As reported first by kakacabeza on This discussion thread, the AIA Angle reports a 9 percent tax deduction for firms applicable to revenues derived from architectural and engineering services that are produced by sole proprietors, partnerships, LLCs, subchapter S corporations, and C corporations.
it was a bi-partisian supported bill, so dont go voting for bush for this reason....
From the AIA Newsletter The Angle
Special Feature
Congress Passes Tax Cut for Architectural Firms
Major AIA legislative victory!
Congress has passed the "JOBS" tax bill, which includes a $358 million tax cut for architecture and engineering firms. Making sure A/E firms were included in the legislation was a priority that the AIA has been advocating since the 2004 Grassroots Conference in March. The new law provides for firms an across-the-board 9 percent tax deduction that will be phased-in over the next six years.
President Bush is expected to sign the bill, which passed with bipartisan support.
The central purpose of the tax legislation was to repeal certain tax breaks for exporters, that had been found to be in violation of international law by the World Trade Organization. In place of these old FSC/ETI export-related tax incentives, the legislation creates a new tax cut for a variety of manufacturing businesses, which includes architecture and engineering firms.
This new tax deduction is applicable to revenues derived from architectural and engineering services that are produced by sole proprietors, partnerships, LLCs, subchapter S corporations, and C corporations. For tax years 2005 and 2006, firms will be allowed to deduct 3 percent of their net revenues from projects undertaken within the U.S. That percentage increases to 6 percent for tax years 2007, 2008, and 2009. After 2009 it becomes 9 percent.
Koonce: Great victory
"This is a great victory for us," said AIA Executive Vice President/CEO Norman L. Koonce, FAIA. "This was a very difficult and complex issue and we were successful in our objectives. As a result, our members will receive a tangible benefit for years to come with the new tax deduction. It shows what the AIA can do when we work together for common goals."
Koonce thanked "the thousands of AIA members who have contacted members of Congress on this important legislation." He also praised AIA Government Advocacy Vice President Ron Faucheux and his team for "a job exceeding well done."
At times over recent months, passage of the overall bill was jeopardized by a variety of issues such as the tobacco buyout amendment. But ultimately enough House and Senate members were able to reach agreement on the tax legislation before adjournment.
The original Senate version of the bill extended the tax breaks to manufacturers but did not include architecture and engineering firms. That was changed with an AIA-supported amendment in the Senate that was sponsored by Sen. Kay Bailey Hutchison (R-TX).
The Senate bill also included a provision that would have repealed the 10 percent historic preservation tax credit program. That provision was eliminated after intensive lobbying by AIA members and preservationists last May.
The original House version of the bill applied the tax cut only to C corporations, which would have denied the benefit to the many architecture firms that are sole proprietorships, partnerships, S corporations, and LLCs. The AIA, along with engineering and small business groups, were successful in persuading the conference committee to extend the tax deduction to all architecture and engineering firms, not just C corporations.
Faucheux said the tax bill was a tough issue for the AIA to lobby because it involved fighting on three fronts. "First, we had to make sure architects were included. Second, we had to make sure all firms, not just C corporations, would benefit. Third, we had to save the historic rehab tax credit." He attributes the triple triumph to "the sustained grassroots efforts put forth by our members since March. Grassroots contact works. This victory proves that once again."
Revenue neutral
According to congressional sponsors, the bill is “revenue neutral” because it does not add to the federal budget deficit. This was accomplished because the legislation, in addition to lowering taxes on certain businesses, also raises revenues from a number of sources including eliminating the FSC/ETI manufacturing export incentives and eliminating corporate tax shelter abuse.
The conference report on the bill finally passed Monday when the Senate voted 69-17 for adoption. Voting for the bill were a bipartisan group of key senators that included Majority Leader Bill Frist (R-TN), Minority Leader Tom Daschle (D-SD), Senate Finance Committee Chair Chuck Grassley (R-IA), and Senate Finance Committee ranking member Max Baucus (D-MT).
Late last week, the House passed the conference report by a 280-141 vote.
Values and practice victories
The tax cut victory comes on the heels of another congressional win for architects last week with passage of the Brightfields/Brownfields legislation. Click here to see "AIA-Supported Brightfields/Brownfields Legislation Passes."
"These two successes show that AIA member activism can make a big difference on issues involving both values and practice," said Faucheux.
"But we've only just begun," noted Faucheux. "In the next Congress, we'll need member participation more than ever. We're currently seeking broad-based AIA member and Knowledge Community input on a long term legislative agenda that strongly reflects the values of our members on a range of sustainability, housing, education, energy, water resources, transportation, and community design issues. The fight goes on."
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More from NYtimes How Tax Bill Gave Business More and More
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