Small business
Small business groups use web site to fight IRS ‘abuse’
San Francisco Business Times - by Kent Hoover
Like Howard Beale in “Network,” small businesses are mad as hell, and they’re not going to take it anymore.
The target of their wrath is the Internal Revenue Service, which contends underreported income by sole proprietors and small businesses is a major contributor to the nearly $300 billion gap between what should be paid in taxes every year and what is actually collected. The IRS has increased its audits of small businesses and proposed several steps to require more third-party reporting of payments made to businesses.
Congress, in search of revenue to offset new spending and tax breaks, has obliged on a couple of these proposals. As part of the recent housing bill, for example, Congress included a provision that requires credit card and debit card companies to give the IRS annual reports on the electronic payments they make to merchants.
The National Small Business Association, as well as other small business groups, opposed this provision, contending these payments aren’t a good indicator of business income. They fear the IRS will use these reports to target small businesses for audits.
The NSBA lost that battle, but it’s continuing to battle the IRS through a special web site, PreventIRSAbuse.org. The site includes information on tax gap proposals that target small businesses and provides an easy way for small businesses to speak out against them.
“The small business community must be allowed to thrive — not further harassed by an already overreaching IRS — if there is any hope of a real economic turnaround,” said NSBA President Todd McCracken. “NSBA does not condone tax cheats or the IRS’s profiling of all small businesses as such.”
Congress has boosted IRS’s enforcement budget for next year. Audits of small corporations jumped 41 percent from 2005 to 2007, according to NSBA, while audits of large corporations fell to their lowest level in 20 years last year.
“We will not sit idly by and watch our community be unfairly targeted,” said NSBA Chair Marilyn Landis, president of Basic Business Concepts Inc. in Pittsburgh.
The IRS, meanwhile, is encouraging businesses and associations to suggest business tax issues that should be resolved by the IRS through new and improved guidance. The deadline for submissions is Aug. 31.
Plus, one business association actually is happy with the IRS. Associated Builders and Contractors praised a proposed rule, published Aug. 1, that would reverse a long-standing agency position limiting construction contractors’ use of the completed contract method of accounting.
“This is a major victory for ABC and the construction industry,” said ABC Tax Group Chairman Richard Shavell, president of the Shavell & Co. accounting firm in Boca Raton, Fla. “It is not often that the IRS reverses positions.”
Office of Advocacy urges changes in ADA rule
The Justice Department needs to take additional steps to ensure that small businesses won’t face significant costs under a proposed rule that requires them to remove barriers that limit access to people with disabilities.
That’s according to the Small Business Administration’s Office of Advocacy, which makes sure federal agencies consider the impact of their regulations on small businesses.
The proposed new Americans with Disability Act regulations include two safe harbors designed to ease the burden on businesses: Elements in existing facilities that already meet 1991 ADA regulations wouldn’t have to be modified to meet the new rules; and small businesses would satisfy the requirements if they spend 1 percent of their annual gross revenue on barrier removal.
In an Aug. 6 letter to the Justice Department, the Office of Advocacy urged the Justice Department to provide more guidance on the small business safe harbor.
This provision is good in theory, the letter stated, because it “would potentially provide a much-needed affirmative defense” for small businesses against claims they didn’t meet their barrier removal obligations.
Small businesses are worried, however, about how this safe harbor would work in reality. Many fear the 1 percent figure “will become the minimum a small business must spend every year on barrier removal to avoid legal liability,” the letter stated.
The Office of Advocacy recommended that language be added stating that a small business that spends less than 1 percent on barrier removal could still meet its barrier removal obligations.
khoover@bizjournals.com
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