AICPA Supports Tax Fairness for Small Businesses, Improving Deduction for QBI Under Section 199A

The American Institute of CPAs (AICPA) has long advocated for an efficient and pro-growth tax system based on principles of good tax policy. In accordance with these principles, the AICPA has submitted a letter to Senate Finance Committee and the House Ways & Means Committee leadership regarding potential modifications to the qualified business income (QBI) deduction under section 199A within the Small Business Tax Fairness Act.

Key to the AICPA’s recommendations is the support for the elimination of the distinction between specified service trades or businesses (SSTBs), such as accountants, attorneys, doctors, athletes, consultants, and entertainers whose incomes exceeded established thresholds*, and non-SSTBs, which encompasses all other businesses. The Small Business Tax Fairness Act would amend section 199A(d) by eliminating the distinction for SSTBs, allowing individuals operating all types of businesses to qualify for the lower effective tax rates provided by the QBI deduction under the Tax Cuts and Jobs Act (TCJA).

“Professional services firms, such as accounting firms, are an important sector in our economy and heavily contribute to the nation’s goals of creating jobs and better wages. They are an integral part of the voluntary tax compliance process. Without the benefit of an equitable and consistent rate reduction for all individual business owners, the incentive to start or grow a business is diminished, with a corresponding loss of jobs and reduction in wages,” explains the letter. “In the interest of equity, the AICPA urges Congress to permit all non-corporate business owners to avail themselves of the QBI deduction provided under the TCJA.”