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On June 11, 2010 FEI’s Committee on Private Company Policy joined almost 30 other organizations in supporting an effort by Senators Olympia Snowe (R-Maine) and Mike Enzi (R-Wy.) to strike a provision which would impose new employment taxes on s corporations.
This provision would require many S corporations to begin paying employment taxes on all active shareholder, non-wage income, and is still part of the ‘Tax Extenders’ bill (H.R. 4213) being debated on the Senate floor. It would raise approximately $11 billion for the federal government, and is designed to limit fraudulent activity in avoiding payroll taxes through active income distribution. Many other organizations have raised concerns about this provision because there has been no substantive debate on potential unintended consequences, and because it is a punitive measure designed to punish even good actors that abide by current laws on providing active shareholders with fair salaries.
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