Tell the Senate to support HR 7024

Tax rules threaten the survival of the software industry

Due to new accounting rules that Congress never intended to take effect, as of 2022 software development and other activities the IRS considers R&D are no longer expensable. (Even if it's work on already-commercialized software and products!) Instead, those costs—salaries, servers, etc—must be spread out over many years. This is creating phantom profits and making companies' tax bills go up by over 400% in many cases. This is leading to layoffs and cutbacks in software development and R&D spending.

There's widespread bipartisan support for fixing R&D expensing, and the House has already passed a broader tax deal that includes a fix for domestic R&D expensing for 2022-2025. It passed the House with overwhelming bipartisan support, with 350 Representatives voting in favor.

But passage in the Senate is going to be an uphill battle. So now it's time for everyone to contact their Senators and ask them to support HR 7024—exactly as the House passed it, without amendments.

You may have never contacted Congress before, and that's okay! We're here to help. Below you'll find scripts for what to say and how exactly to get in touch. Congressional staff are required to keep tallies of which issues constituents (i.e. people who live in their district or state) contact their office about and report those tallies to their boss and other staff, so your time is well-spent.

Here's what to do

  1. 1. Call the DC offices of your Senators (all 3)
  2. 2. Use the script below when you call.
  3. 3. Want to do more? Call their district offices as well. Phohne numbers for their state offices are on their websites.
  4. 4. After you call, tweet at them. It might sound silly, and you might be wondering if tweeting actually does anything, but it does! We want their communications staffs' Twitter dashboards blowing up about this. It all adds to the feeling that there is widespread support for the tax deal.
  5. Step 1. Choose your role below to get a call script

    About the Small Software Business Alliance

    We are an informal group of small businesses that impacted by changes to Section 174 expensing. Many of our businesses employ 10 people or less, and the vast majority of us have revenue under $10M per year. On April 18th, 2023, we sent a letter to Congress urging them to take action and make software development expensable again. That letter was signed by 594 small software businesses in all 50 states.

    Our letter to Congress was mentioned in Congressional hearings and by CNBC, Bloomberg, Politico, Stratechery, and more.

    Wall Street Journal logo

    “A tax code change that impacts how companies account for research and development costs is walloping businesses of all sizes. At best, it is a cash flow challenge, costing large public companies hundreds of millions or billions of dollars, which finance chiefs have said could dent their R&D spending. At worst, business owners wonder if their companies will make it, with some who run small and medium-size firms slowing growth, laying off workers or dipping into personal savings to cover tax bills.”

    CNBC logo

    “Software startups say they were blindsided by shocking tax bills as a result of a change in law related to research and development costs, and if Congress does not provide a retroactive fix, business failures will spread throughout the industry.”

    Organizer of the Small Software Business Alliance: Michele Hansen. Questions? Email ssballiance at mjwhansen dot com