Bill > HR947

This bill, titled the Small Business Accounting and Tax Simplification Act, aims to make tax accounting easier for small businesses by expanding the availability of the cash method of accounting, which recognizes income and expenses when cash is received or paid, rather than when they are earned or incurred. Specifically, it allows businesses that have met a certain gross receipts test (now increased from $5 million to $10 million, with future inflation adjustments) and are not subject to specific accounting rules for larger businesses (sections 447 and 448 of the Internal Revenue Code) to use the cash method without limitation. Furthermore, the bill clarifies that these "qualified taxpayers" are not required to use inventories to track their goods, treating them instead as materials or supplies that are not incidental, simplifying inventory management for tax purposes. These changes are effective for taxable years beginning after December 31, 2012, and allow for a gradual adjustment period for businesses changing their accounting methods.