Another Bill Backing S-ESOPs Introduced
Bipartisan legislation backing S-Corp employee stock ownership plans has been introduced in the U.S. Senate.
Sens. Pat Roberts (R-Kan.) and Ben Cardin (D-Md.), both members of the Senate Finance Committee, have introduced the “Promotion and Expansion of Private Employee Ownership Act,” legislation to encourage retirement savings by fostering the growth of S-Corps that are owned by ESOPs — or “S-ESOPs.”
According to a press release
, through changes to the tax code and educational outreach to companies, the legislation would eliminate barriers that businesses and their owners currently face in establishing a new S-ESOP or expanding the employee ownership stake in an S Corp.
The legislation would:
- enable owners of S Corps to sell their stock to an ESOP;
- provide needed technical assistance for companies that may be interested in forming an S-ESOP;
- ensure that small businesses which become ESOPs retain their SBA certification; and
- affirm the importance of preserving the S-ESOP structure in the Internal Revenue Code.
The bill would also ensure that small businesses continue to qualify for Small Business Administration loans, contracting assistance or business development programs after they are converted to ESOPs. According to the announcement, this technical change in the law allows the business to maintain its status as minority-owned, woman-owned, veteran-owned, or otherwise qualify for specific programs within SBA that are dependent on the nature of the ownership.
Original cosponsors of the bill include Sens. John Thune (R-S.D.), Sheldon Whitehouse (D-R.I.), Mike Crapo (R-Idaho), Roy Blunt (R-Mo.), Al Franken (D-Minn.), Debbie Stabenow (D-Mich.), Heidi Heitkamp (D-N.D.), Pat Leahy (D-Vt.) and James Risch (R-Idaho).
A similar bipartisan bill, H.R. 2096, was recently introduced in the House
by House Ways and Means Committee members Dave Reichert (R-Wash.) and Ron Kind (D-Wis.).