Continuing my current series of posts on addressing small business tax law complexity, here is another suggestion I included in what I submitted for the written record of a June 7, 2023 SFC and Small Business and Entrepreneurship Committee roundtable.
Promote Tax Literacy
We don’t teach about tax in K-12 or at universities other than accounting majors typically taking at least one taxation course and there might be some tax included in financial literacy curriculum available at some high schools and colleges. Given everyone’s role as a taxpayer, more is needed. To help small businesses, I suggest:
When a taxpayer requests an EIN for a new business, the IRS should at that time also send (electronically and/or by the U.S. Post Office) information about tax obligations of a business in a form understandable by a layperson.
Provide funding to the IRS and SBA to run live, online workshops for new business owners on specific topics relevant to helping the taxpayer understand their tax obligations and to ask questions.
While there are numerous publications at the IRS website that can help a new business owner understand their tax obligations, they can be overwhelming and sometimes not specific enough such as to explain estimated tax payments and information reporting obligations.
An example of such workshops can be found at the California Department of Tax and Fee Administration (CDTFA) website that cover a multitude of topics such as recordkeeping, navigating the CDTFA website, and ones specific to particular industries. Other states might have similar workshops that are examples of ways to help business owners understand their tax obligations.
Find ways to promote and fund tax literacy activities.
Any federal funding of financial literacy activities should be sure to include an introduction of federal tax obligations of a new business. STEM activities funded by the government, and similar ventures that reach high school and college students, should also be encouraged or required to offer tax education because many of these students will become self-employed entrepreneurs.
What do you think? Professor Annette Nellen, San Jose State University.
Annette Nellen, CPA, Esq., is a professor in and director of San Jose State University’s graduate tax program (MST), teaching courses in tax research, accounting methods, property transactions, state taxation, employment tax, ethics, tax policy, tax reform, and high technology tax issues.
Annette is the immediate past chair of the AICPA Individual Taxation Technical Resource Panel and a current member of the Executive Committee of the Tax Section of the California Bar. Annette is a regular contributor to the AICPA Tax Insider and Corporate Taxation Insider e-newsletters. She is the author of BNA Portfolio #533, Amortization of Intangibles.
Annette has testified before the House Ways & Means Committee, Senate Finance Committee, California Assembly Revenue & Taxation Committee, and tax reform commissions and committees on various aspects of federal and state tax reform.
Prior to joining SJSU, Annette was with Ernst & Young and the IRS.
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