Robin Heller: Biden’s last-minute tax regs threaten small businesses

The Internal Revenue Service (IRS) is one of the most powerful and integral agencies in the United States government. Every single year the decisions it makes affect the everyday lives of hundreds of millions of Americans. As part of its mission statement dating back decades, its self-proclaimed goal is to help America’s taxpayers “understand and meet their tax responsibilities by applying the tax law with integrity and fairness to all.” 

But what happens when that promise is broken, and politicians influence the agency in a way that unfairly targets American companies, slows economic investment, wastes resources, and punishes those who are fully compliant with the law? Unfortunately, that scenario is not just a hypothetical, it is the current reality thanks to policy changes enacted by the Biden administration in the waning days of Democratic control.

Just before President Trump took office, Biden administration officials issued a regulation targeting basis shifting transactions. American business partnerships employ the method, which is commonly used and fully complaint with the tax code, to responsibly position their assets in a way that permits business expansion and job growth. Under the new regulation, these transactions will undergo further unnecessary scrutiny by a newly established special investigations unit staffed by career IRS officials to enforce the rule. In sum, a perfect example of government overreach, bloated bureaucracy, and unfair targeting practices. 

The regulation serves as a serious hamstring to business owners here in Pennsylvania. It requires partnerships to make six years of business transactions available in the change the investigations unit wants to scrutinize past business measures. Made worse, the IRS already has each of these transactions via company tax returns previously filed, making the process entirely redundant. Empowered by Biden holdover policies, career IRS officials can now fine companies as much as $50,000 per transaction, per participant under this new regulation. 

That type of threat can have a chilling effect on business owners with the unfortunate consequence of disincentivizing American investment. It’s indisputable that the IRS has a lot of problems on their hands from aging systems to cybersecurity threats, but partnerships engaging in a legal and sensible strategy surely is not one of them. Funds from the Democrats’ Inflation Reduction Act should have been used to address the enormous refund backlog that is keeping money out of American taxpayers’ pockets or improve taxpayer service reliability and response times.

When President Trump was elected in November, the American people gave him a clear mandate – end business as usual in the federal government. Since Inauguration Day, the Trump administration and the Department of Government Efficiency (DOGE) have begun to fulfill that mandate at a breakneck speed. No one doubts the determination and hard work of President Trump and the DOGE team in their efforts to fix the disastrous damage left in place by the Biden administration and eliminate the waste, fraud and abuse that has long plagued the federal government.

But it may surprise some that despite being out of office, Biden’s stranglehold over the federal bureaucracy, and the IRS in particular, has not fully been weeded out. The reality is with so much damage done, the cleanup process is going to take time, and it will require an all-hands effort from conservatives and small government advocates across the country. 

With that in mind, Southeastern Pennsylvanians are so fortunate to have Representative Brian Fitzpatrick fighting for them in Congress. A tried-and-true fighter for responsible small government and conservative values, he has been a commonsense voice on a myriad of issues impacting Southeastern Pennsylvania. He ought to continue that great work by urging the Trump administration to eliminate this regulation targeting partnerships and immediately shutter the unnecessary special investigation unit working to enforce it. These actions would pave the way for American investment and innovation, free up desperately needed manpower within the IRS to focus on the real issues impacting the agency and help rid the federal government of the corruption and mistrust that were a staple of the Biden presidency. 

Robin Heller is the co- owner of Flowers by David, a family-owned small business in Bucks County since 1989.