The American Council of Engineering Companies (ACEC) announced that its long-running opposition to House and Senate tax reform proposals that would limit use of the cash method of accounting for businesses has generated unprecedented bipartisan support.
A congressional letter sponsored by Representatives Mike Quigley (D-IL), Blaine Luetkemeyer (R-MO), Brad Schneider (D-IL), and Richard Hudson (R-NC), strongly opposes the attempt to force businesses to pay taxes on income not yet received. The letter has been signed by 233 House members. A similar letter of opposition in the Senate has garnered 46 signatures.
“The effort to limit cash accounting would impose significant cash flow problems on many businesses, including the majority of engineering firms,” says ACEC President & CEO David A. Raymond. “It is an unfair attack on business finances, especially for engineering firms as the vast majority of their business costs are labor-related and must be paid well before the firms are paid by their clients.”
Under the cash method of accounting, firms pay taxes in the year they are paid for their services, versus the accrual method, where firms pay taxes in the year they deliver the service, regardless of whether they have received payment. The House and Senate proposals of which of the opposition is based would limit cash accounting to firms with less than $10 million in revenues and to sole proprietors.
“The cash method of accounting is just a simpler process, has fewer compliance costs, and most importantly does not require a business owner to pay tax before receiving the income being taxed,” Raymond added.
The American Council of Engineering Companies (ACEC) is the business association of America’s engineering industry, representing more than 5,000 independent engineering firms and more than 500,000 professionals throughout the U.S. engaged in the development of America’s transportation, water and energy infrastructure, along with environmental, industrial and other public and private facilities. Founded in 1909, ACEC is a national federation of 51 state and regional organizations.