Last week, the U.S. House Ways and Means Committee held a field hearing here in Des Moines to discuss the success of pro-growth, pro-worker tax policies in the Midwest. As a small business owner myself, I was happy to hear my peers share their experiences navigating the challenges we have been facing in recent years.
In addition to the effects of the COVID-19 shutdowns, small businesses in the Midwest have been facing a rapid rise in inflation as well as an increase in the frequency of natural disasters. With the increasing cost of insurance policies and a dwindling number of insurance options in our region, it has felt as though we were forced to navigate these crises on our own, unsupported and unequipped to adequately respond. However, this doesn’t need to be the case.
There are many small businesses that have been able to navigate these challenges through the utilization of microcaptive insurance plans thanks to section 831(b) of the tax code. This section of the code allows small businesses the ability to self-insure against unique and often niche risks that commercial insurers often fail, or refuse, to cover. By having the ability to set aside funds that can be utilized to cover losses imposed by unexpected crises, small businesses have been able to survive the turbulent markets of recent years.
However, this layer of security is being actively threatened by the Internal Revenue Service’s (IRS) refusal to provide clear and concise regulations relating to section 831(b). This decision has made it challenging for small business owners to successfully navigate the often-confusing regulations effectively, limiting our ability to successfully prepare effective risk management plans. But it doesn’t need to be this way.
Congressional leaders, like House Ways and Means Committee Chairman Jason Smith, have the ability to direct the IRS to clarify this tax code, increasing small business owners’ ability to prepare for the unexpected. The House Ways and Means Committee can support my fellow small business leaders in the time of our greatest need, ensuring we are no longer stranded facing these challenges alone. With the support of this committee, we can work to strengthen the backbone of the American economy and empower more small businesses to structure risk management plans capable of covering them during challenging times.
Author: Chris Janda
Chris Janda is the owner of Inspire Finance, a local small business.
