WASHINGTON — The Family Business Coalition (FBC), a group of 119 small business associations including the Tire Industry Association (TIA), has asked the U.S. Department of the Treasury to withdraw proposed revisions to the estate and gift tax provisions in Section 2704 of the Tax Code.
"The regulations would remove important tools business owners use to adjust for lack of control and marketability when valuing minority shares of a small business," the FBC said in its April 27 letter to Treasury Secretary Steven Mnuchin.
The April 27 letter essentially reiterated a letter the FBC sent in September 2016 to then-Treasury Secretary Jack Lew.
"The changes proposed to Section 2704 would remove legitimate valuation discounts for estate, gift, and generation-skipping taxes which businesses have used for the past two decades in order to prevent the IRS from overvaluing their businesses at death," the FBC said at that time.
"These proposed regulations would force even more family businesses and farms to grapple with the complicated and costly estate tax," it said.
The changes to Section 2704 were also against the will of Congress, where several bills and resolutions to repeal the estate tax met with approval in 2013 and 2015, the FBC said.
In the April 27 letter, the FBC said it was encouraged by Secretary Mnuchin's comments to Sen. John Thune, R-S.D., during Secretary Mnuchin's Senate confirmation hearing on Jan. 19, 2017.
"We need to make sure that people who own minority interest in operating businesses — that the valuation for tax purposes are reflected appropriately," the FBC quoted Secretary Mnuchin as saying.
Both the FBC and TIA noted that President Trump's April 25 executive order calls for the formation of a task force that would promote the preservation of family farms and businesses as they are passed from one generation to the next.
"It is within the power of the Treasury Department to put an immediate end to this pending expansion of the estate tax," TIA said in the May 15 issue of its Weekly Legislative Update.
TIA urged its members to work with the association in contacting Treasury officials and legislators in opposition to the proposed changes to Section 2704.
"We look forward to working with you and President Trump to create a healthier, more predictable playing field for family-owned and –operated businesses," TIA said.