{"database": "openregs", "table": "congressional_record", "rows": [["CREC-2000-12-15-pt1-PgH12097-5", "2000-12-15", 106, 2, null, null, "INSTALLMENT TAX CORRECTION ACT OF 2000", "HOUSE", "HOUSE", "ALLOTHER", "H12097", "H12100", "[{\"name\": \"Bill Archer\", \"role\": \"speaking\"}, {\"name\": \"Gerald D. Kleczka\", \"role\": \"speaking\"}, {\"name\": \"Wally Herger\", \"role\": \"speaking\"}, {\"name\": \"Benjamin L. Cardin\", \"role\": \"speaking\"}, {\"name\": \"John S. Tanner\", \"role\": \"speaking\"}, {\"name\": \"John A. Boehner\", \"role\": \"speaking\"}, {\"name\": \"Doug Bereuter\", \"role\": \"speaking\"}, {\"name\": \"Mark Udall\", \"role\": \"speaking\"}]", "[{\"congress\": \"106\", \"type\": \"HR\", \"number\": \"3594\"}, {\"congress\": \"106\", \"type\": \"HR\", \"number\": \"3594\"}, {\"congress\": \"106\", \"type\": \"HR\", \"number\": \"3594\"}]", "146 Cong. Rec. H12097", "Congressional Record, Volume 146 Issue 155 (Friday, December 15, 2000)\n\n[Congressional Record Volume 146, Number 155 (Friday, December 15, 2000)]\n[House]\n[Pages H12097-H12100]\nFrom the Congressional Record Online through the Government Publishing Office [www.gpo.gov]\n\n                 INSTALLMENT TAX CORRECTION ACT OF 2000\n\n  Mr. ARCHER. Mr. Speaker, I move to suspend the rules and pass the\nbill\n(H.R. 3594) to repeal the modification of the installment method.\n  The Clerk read as follows:\n\n                               H.R. 3594\n\n       Be it enacted by the Senate and House of Representatives of\n     the United States of America in Congress assembled,\n\n     SECTION 1. SHORT TITLE.\n\n       This Act may be cited as the ``Installment Tax Correction\n     Act of 2000''.\n\n     SEC. 2. REPEAL OF MODIFICATION OF INSTALLMENT METHOD.\n\n       (a) In General.--Subsection (a) of section 536 of the\n     Ticket to Work and Work Incentives Improvement Act of 1999\n     (relating to modification of installment method and repeal of\n     installment method for accrual method taxpayers) is repealed\n     effective with respect to sales and other dispositions\n     occurring on or after the date of the enactment of such Act.\n       (b) Applicability.--The Internal Revenue Code of 1986 shall\n     be applied and administered as if that subsection (and the\n     amendments made by that subsection) had not been enacted.\n\n  The SPEAKER pro tempore (Mr. Pease). Pursuant to the rule, the\ngentleman from Texas (Mr. Archer) and the gentleman from Wisconsin (Mr.\nKleczka) each will control 20 minutes.\n  The Chair recognizes the gentleman from Texas (Mr. Archer).\n\n                             General Leave\n\n  Mr. ARCHER. Mr. Speaker, I ask unanimous consent that all Members may\nhave 5 legislative days within which to revise and extend their remarks\nand to include extraneous material on H.R. 3594.\n  The SPEAKER pro tempore. Is there objection to the request of the\ngentleman from Texas?\n  There was no objection.\n  Mr. ARCHER. Mr. Speaker, I yield myself such time as I may consume.\n  Mr. Speaker, while the nature of this bill is complex, the purpose is\nquite simple; and that purpose is to protect as many as 260,000 small\nbusinesses from a harmful tax provision. More important, it should\nserve as a lesson to all politicians who talk about closing loopholes.\n  This was presented originally in President Clinton's fiscal year 2000\nbudget and included in the 1990 Tax Extenders package at the insistence\nof the White House and it outlawed the use of the installment sales\nmethod byN O T I C E\n\nEffective January 1, 2001, the subscription price of the\nCongressional Record will be $393 per year or $197 for six months.\nIndividual issues may be purchased for $4.00 per copy. The cost for\nthe microfiche edition will remain $141 per year with single copies\nremaining $1.50 per issue. This price increase is necessary based\nupon the cost of printing and distribution.\n                                    Michael F. DiMario, Public\nPrinter\n\n[[Page H12098]]\n\ntaxpayers using the accrual method of accounting.\n  The accrual method of accounting generally requires that taxpayers\nrecognize income in the year in which the right to receive the income\noccurs regardless of whether the taxpayer actually receives the cash in\nthat year.\n  The installment method of accounting allows a taxpayer to defer\nrecognition of income until the taxpayer actually receives the payment,\nand that is appropriate.\n  During the negotiations in the 1999 tax package, we were told this\nprovision was a ``loophole closer,'' that it was noncontroversial, and\nthat no one would be heard. Months after the bill became law, however,\nwe learned from the small business community that this harmless\nloophole closure would, in fact, hurt and hurt significantly. So now\nthere is strong bipartisan support to undo this mistake and to go back\nto the way things were before this tax change was made. But this should\nserve as a lesson to all of us, not just today but in future\nCongresses. ``Closing loopholes'' always is a good sound bite for\npoliticians. Whereas the real-life result is usually a bigger tax bite\non American workers or businesses.\n  Today we will right the wrong and provide a little more peace of mind\nto thousands of small business owners across the country.\n  I urge my colleagues to support this important and time sensitive\nlegislation.\n  Mr. Speaker, I reserve the balance of my time.\n  Mr. KLECZKA. Mr. Speaker, I yield myself such time as I may consume.\n  Mr. Speaker, I rise today in support of the Installment Tax\nCorrection bill.\n  As the author of the first bill introduced in the House of\nRepresentatives to reinstate the installment method of accounting for\naccrual basis taxpayers, I commend the gentleman from Texas (Mr.\nArcher) for his efforts on this issue.\n  Mr. Speaker, this legislation is needed to correct a flaw in the\nTicket to Work and Work Incentives Improvement Act, which was passed by\nCongress last year.\n  Although the Ticket to Work bill contained many important provisions,\nit repealed the installment method of accounting for most accrual basis\ntaxpayers. The bill before us is necessary to fix this repeal.\n  The installment sales method is frequently used in the sale and\npurchase of a small business where bank financing is unavailable. Under\nthe Ticket to Work Act, small business owners selling a business using\nthe installment sales are required to pay all capital gains taxes on\nthe sale of a business all at once even if the proceeds are to be\nreceived in installments over the years.\n  As a result, some small businesses now face lump sum income tax\npayments that are more than the immediate proceeds of the actual sale.\nIn other words, taxpayers have had to pay taxes on money they will not\nreceive for many years in the future or, in some cases, money that they\nwill never receive due to the buyer defaulting on future payments.\n  The intention behind repealing the installment method of accounting\nwas to crack down on large corporations deferring taxes for extended\nperiods of time. Instead of simply addressing a tax avoidance scheme,\nthe Ticket to Work bill also eliminated a perfectly legitimate method\nof financing sales transactions for small business owners. Clearly,\nCongress did not consider the full ramifications of this change in the\nlaw.\n  It is estimated that more than 250,000 small businesses may have\nalready been adversely affected by this repeal. Many small business\nsales that were not finalized when the Ticket to Work bill was enacted\non December 17, 1999, have fallen apart and countless others have never\noccurred before because of the repeal contained in the Ticket to Work\nbill.\n  Furthermore, those business owners who are looking to purchase\nadditional assets in order to expand their operations will now find it\nmore difficult to find a potential seller. As a result, the value of\nsome small businesses may have been reduced by as much as 20 percent.\n  Mr. Speaker, I believe the broad partisan interest that this bill has\nattracted underscores the importance of passing this legislation to\nreinstall and to reinstate the installment method of sales.\n  Mr. Speaker, I guess we can deal in a blame game this morning, but I\nshould point out to the Members that in both Republican tax bills, the\nmassive tax bills that were introduced in the House, both of those\nbills contained this repeal also. So while some may take to the floor\nto blame the administration, know full well that the blame should be\nequally spread on all of us. However, the important thing is that the\nCongress will correct this inequity today.\n  I urge my colleagues to vote yes on H.R. 3594.\n  Mr. Speaker, I reserve the balance of my time.\n  Mr. ARCHER. Mr. Speaker, I yield such time as he may consume to the\ngentleman from California (Mr. Herger) a highly respected member of the\nCommittee on Ways and Means who has spent such terrific effort in\nbringing this issue to fruition on the floor today.\n  Mr. HERGER. Mr. Speaker, I say to the chairman, as this is the last\nbill that will be considered by the House under his chairmanship, I\nwant to thank him for helping to bring this important legislation to\nthe floor and for all he has done to improve the Tax Code and make it\nfairer for all Americans. Our Nation owes him a great debt of\ngratitude.\n  Mr. Speaker, earlier this year I was pleased to join with my\ncolleagues from both sides of the aisle to introduce the legislation\nbefore us today, the Installment Tax Correction Act. This bill corrects\na change in tax law which has had serious, unanticipated consequences\nfor small business owners.\n  Last year, Congress passed and the President signed a change in law\nto disallow the installment method by accrual basis taxpayers. An\nunexpected result of this new law has been to erect a serious barrier\nto small business ownership. Many small business sales across the\ncountry have been canceled, while others have simply been put on hold\nwhile waiting for Congress to act. Additionally, the value of some\nbusinesses has been reduced by as much as 10 or 20 percent. And perhaps\nmost urgently, business owners who have sold their business under the\nnew tax law now face a large unexpected tax burden.\n  The time has come to correct this situation. This legislation, which\nis retroactive to the time of the tax change last December, will ensure\nthat small business owners who find themselves facing a large tax\nburden as a result of an installment sale will receive tax relief\nbefore having to file their tax returns next year.\n  This much needed measure will make certain that elderly small\nbusiness owners waiting to finance their retirement through the sale of\ntheir business would not have to wait any longer.\n  Mr. Speaker, most small business owners have chosen to use the\ninstallment sales method when selling their business because bank\nfinancing is often unavailable. Under an installment sale, the buyer\nmakes a down payment up front and pays for the rest of the business\nover a period of years. Such sales grant greater flexibility to both\nthe buyer and seller and have enabled thousands of Americans who would\notherwise be unable to buy a business the opportunity to make their\ndream of small business ownership a reality.\n  This chart clearly demonstrates the impact the new tax treatment is\nhaving on small business sales. Imagine a small business being sold for\n$100,000 with the buyer paying $10,000 each year over 10 years. Under\nthe old rule, the seller would pay tax on the gain from the sale as he\nreceived the payments. In other words, he would be taxed on $10,000\neach year. However, under the new rule, the seller is taxed on the\nentire $100,000 up front even though he has only received the initial\n$10,000 payment.\n  We believe it is simply unfair to ask small business owners to pay\ntax on money they have not yet received. Our legislation will fix this\nproblem by once again allowing business owners to pay the tax as they\nreceive the payments. And because our legislation is retroactive to the\ntime of the tax change last December, small business owners who have\ncompleted installment sale this year would no longer face an unexpected\ntax burden.\n\n[[Page H12099]]\n\n  Mr. Speaker, this is a serious problem. The National Federation of\nIndependent Business estimates that as much as 200,000 small business\nsales each year could be adversely affected if we do not act. I believe\nwe owe it to small businessmen and businesswomen to have a Tax Code\nwhich treats them fairly, and I look forward to our approval today of\nthis very worthy legislation, thus ensuring that small business remains\na path to prosperity for millions of Americans.\n\n                              {time}  1015\n\n  Mr. KLECZKA. Mr. Speaker, I yield 3 minutes to the gentleman from\nMaryland (Mr. Cardin), a member of the Committee on Ways and Means.\n  Mr. CARDIN. Mr. Speaker, let me thank the gentleman from Wisconsin\n(Mr. Kleczka) for his leadership on this issue, for yielding me this\ntime and in helping us make sure that we get this change indeed enacted\nbefore the Congress adjourns for this session.\n  Mr. Speaker, this is an example of unintended consequence of\nlegislation that was previously passed by this body and was enacted\ninto law. Sometimes we look to try to get revenue raisers attached to\nbills in order to pay for them and we do not really realize the\nconsequences of that action. This is an example of that. The changes\nthat we made to the Installment Sales Act of 1999 will have and has had\nadverse consequence on small businesses in our country.\n  Let me try to explain why. The reason why we put the installment\nsales provisions in the Tax Code was very logical. If you sell a\nbusiness and you get part of the proceeds and you get the proceeds over\na number of years, it is almost impossible for the person who sells the\nbusiness to be able to pay all the taxes up front. If you do that, you\ndo not have enough cash to pay all the taxes up front. That is the\nreason why we developed the installment sales provisions within our tax\ncode. What we did in 1999 for many of the installment sales is require\nthe business owner who sold the business to pay 100 percent of the\ntaxes up front. That did not make any sense. I do not think we really\nintended that to be the consequence because we were dealing with the\ndifferences between accrual accounting and cash accounting, not\nrealizing the fact that we have mandated that most small businesses\nmust use accrual accounting procedures.\n  Therefore, on one section of the code, we require them to use an\naccounting method that would require them to pay 100 percent of the\ntaxes up front. This legislation corrects it. I applaud my colleagues\non both sides of the aisle for bringing it forward. It makes sense. It\nwill help small businesses in our country. It is the right tax policy.\n  Mr. Speaker, I am disappointed that we are not going to have a more\ncomprehensive tax bill this year, because I think there are many\nprovisions that Republicans and Democrats have worked out and we had\nhoped to have had a broader bill. But I applaud the gentleman from\nTexas (Mr. Archer) for at least making it possible to correct this\nmistake this year to get it enacted. It is the right thing to do. I\nfully support it. I hope that we will pass it with broad support on\nboth sides of the aisle.\n  Mr. ARCHER. Mr. Speaker, I yield myself such time as I may consume to\nthank my friend from Maryland for all of his contributions in the years\nthat I have been chairman of the Committee on Ways and Means and also\nto thank the gentleman from Wisconsin (Mr. Kleczka) for his independent\nthinking and the contributions that he has made to the committee.\n  I would say to my friend from Maryland that I am also saddened that\nwe did not get the pension reform bill passed. We had over 400 votes\nhere on the floor of the House in support of it. He, along with the\ngentleman from Ohio (Mr. Portman), did tremendous work in putting that\npackage together. It would benefit all working Americans with greater\nretirement security opportunities.\n  But it will come another day. It will come, I am sure, in the next\nCongress; and all of the work that our committee has put into it and\nthe gentleman from Maryland along with the gentleman from Ohio (Mr.\nPortman) has put into it will not be lost.\n  I think we finish this year on a very positive note. This bill is a\nbill that can be supported by all of us. The tax provisions that will\ngo in the ultimate package that we will vote on later today are\nprovisions that I believe all of us should be able to support. I am\npleased that we finish this Congress on this high level of harmony. I\nhope that it can extend into the next Congress.\n  Mr. Speaker, I urge full support of this bill.\n  Mr. Speaker, I reserve the balance of my time.\n  Mr. KLECZKA. Mr. Speaker, I yield 3 minutes to the gentleman from\nTennessee (Mr. Tanner).\n  Mr. TANNER. Mr. Speaker, I am afraid we are getting into the area of\neverything having been said about this bill but not everybody having\nsaid it. Nonetheless I think it is important to reflect and realize\nthat this action that was taken last year by the House was done at the\nend of the session, with a lot of unfinished work poured into one huge\npackage, and I am afraid we are going to do that again today. It was\nthought to end abusive practices within the code as it relates to\nbusinesses with accrual accounting and installment sales and to\nactually pay for the ticket to work which was a smaller part of a\nbroader welfare reform bill, that this was a desirable change in the\ncode. After it was discovered by almost everyone connected with it, it\nwas quickly realized that this covered far more than those abusive\npractices that were being closed to pay for the ticket to work, and so\nthe gentleman from California (Mr. Herger) and others, myself and\nothers, put a bill in, H.R. 3594, some time ago. I am glad we are\ngetting this done.\n  This is truly, I think by anyone's definition, the law of unintended\nconsequences at work. It demands that one who has an accrual basis of\naccounting in one's business when one sells it to report all of the\nincome at the time of the sale when one has, as Members know under\naccrual accounting, a right to the income.\n  This makes no sense, as the gentleman from Maryland (Mr. Cardin)\nsaid; and so we changed it back to the way it was and the way that is\nsensible, sane, and reasonable. And so what we will do is by this\nchange assure every small business owner, every small business\nprospective buyer that on the installment sales contract method of\ntransaction, one may count on not having a tax liability until the\nmoney is actually realized.\n  I want to thank the gentleman from Texas (Mr. Archer) for working\nwith us on this this year and also the gentleman from New York (Mr.\nRangel) and the gentleman from Wisconsin (Mr. Kleczka), who is the\nranking member of the subcommittee. I think this is a good thing we do\nto straighten out an obvious error that was made last year in the haste\nof closing up shop for the year. I hope we do not have to do this again\nnext year.\n  Mr. KLECZKA. Mr. Speaker, I yield myself such time as I may consume.\n  What I would like to indicate at this point is that this is the last\ntax bill that will be managed by the able chairman of the Committee on\nWays and Means, the gentleman from Texas (Mr. Archer). I know this is\nnot the tax bill he really wanted to bring to the floor to manage for\nhis last bill but nevertheless that was not to be this session.\n  But I would want to tell the gentleman and the Members who are\nlistening that the gentleman will be missed. He was a real gentleman on\nthe committee. I really appreciated the opportunity to work with him.\nWhat was especially heartening was his knowledge of the Tax Code and\nthe fairness with which he treated all members of the committee, both\nDemocrat and Republican. He is moving on to a much deserved retirement.\n  However, with the new administration taking over, there are some of\nus who would like to put together a letter to recommend to President-\nelect Bush that he look very seriously upon him as the new Secretary of\nthe Treasury. So if he gives me a wink and a nod, I am sure we can put\nsomething together on that score.\n  However, if that is not to be, I personally wish him the very, very\nbest. He is going to be missed sorely in the House.\n  Mr. BOEHNER. Mr. Speaker, will the gentleman yield?\n  Mr. KLECZKA. I yield to the gentleman from Ohio.\n  Mr. BOEHNER. I thank the gentleman from Wisconsin for yielding and\n\n[[Page H12100]]\n\nthank all the members of the Committee on Ways and Means, especially\nthe chairman, for moving this piece of legislation. This was, in fact,\nan oversight that was affecting thousands of businesses if not more\nacross the country. I know a number of people in my district, small-\nbusiness people, have asked to have this corrected. I am glad that we\nare, in fact, doing it.\n  Let me add to the chorus of remarks to my good friend the gentleman\nfrom Texas (Mr. Archer). The gentleman from Texas and I have worked\nvery closely together during the years that I served in the Republican\nleadership and as the gentleman from Texas was the chairman of the\nCommittee on Ways and Means. I do not think one could find a more\ndedicated public servant, someone who believed in reforming the Tax\nCode and worked hard on behalf of not only his constituents but\ntaxpayers all across the country. After 30 years in the Congress, he\ndeserves a little rest. He has been a pleasure to work with and I think\na model Member of this body. I wish him well in his retirement.\n  Mr. BEREUTER. Mr. Speaker, this Member wishes today to express his\nsupport for H.R. 3594, the Installment Tax Correction Act of 2000, of\nwhich this Member is a cosponsor. This bill, which is being considered\nunder suspension of the rules, will have a positive effect on small\nbusinesses nationwide.\n  At the outset, this Member would like to thank both the distinguished\ngentleman from California [Mr. Herger] for introducing this legislation\nand the distinguished Chairman of the House Ways and Means Committee\nfrom Texas [Mr. Archer] for his efforts in bringing this measure to the\nHouse Floor.\n  This legislation, H.R. 3594, eliminates the provision of the tax code\nwhich repealed the use of the installment method of accounting for\naccrual method taxpayers. This bill is necessary because of a provision\nin the Ticket to Work and Work Incentives Improvement Act (P.L. 106-\n170), which was signed into law in 1999. Unfortunately, this Act\nincluded a prohibition on the use of the installment method by accrual\nmethod taxpayers. As a result of this provision, these type of\ntaxpayers are currently required to pay tax on all capital gains in the\nfirst year of an installment sale, regardless of when cash payment is\nreceived.\n  This provision is particularly onerous for small businesses. For\nexample, installment sales methods are common for situations where the\nseller continues to stay involved in the transferred small business or\nwhen a family business transfers from one generation to the next.\nFurthermore, this Member has been told that neither the Administration\nnor the Ways and Means Committee anticipated nor understood the effect\nthe inclusion of this prohibition in the Ticket to Work and Work\nIncentives Improvement Act would have on small businesses. Fortunately,\nH.R. 3594 remedies this by situation by repealing the prohibition on\nusing the installment method of accounting for accrual method\ntaxpayers.\n  Therefore, for these reasons, this Member urges his colleagues to\nsupport H.R. 3594, the Installment Tax Correction Act of 2000. Thank\nyou.\n  Mr. UDALL of Colorado. Mr. Speaker, as a cosponsor of H.R. 3594, I\nrise in strong support of the bill. I am very glad that it is being\nconsidered today rather than being left to languish until the new\nCongress convenes next month.\n  The bill would repeal a change in the tax law that was part of the\n``Ticket to Work'' bill enacted last year.\n  It evidently was included as a way to help offset the costs of that\nbill by increasing tax receipts. However, I do not think that it was\nnecessary or appropriate.\n  The 1999 change prohibited use of the ``installment method'' for\ncalculating taxes on certain asset sales where the seller is paid over\ntime rather than all at once. The effect of this is to make it much\nharder for small-business owners to sell their businesses or to\nseriously reduce the amount they can receive if they do sell. I have\nheard from many people in Colorado who have been and remain concerned\nabout this aspect of the changes made in 1999.\n  H.R. 3594 would repeal that, restoring the ability of sellers to\nspread their receipts--and taxes--over several years. I think that is a\ngood idea, which is why I joined as a cosponsor.\n  I urge the House to approve the bill.\n  Mr. KLECZKA. Mr. Speaker, I yield back the balance of my time.\n  Mr. ARCHER. Mr. Speaker, I have no further requests for time, and I\nyield back the balance of my time.\n  The SPEAKER pro tempore (Mr. Pease). The question is on the motion\noffered by the gentleman from Texas (Mr. Archer) that the House suspend\nthe rules and pass the bill, H.R. 3594.\n  The question was taken; and (two-thirds having voted in favor\nthereof) the rules were suspended and the bill was passed.\n  A motion to reconsider was laid on the table.\n\n                          ____________________"]], "columns": ["granule_id", "date", "congress", "session", "volume", "issue", "title", "chamber", "granule_class", "sub_granule_class", "page_start", "page_end", "speakers", "bills", "citation", "full_text"], "primary_keys": ["granule_id"], "primary_key_values": ["CREC-2000-12-15-pt1-PgH12097-5"], "units": {}, "query_ms": 18.17414304241538, "source": "Federal Register API & Regulations.gov API", "source_url": "https://www.federalregister.gov/developers/api/v1", "license": "Public Domain (U.S. Government data)", "license_url": "https://www.regulations.gov/faq"}