Tax Relief Bills Aim to Prime the Small-Business Pump

In boom times, solutions providers talk of opening new business lines and offices.

In boom times, solutions providers talk of opening new business lines and offices.

In lean times, they just want customers to open their wallets a crack. A bill before Congress would provide small businesses incentives to do just that. At least thats what a newly launched coalition is hoping. The Alliance for Small Business Investment was created last month, founded by the Computing Technology Industry Association (CompTIA), 3Com, Gateway and Intel.

The groups aim is to rally support for tax relief provisions aimed at small businesses. The alliance is focused specifically on the Small Business Works Act of 2001 (S. 189). Sen. Christopher "Kit" Bond (R-Mo.), who was chair of the Senates Small Business Committee at press time, introduced the bill earlier this year. Rep. Donald Manzullo (R.-Ill.) introduced a companion bill in the House (H. 1037).

The legislation would increase the amount of equipment purchases that small businesses can expense annually to $50,000 from the $24,000 currently permitted under section 179 of the tax code. The bill also would allow software to be expensed and let small businesses depreciate computer equipment over two years as opposed to five years.

Bruce Hahn, director of public policy at CompTIA (www., says the changes to section 179 will "make life easier" for small-business owners. Solutions providers could benefit on two levels. First, small-business owners may be more likely to spend money on technology under the revised expensing provision. Already, a third of the capital purchases expensed under section 179 are computer-related, according to an Intel study cited by Hahn. Sweetening the tax incentive couldnt come at a better time for a market waiting for an uptick in spending.

Second, many solutions providers are small businesses themselves and presumably could take advantage of the legislation to upgrade their internal IT infrastructures.

Overall, the tax relief plan is intended to "ease burdens on self-employed individuals and small firms that pay approximately 40 percent of the nearly $2 trillion that the government collects each year," according to a statement from the Senates Small Business Committee.

The alliance, meanwhile, has conducted its first couple of meetings. Beyond the tech companies, attendees have included the American Institute of Certified Public Accountants, the National Association for the Self-Employed (NASE) and the U.S. Chamber of Commerce. At press time, Hahn said he expected a number of small-business groups to join the alliance.

NASE ( has joined and is on the coalitions steering committee. Kristie Darien, director of government affairs at NASE, says the small-business legislation has her groups support. Other key elements, she says, include a provision allowing small-business owners to deduct 100 percent of their health-care insurance costs and another provision that would raise the limit on business-meal deductions.

The tech community is interested in the well-being of the small-business sector as a source of revenue. Time will tell whether the small-business measures will make it through what promises to be a complicated session for tax legislation.

John Moore is services editor of [email protected] Partner. He can be reached at [email protected]