BIG “I” SUPPORTS SENATE INTRODUCTION OF INTANGIBLE ASSETS TAX BILL
Legislation would shorten write-offs, create more accurate amortization schedule
WASHINGTON, D.C., Sept. 28, 2006—The Independent Insurance Agents & Brokers of America (the Big “I”) supports a bill introduced today in the Senate that would allow purchasers of eligible small businesses to write off as much as $5 million of acquired intangible assets over the course of a five-year period.
The bipartisan legislation, S. 3974, introduced by Sen. Jim Bunning (R-Ky.) and Sen. Kent Conrad (D-N.D.), would allow purchasers to more accurately amortize intangible assets acquired through the purchase of small businesses, and provide better liquidity to Main Street businesses.
“I am pleased to champion this legislation which will assist America's small businesses by ensuring that the taxes they pay better reflect the economic realities that they face,” Sen. Bunning says.
“Amortization of business assets ought to reflect the useful lives of those assets,” Sen. Conrad adds. “This legislation would bring our tax system much closer to economic reality.”
The Senate bill parallels legislation that was introduced in the House, H.R. 4960, “Tax Fairness for Small Business Act,” earlier this year by Chief Deputy Majority Whip Eric Cantor (R-Va.) and Rep. Earl Pomeroy (D-N.D.).
“The top tax priority of the Big ‘I’ is common-sense tax reform on intangible assets acquired through the purchase of one small business by another,” says Charles E. Symington Jr., Big “I” senior vice president for government affairs and federal relations. “Our members applaud Senators Bunning and Conrad for introducing this legislation that will provide tax relief to businessmen and businesswomen across America, and we appreciate the bipartisan leadership we’ve seen on this issue in both chambers of Congress.”
Current law requires intangible assets to be depreciated over 15 years, even though these specific types of assets, such as customer lists, have much shorter shelf lives. In fact, experience has shown that these types of intangible assets have shelf lives closer to five years. The Big “I” consistently has supported shortening the depreciation schedule for intangible assets so that it reflects their useful economic life.
“Modernizing the depreciation schedule will help small businesses by allowing their intangible assets to be amortized more accurately,” says Brendan Reilly, Big “I” assistant vice president of federal government relations. “A shorter depreciation schedule also would allow Main Street businesses to reinvest more money in themselves and their operations.”
Founded in 1896, IIABA (the Big “I”) is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life, and health—as well as employee benefit plans and retirement products. Web address: www.independentagent.com.