Newspaper article THE JOURNAL RECORD

Bond Offers Cash Accounting Proposal

Newspaper article THE JOURNAL RECORD

Bond Offers Cash Accounting Proposal

Article excerpt

Small business owners have been complaining for years to their federal lawmakers that cash accounting will ease compliance burdens and simplify the tax code. Several lawmakers have been listening.

Responding to the pleas for tax simplification, Sen. Christopher Bond, R-Mo., has recently introduced legislation that will permit small business taxpayers with average annual gross receipts of $5 million or less to use the cash method of accounting, instead of costly accounting rules.

Bond's bill, the "Cash Accounting for Small Business Act of 2001," continues his work from the last Congress and also offers relief for small business service providers faced with onerous inventory accounting requirements. A companion bill has been introduced in the House by Rep. Congressman Wally Herger, R-Calif.

The National Taxpayer's Advocate of the Internal Revenue Service has endorsed the change contained in the Bond and Herger bills.

"A straightforward threshold that allows small companies to use cash accounting can substantially reduce the cost of hiring bookkeepers, accountants, and lawyers for thousands of small businesses," Bond said. "Many small businesses simply cannot afford to hire outside professional help to guide them through the maze like tax code maintained by the IRS."

By some estimates, such professional help can increase a company's accounting costs by as much as 50 percent, excluding the cost of high-tech, computerized accounting systems that some businesses must install.

Bond, chairman of the Senate Committee on Small Business, faulted the IRS for attempting to force as many small business taxpayers as possible into using costly accrual and inventory accounting rules over the past several years. …

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