[Congressional Record (Bound Edition), Volume 155 (2009), Part 6]
[Extensions of Remarks]
[Page 7682]
[From the U.S. Government Publishing Office, www.gpo.gov]




        THE HOME OFFICE DEDUCTION SIMPLIFICATION ACT (H.R. 1509)

                                 ______
                                 

                          HON. JOHN M. McHUGH

                              of new york

                    in the house of representatives

                        Tuesday, March 17, 2009

  Mr. McHUGH. Madam Speaker, yesterday, March 16, 2009, the Gentleman 
from Oregon, Mr. Schrader, and I introduced legislation, H.R. 1509, the 
Home Office Deduction Simplification Act. This legislation, which was 
H.R. 6214 in the 110th Congress, is designed to reduce the complexity 
of the tax code and provide Americans with the ability to elect to take 
a standard deduction in the amount of $1,500 for home office expenses.
  In 1976, Congress enacted Section 280A of the Internal Revenue Code, 
which as amended in 1997, provides the limited circumstances in which 
an individual or an S corporation may take a deduction for expenses 
related to an office in the home. Generally, deductions are limited to 
those parts of a home that are exclusively used on a regular basis as a 
principal place of business or to meet with patients, clients, or 
customers.
  As a result of technological advancements and other significant 
changes in our economy over the past 40 years, many more small 
businesses are now able to effectively operate out of the home. Not 
surprisingly, there has been a growth in the use of home offices; 
according to the Internal Revenue Service (IRS), the home office 
deduction was taken on 3.3 million self-employed business returns in 
tax year 2006, an increase of 700,000 from tax year 2002.
  Nonetheless, the IRS reports that ``a substantial number of taxpayers 
with home office expenses are not claiming them on tax returns.'' 
According to the IRS, the deduction might be underutilized because 
``understanding and complying with the rules for deducting home office 
expenses can be difficult for small business and self-employed 
taxpayers.'' This is borne out by an IRS analysis that found almost 
half of the taxpayers claiming a home office deduction made errors.
  Small businesses are unquestionably the backbone of our nation's 
economy. In fact, some 27 million American small businesses represent 
more than 99 percent of all employers, provide 51% of private sector 
employment and 45% of its payroll, and produce approximately 50% of the 
nation's private, nonfarm GDP. I could not overstate the importance of 
the nearly 66,000 small businesses I have the privilege of representing 
to the economy of Northern and Central New York.
  The importance of this measure to small businesses is evident by the 
fact that it is supported by a coalition that includes the Alliance of 
Visual Artists, American Homeowners Grassroots Alliance, Associated 
Builders & Contractors (ABC), Association for Enterprise Opportunity 
(AEO), National Association for the Self-Employed (NASE), National 
Federation of Independent Business (NFIB), National Small Business 
Association (NSBA), Professional Photographers of America, Small 
Business & Entrepreneurship Council, Small Business Legislative Council 
(SBLC), and Women Impacting Public Policy (WIPP). The Home Office 
Deduction Simplification Act is also supported by the SBA Office of 
Advocacy.
  Given the importance of small businesses to our economy, it is 
imperative that Congress act when presented with opportunities to 
reduce or remove costly regulatory burdens. The current home office 
deduction presents such an opportunity, which Congress can reduce, by 
enacting the Home Office Deduction Simplification Act. Accordingly, I 
ask my colleagues to join with Mr. Schrader and me to enact this 
important measure.

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