Comment by rietta

I am writing my member of Congress right now.

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I'm writing to express my urgent concern regarding the negative impact of the 2022 Section 174 tax code changes on small businesses like mine. As owner of Rietta, Inc., a small cybersecurity firm, I still do much of the technical work. My wife and I have three young children under 6. My family and I have been directly negatively impacted by these changes from the 2017 act.

Previously, the tax code helped us afford open-source and experimental work that benefited customers. For example, modernizing applications to run on Docker improved testing and deployment. Our State government clients now benefit, but this was once experimental. Now we're largely back to just work-for-hire consulting, treated as cost of goods sold. I don't have the cash to pay for experimental software development only to then amortize it over five years. If I have $100k revenue and spend $100k, the current code allows only a $20k deduction. I owe taxes on the other $80k despite no cash or documented asset value. Experimental software doesn't work like that in this field.

I started this business 26 years ago. We provide important long-term custom programming and update work for private sector and State government clients ("STATE A" and "STATE B" judicial branches). Often, we work with code we didn't originally write.

As a professional computer scientist and business owner, I rely on my CPA for tax compliance. If I've erred in my example, that's on me. But I can tell you this amortization requirement particularly cripples small businesses like Rietta, Inc., where cash flow is critical, severely limiting the quality of services I can afford to provide. I support undoing this tax change.