Please reach out to your Senators to voice your opposition to the unfair targeting of pass-throughs, such as those of accountants, dentists, doctors, lawyers and pharmacists, through the elimination of the pass-through entity tax (PTET) SALT deduction. This would increase taxes on the partners/owners of many service-based businesses, such as accounting firms, discourage the creation and growth of such businesses, and further expand the disparity between C corporations and pass-through entities.

The House Ways & Means Committee passed its tax legislation, which included language that would eliminate the ability of certain pass-through entities, including accounting firms, to take advantage of the state and local tax deduction for pass-throughs. This legislation not only has an impact on the accounting profession, but also on many of their clients. The Senate is now considering this legislation and will be voting soon. 

Under this legislation, accounting firms will be worse off than they were after the application of the SALT cap under the Tax Cuts and Jobs Act (TCJA) and before the IRS-approved deductions were authorized. Specifically, the proposal newly subjects local entity level taxes to the individual SALT cap.

The proposed tax legislation unfairly subjects specified service trades or businesses (SSTBs), such as accountants, doctors, lawyers, pharmacists, dentists, veterinarians, etc., to the individual cap on state and local income tax deductions at the federal level, regardless of partners’/owners’ income level or the state in which they live.

When comparing the tax treatment of state and local taxes for pass-through entities between the TCJA and this proposed bill, the sole change is the targeting of pass-through service providers, who were already substantially limited under the qualified business income (QBI) deduction for SSTBs.

How you can help

The accounting profession believes that this bill further increases the lack of parity between pass-through entities and corporations; we strongly oppose the targeting of certain pass-throughs from deducting state and local entity taxes at the federal level. We urge you to contact your Members of Congress to express your opposition to this unfair limitation of pass-through entities and ask them to support service trades and businesses.

Please call or email your Senators by Friday, June 13. 

• If you live in New Jersey, please use the form to the right.
• If you live outside of New Jersey, please look up your member(s) of Congress here and use the sample message in the right column.