Hill and Schweikert Introduce S Corporation Crowdfunding Legislation
Press Release – WASHINGTON – Today, House Committee on Financial Services Member Congressman French Hill (AR-02) and House Ways and Means Committee Member Congressman David Schweikert (AZ-06) introduced H.R. 531, the S-Corp Access to Crowdfunding Act.
The 2012 JOBS Act made it easier for small businesses to raise capital by expanding Regulation A and through crowdfunding, allowing companies to more easily raise relatively small amounts of capital from a number of investors. However, restrictions placed on S corporations (S-corps)—most notably the 100-shareholder limitation—may hinder their ability to take advantage of these new avenues to raise capital.
H.R. 531 would amend the tax code to make an exception to this limitation for shares acquired through crowdfunding or small public offering provisions so that S-corps can also have access to this source of financing.
After introducing the bill, Congressman Hill and Congressman Schweikert released the following statements:
“The long-term success of any company is linked to its ability to raise the money needed to grow their operations. As House Republicans formulate our plans to restructure tax law in this country, we need to make sure that we are taking into account the problems and concerns of businesses of all sizes. This bill would eliminate a roadblock in the tax code so that all businesses can utilize these new cost-effective methods for raising capital.” – Congressman French Hill
“As crowdsourcing in capital becomes a more robust opportunity for our small businesses, archaic legacy rules need to be brought up to date for today’s capital environment.” – Congressman David Schweikert
The Tax Law Makes It Almost Impossible for ‘S Corporations’ to Use Equity Crowdfunding, The Daily Signal
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