September 26, 2008

VIA ELECTRONIC MAIL AND FACSIMILE

The Honorable Charles Gonzalez
U.S. House of Representatives
Washington, DC 20515

Re:  Support for H.R. 7074: Home Office Deduction Simplification and 
Improvement Act of 2008

Dear Mr. Gonzalez:

I am writing to express my strong support for H.R. 7074, the Home Office Deduction 
Simplification and Improvement Act of 2008.  Members of the small business 
community frequently appeal to my office for relief from tax requirements that are 
disproportionately burdensome for small businesses.  The latest research shows that tax 
compliance is 67 percent more burdensome for the smallest businesses compared to their 
larger competitors.(1)  Tax complexity, combined with the fact that 53 percent of 
America’s small businesses are home-based, prompts my office’s support for H.R. 7074.

H.R. 7074 is consistent with what small business expressed to my office during an 
initiative we launched last year to encourage Federal agencies to minimize the regulatory 
burden on small business on a regular basis.  As you are aware, the Office of Advocacy 
started the Regulatory Review and Reform (r3) initiative as an annual exercise for the 
small business community to identify the top 10 Federal regulations that should be 
reviewed and reformed.(2)  The home office deduction was identified by the National 
Association for the Self Employed (NASE) and others as a tax provision that is unduly 
complex.  We agreed with NASE and have called upon the IRS to consider implementing 
a standardized deduction under their existing administrative authority.(3)  

This issue was further highlighted in a recent hearing you chaired in the House Small 
Business Subcommittee on Regulations, Healthcare and Trade on July 30, 2008.  The 
hearing examined the extent to which agencies are complying with their obligation under 
the Regulatory Flexibility Act (RFA) to review the regulations to determine if they are 
outdated, duplicative, or overly complex.  The hearing so aptly conveyed the need for 
reform of the home office deduction and your legislation, H.R. 7074, will address the 
issue legislatively.

Congress established the Office of Advocacy to represent the views of small business 
before Federal agencies and Congress independently.(4)  Due to the Office’s 
independence, the views expressed in this letter do not necessarily reflect the views of the 
U.S. Small Business Administration (SBA) or official administration policy.

I commend your introduction of the Home Office Deduction Simplification and 
Improvement Act of 2008.  Thank you for your leadership and I look forward to working 
with you on this and other issues of importance to small employers.  If you have 
questions about the content of this letter, please do not hesitate to contact me or my 
office’s tax counsel, Dillon Taylor.  He is reachable at (202) 401-9787 or 
Dillon.Taylor@sba.gov.


Sincerely,
/s/
Thomas M. Sullivan
Chief Counsel for Advocacy

ENDNOTES

1.  W. Mark Crain, The Impact of Federal Regulations on Small Firms (2005).  
http://www.sba.gov/advo/research/rs264tot.pdf. 
2.  Small Business Regulatory Review and Reform Initiative.  
http://www.sba.gov/advo/r3/.   
3.  Simplify the Home Office Deduction (February 2008).  
http://www.sba.gov/advo/r3/r3_home08.html#irs. 
4.  15 U.S.C. § 634a (1976).  http://www.sba.gov/advo/laws/law_sta.html#634a.