In two separate letters to Treasury Secretary Jacob Lew, members of Congress as well and thousands of organizations expressed their opposition and asked for withdrawal of the proposed estate tax regulations made in August.
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 letter from 41 Senate Republicans explained 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.
A proposal to change the estate tax is drawing opposition, including from 41 Republican senators who sent a letter to Treasury Secretary Jacob Lew. (Photo: alexskopje/Thinkstock)
“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,” the senators wrote, led by Sens. John Thune, R., S.D., a member of the tax-writing Senate Finance Committee, and Orrin Hatch, R., Utah, chairman of the Senate Finance Committee.
“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,” a letter on behalf of 3,800 organizations and family-owned enterprises 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, National Cattlemen’s Beef Associaiton 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,” says 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.”
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