Tax Attorneys: The Health Care Law’s Aggregation Rules Present Opportunity to Aid Small Businesses

A new way for tax attorneys to make money

In a recent article by J.D. Harrison of the Washington Post, he drew attention to what may be a significant problem for many small business owners, and one that can provide tax attorneys with another means by which to offer great value to clients.

The author observes the following:

The law references a section of the Internal Revenue Code known as the Common Control Clause. Under that clause, all employees of corporations, partnerships or sole proprietorships with common owners are lumped together, and in some cases, firms that share common equity investors can be considered a single employer, too. Ultimately, if the sum exceeds 50 workers, each firm is subject to the new coverage mandate.

Often overshadowed by rules concerning the number of hours that constitute full-time employment or the number of workers that define a small business, the aggregation rules pose an addition compliance headache for a large number of small business owners. In fact, roughly four out of 10 small firms with at least 20 employees are run by employers who own at least 10 percent of at least one other company, according to research by the National Federation of Independent Business.

Due to the complicated nature of the rules, many of those firms will be forced to hire a tax attorney to determine their size status under the law, according to Debbie Walker, a Washington accountant who testified at the hearing.

T he aggregation rules aren’t new, but they are being used in a new way, Walker explained. Currently, the Common Control Clause in the tax code is generally used by large firms to determine retirement benefits. Thus, many small business owners, and in fact many small business advisors, aren’t familiar with that section of the tax code. Some employers, she said, may not realize they are considered a large employer until regulators come knocking.

Yet another opportunity to serve as a trusted advisor to our small business clients!

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