IRS proposes raising estate tax by more than 30 percent for many community banks
Washington, D.C. (Nov. 2, 2016)—The Independent Community Bankers of America® (ICBA) today called on the Internal Revenue Service to withdraw a proposal to raise taxes on community banks, family farms and other family-owned businesses. In a comment letter, ICBA said the IRS plan would increase the estate tax on many community banks by more than 30 percent—exacerbating consolidation in the banking industry and harming local communities.
“Community banks thrive by developing small business and consumer relationships that span generations,” ICBA wrote. “The proposed regulation is a threat to this model of banking because it jeopardizes the transfer of community banks from generation to generation.”
The IRS proposal to amend Section 2704 of the tax code would effectively end estate-planning techniques commonly used to transfer community banks and other family-owned businesses to the next generation. Under the plan, transferring community banks and other businesses to family members would in many cases become unaffordable.
In today’s comment letter, ICBA told the IRS that significant changes to the estate tax should be left to Congress. Lawmakers and the presidential administration have debated reforms to the estate tax for years, clearly demonstrating that this is a congressional matter.
ICBA strongly supports H.R. 6100 and S. 3436, introduced by Rep. Warren Davidson (R-Ohio) and Sen. Marco Rubio (R-Fla.), respectively, to block the IRS proposed rule. Meanwhile, the association looks forward to continuing to work with the IRS to address community bank concerns with its proposal.
The Independent Community Bankers of America®, the nation’s voice for nearly 6,000 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services.