Member News

HR 4213, Section 413 - Employment Tax Treatment of Professional Service Businesses

On May 28, 2010, the House passed H.R. 4213, the “American Jobs and Closing Tax Loopholes Act of 2010,” by a vote of 245-171. It is currently stalled in the Senate.

Section 413 of the bill affects the self employment tax treatment of various small businesses including accounting practices that are set up as S corporations and limited partnerships. The provision would require that these S corporation owners and limited partners be subject to self-employment tax on their share of distributable profits in excess of salary/guaranteed payments for servies even if the distribution isn't actually made.

Senators Snowe and Senator Enzi drafted an amendment (S Amdt. 4342) that would strike Section 413 from the bill.

If you or your clients are affected by Section 413 you may consider sending a letter in support of this amendment. For your convenience, PSPA has prepared a letter for members to contact the Pennsylvania representatives to voice your support of S Amdt. 4342 to strike Section 413 from HR 4213. The letter can be viewed below.

Attachments:
Section 413 - Letter of Opposition.doc