U.S. Reps. Blaine Luetkemeyer, Brad Schneider (IL-10), Mike Quigley (IL-05) and Richard Hudson (NC-08) led a bipartisan letter with 229 colleagues to House Leadership urging them to preserve the simple and appropriate cash method of accounting for small businesses and service firms.

“America is long overdue for a tax code that is based upon fairness and simplification, not complex and confusing,” Luetkemeyer said.  “I am pleased that more than half of the House of Representatives recognize the importance of preserving the cash method of accounting for our nation’s job creators which are small businesses and service firms. I will continue to support common-sense approaches to reforming our nation’s tax code. ”

“Modernizing and simplifying our tax code is critical to achieving long-term, sustainable economic growth,” Schneider said. “While it is imperative that we enact comprehensive tax reform, needlessly forcing small businesses and farms to switch accounting methods would have the unintended consequence of creating greater complexity and economic disincentives in our tax code—stifling growth at a time when we should be helping these businesses build and hire.”

“America’s federal tax code must be overhauled from top to bottom, but not with cumbersome and unnecessary reforms that restrict the success and competitiveness of our small businesses and service firms,” Quigley said. “Instead of forcing them to use a complex accounting system that limits flexibility, we should focus on simplifying our tax code and develop incentives that encourage small businesses growth and job creation.”

“Every day, America’s small businesses struggle as they are they are forced to comply with excessive rules and regulations coming out of Washington,” Hudson said. “Forcing small businesses to change accounting methods creates more confusion and complexity, making it difficult for them to grow and hire and hindering economic growth. We need to make common sense reforms to our current tax code to make it work for these job creators, not against them.”

In March 2014, the House Ways and Means Committee released a tax reform discussion draft, which included a number of proposals adjusting business accounting methods. While the proposal would expand the cash accounting method for C Corporations, it would also create new limits on pass-through entities, personal service companies, and farmers—forcing businesses to use the more complex accrual accounting method once they accumulate more than $10 million in gross receipts.  This would stifle natural economic growth for small businesses as they approach the newly proposed cap.    

In November 2013, Schneider, Luetkemeyer, Quigley, Hudson and 67 of their colleagues sent a bipartisan letter to the Chairman and Ranking Member of the House Ways and Means Committee urging them to consider the consequences of proposed tax reforms that would restrict accounting flexibility and force businesses to switch accounting methods.