Congressman Panetta Introduces Legislation to Help Women-Owned Small Businesses by Eliminating Effects of Outdated Tax Law
Today, Congressman Jimmy Panetta (D-Carmel Valley) and Congressman Jodey Arrington (R-TX-19) introduced the Family Attribution Modernization Act. The bipartisan legislation would modernize current tax law that penalizes small businesses in community property states, and disproportionately impacts women business owners.
There currently exist nine community property states, including California and Texas. Under the existing tax laws, spouses in those states are automatically considered to own half of all property obtained during the marriage. As a result, business owners must bundle their business with that of their spouse when performing retirement plan coverage and nondiscrimination tests. Those tests are required assessments to ensure that small businesses offer retirement plans to their employees, and not just higher paid employees.
That is harmful to the growing number of women-owned businesses, especially if there is a dispute in a family or separation, as the businesses are forced to interact and be considered joint-owned under the attribution rule. This requirement also undermines small business owners whose spouses’ businesses do not offer retirement plans or have poorly managed retirement plans. The Family Attribution Modernization Act would eliminate this attribution rule to ensure business owners are not unfairly penalized for living in a community property state.
“At a time when women-owned small businesses are growing, their success can be stunted by antiquated family attribution rules,” said Congressman Panetta. “This bipartisan legislation would modernize those rules and ensure compliance with retirement plan laws so that owners are not adversely impacted by their spouse’s business. The Family Attribution Modernization Act would provide this long overdue change to help ensure that the growing number of women-owned businesses are not held back by outdated tax laws.”
“Making it easier for workers and families to save for retirement, and incentivizing businesses to offer plans for their employees is a bipartisan priority. There should be parity in this endeavor across the board,” said Rep. Arrington. “Unfortunately, antiquated rules and inequities in the tax code prevent certain small business owners from offering retirement benefits to workers, based on the state in which they reside along with marital and parental status. I am proud to join my colleague, Congressman Panetta, in introducing the bipartisan Family Attribution Modernization Act that will eliminate these disparities while complimenting the SECURE Act and additional landmark retirement legislation to follow”.
“Small business owners, and most specifically women small business owners, have too long been constrained by well-intentioned, but archaic rules that no longer apply in today's economy. The Family Attribution Modernization Act will not only help small business owners expand retirement plan coverage to more hard-working Americans, it acknowledges the realities of today's increasingly diverse business ownership," said Brian Graff, CEO of the American Retirement Association.