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Small Business Committee Newsletter Printer Friendly Version
Small Business Committee Notes
Friday, April 07, 2006 Printer Friendly Version
Small Business Committee Notes April 7, 2006 -- Issue 109-40 Phil Eskeland, Policy Director, House Committee on Small Business _______________________________ IRS Enforcement: Is the Bulls-Eye on Small Businesses? On Wednesday, April 5, House Small Business Committee Chairman Donald Manzullo (R-IL) held a hearing on the plan of the Internal Revenue Service (IRS) to close the “tax gap” (the estimated difference between what taxpayers pay to the Treasury and what is actually owed). The IRS attributes a large portion of this gap to small businesses and the self-employed. Below is a copy of Chairman Manzullo’s opening statement. “The IRS launched the National Research Project (NRP) several years ago in an effort to study the ‘tax gap.’ Using data from 2001, the study validated that there was a big ‘tax gap’ in the magnitude of $300 billion. A large portion of this gap has been attributed to small businesses and the self-employed. The Commissioner is now utilizing the data to provide greater and greater scrutiny of our nation’s small businesses. Just two weeks ago, the IRS released its examination data for fiscal year 2005. This data demonstrates that from 2004 to 2005 the IRS increased audits for all categories of small businesses. For small business that reported greater than $100,000 of gross receipts, IRS audits actually doubled. Last week, the Commissioner stated that even greater enforcement resources would be directed at small businesses in the future. The IRS is utilizing the NRP study to direct ever-increasing resources to audit our nation’s small businesses even though it has not completed the study of all taxpayers. In particular, the NRP study has not been updated to provide an estimate of the ‘tax gap’ for C corporations or flow-through entities, such as partnerships. The data for these entities is still from the 1980’s – a time that is far removed from the aggressive tax strategies that many ‘blue chip’ accounting and law firms developed during the late 1990’s. In addition to the study being incomplete, the Government Accountability Office (GAO) highlighted in July 2005 that the IRS has not determined the reasons why taxpayers are non-compliant even though this data was collected during the NRP study. Unless this data is analyzed, there is no way for the IRS to determine how much of its resources to allocate to IRS enforcement versus taxpayer service. While I understand the push to lower the budget deficit and the readily-available statistics that support increased enforcement, imposing increased burdens on small businesses through more audits cannot be the only answer. Many times, small business owners are attempting to the best of their ability to comply with the complex tax code. It is not that they don’t want to comply; rather, the system and paperwork are so complex that it’s difficult to comply. No matter how many additional auditors and collection agents are added to the IRS, there will still be a more pressing need to educate taxpayers about their obligations. The IRS will never have enough resources to police everyone and thereby enforce compliance. Small businessmen and women are not tax experts, and they face real difficulties with complying with the tax system. In addition to increasing audits, the IRS also proposed closing the ‘tax gap’ by imposing new withholding regimes on small businesses in the 2007 budget. The Taxpayer Advocate has even gotten on this bandwagon. These proposals take money away from our nation’s small businesses upfront before they know how much, if any, tax they owe. If this regime ever became a reality for the majority of this nation’s small businesses, most of these firms would no longer be in operation. While I understand the need to foster compliance among taxpayers, we must ensure that the approaches used by the IRS do not create excessive burdens. We can ill afford to burden our small businesses with these new withholding proposals. Rather, to the extent possible, we must keep small businesses free from government regulation and interference. This is the only way our nation’s small businesses will continue to thrive.” For further information, please contact John Westmoreland, Chief Tax Counsel. _______________________________ RR&O Subcommittee Hearing on the Electronic Medical Records Technology for Small Healthcare Groups On Thursday, April 6, Representative Todd Akin (R-MO) chaired a Regulatory Reform & Oversight (RR&O) Subcommittee hearing on the feasibility of adopting electronic medical records technology for small healthcare groups. Below is a copy of the opening statement of Chairman Akin: “In my role as a Congressman and Chairman of this Subcommittee I have had the opportunity to interact with many businesses in just about every industry. I have talked to business owners and CEOs about the many challenges they face both domestically and abroad, and time and time again they state that the rising cost of healthcare is crippling for their firms. Because many small businesses operate on slim margins, any increase in cost can turn a profitable business into an unprofitable one. The rising cost of healthcare is an important issue and there are many different voices in the public square advocating different approaches to offset these rising costs. Today this Subcommittee will focus on the economic benefits derived through the adoption of technological processes. Is the adoption of electronic medical records feasible for small businesses, specifically small doctors’ practices? We also hope to determine the challenges these small groups face in adopting such technology. There is little doubt that the adoption of electronic medical records can play an important role in increasing efficiency, reducing paperwork and redundancy and more importantly, reducing medical errors. According to the Department of Health and Human Services (HHS), it is estimated that the introduction of Health Information Technology can reduce healthcare costs up to 20 percent per year. The Bush Administration has stated the importance of implementing electronic healthcare systems, and HHS has made it a priority. That said, doctors have increasingly faced higher liability costs, potential cuts in Medicare physician payments and additional regulatory burdens resulting in a question as to whether smaller practices can adopt this innovative technology. I look forward to hearing the testimony of the witnesses to learn more about whether small practices can adopt electronic medical records technology.” For further information, please contact Chris Szymanski, Professional Staff. _______________________________ Ex-Im Reauthorization Hearing On Wednesday, April 5, the Domestic and International Monetary Policy Subcommittee of the House Financial Services Committee, chaired by Representative Deborah Pryce (R-OH), held a hearing on the Export-Import Bank Reauthorization Act of 2006 (H.R. 5068) to reauthorize the Export-Import Bank of the United States (Ex-Im) through Fiscal Year 2011. House Small Business Committee Chairman Donald Manzullo also serves on this subcommittee. Based on previous hearings before this subcommittee and the Small Business Committee (see SBC Notes 109-6), Chairman Manzullo worked closely with Chairwoman Pryce to craft many of the provisions in H.R. 5068. Chairman Manzullo also had the privilege of delivering one of the keynote addresses before the 2006 annual conference of the Ex-Im Bank held in Washington, DC on Thursday morning. Below is a copy of Chairman Manzullo’s statement: “Thank you, Madam Chair, for holding this hearing today. I also want to thank you for including me in the drafting of the Ex-Im reauthorization bill. I am pleased to welcome Jim Lambright, Acting Chairman of Ex-Im Bank, to this hearing today as we explore the options for improving the Bank’s active support for expanding small business participation in trade through renewal of its authorizing legislation. I lend my support to Jim’s efforts to reform the Bank and encourage his timely confirmation as the new Chairman of the Bank. I also hope that the open Bank Board Member positions can be filled in the near future, so the institution will be able to move forward with a full compliment of senior managers. Based on recent hearings I have held and personal discussions with Jim, I find the needed Bank reforms falling into four major categories: 1. Installing a new institutional structure and operating procedures within the Bank that insure its Congressional objective of providing 20 percent of available resources to small businesses is achieved in a timely manner with the goal of providing a 30 day turnaround in processing applications, that do not require a Board vote; 2. Undertaking a top to bottom review and improvement of Bank products to insure they currently meet the needs of the small business community with minimal restrictions and identify new products the Bank should be offering to enhance its competitiveness with export financing institutions of our trading partners; and 3. Reforming the internal culture of the Bank to instill a greater commitment to servicing the needs of small business, including having a much more encompassing dialogue with small businesses in utilizing and changing Bank products and services. 4. Making sure that on the tough cases, the entire Board is responsible, through a vote, for Ex-Im’s decision, not just a unilateral decision by the Chairman. I look forward to hearing from Jim on how he will go about addressing these four major areas of concern in Bank operations.” For further information, please contact James Meenan, Senior Trade Advisor. _______________________________ Issues in Brief On Tuesday, April 4, the Senate Appropriations Committee passed by a vote of 27 to 1 the emergency supplemental appropriations bill (H.R. 4939) after adding $10 billion more for port security, pandemic flu preparations, fisheries, highways, and other items. Total cost of H.R. 4939 is now $106.5 billion. H.R. 4939 would provide $190 million in administrative funds to pay for the salary and expenses of SBA disaster loan processing personnel and $352 million in additional disaster loan budget authority for the SBA. This will provide approximately $2.4 billion in more lending for disaster loan victims. H.R. 4939 now awaits action before the full Senate, which is expected right after the conclusion of the Spring District Work Period during the last week in April. _______________________________ Upcoming Events The weeks of April 9th and April 16th are part of the Spring District Work Period. The House will not return to session until Tuesday, April 25th. The next edition of SBC Notes will be published on April 28th. Wednesday, April 26 2:00PM – hearing before the full committee on improving the Trade Promotion Coordinating Committee (TPCC) to better serve the needs of small exporters. For further information, please contact James Meenan, Senior Trade Advisor. Thursday, April 27 10:30AM – Workforce, Empowerment & Government Programs (WE&GP) Subcommittee hearing on health care issues facing small businesses. For further information, please contact Joe Hartz, Professional Staff. Senate Majority Leader Bill Frist (R-TN) announced that he intends to bring to the Senate floor during the week of May 1st legislation on medical malpractice liability reform ($750,000 total cap on non-economic damages) and S. 1955 dealing with Association Health Plans (AHPs). _________________________________ Past hearings/mark-ups/roundtables/meetings in 2006 February 1, 2006 – Tax, Finance & Exports (TF&E) and (REA&T) joint subcommittee hearing on “Transforming the Tax Code: An Examination of the President’s Tax Reform Panel Recommendations.” February 8, 2006 – RR&O Subcommittee hearing on “The Internet Sales Tax: Headaches Ahead for Small Business?” March 2, 2006 – WE&GP Subcommittee hearing on the “Oversight of the Small Business Administration’s Entrepreneurial Development Programs.” March 8, 2006 – TF&E Subcommittee hearing on the “Oversight of the Small Business Administration’s Finance Programs.” March 15, 2006 – REA&T Subcommittee hearing entitled, “The Missouri River and its Spring Rise: Science or Science Fiction?” March 15, 2006 – hearing on the Fiscal Year 2007 Budget and Reauthorization Proposals of the SBA. March 16, 2006 – RR&O Subcommittee hearing entitled, “The State of Small Business Security in a Cyber Economy.” March 30, 2006 – RR&O Subcommittee hearing on the “Procurement Assistance Programs of the SBA.” April 5, 2006 – hearing on “IRS Latest Enforcement: Is the Bulls-Eye on Small Businesses?” April 6, 2006 – RR&O Subcommittee hearing entitled “Can Small Healthcare Groups Feasibly Adopt Electronic Medical Records Technology?” _____________________________ Small Business Website Check out the Small Business Committee website at http://www.house.gov/smbiz. The site includes regular updates on small business committee news. The site features special projects, press releases, hearings and scheduling information. _______________________________ Phil Eskeland Deputy Chief of Staff & Policy Director House Committee on Small Business Phil.Eskeland@mail.house.gov (202) 225-5821 To contact any staff member listed in the above newsletter, please use the general number for the House Small Business Committee – (202) 225-5821. Please E-mail me if you want to be removed from the mailing list or if you know of others who might be interested in receiving this publication. Mission Statement of the House Committee on Small Business "We promote the success of America’s small businesses by leveling the global economic playing field and reducing domestic burdens that impede their growth. In this spirit, we work to ensure that every branch of the U.S. government understands the critical role America’s small businesses play – both at home and abroad – including the jobs they create and the spirit of entrepreneurship they embody.”
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