurant with 40 part-time employees will receive tax relief of $28,000 in 2010 to help pay for the cost of providing health insurance to their employees. According to a study by the Small Business Majority, approximately 1,198,700 American small businesses will be eligible to receive the maximum tax credit in 2010.
We hope you will do your part to heighten awareness of this valuable credit that will reduce costs for small businesses. Upon deliverance of final tax documents to your eligible small business clientele this tax season, we urge you to provide written notifications explaining the availability of this tax break.
Small businesses and their employees cannot afford to miss out in claiming this important tax credit and we hope you agree with us and take all steps to ensure it is not overlooked.
Senate Majority Leader Harry Reid (D-NV)
Senate Finance Committee Chairman Max Baucus (D-MT)
Senate Assistant Majority Leader Dick Durbin (D-IL)
Senate Democratic Vice Chairman Chuck Schumer (D-NY)
Senate Democratic Conference Secretary Patty Murray (D-WA)
Senate Democratic Policy and Communications Vice Chair Debbie Stabenow (D-MI)
Senate Democratic Steering and Outreach Chairman Mark Begich (D-AK)
American Institute of Tax Professionals (AICPA)
National Association of Enrolled Agents (NAEA)
National Association of Tax Professionals (NATP)
National Society of Tax Professionals (NSTP)
National Society of Accountants (NSA)