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NSA eye on the Hill.

Small Business Enforcement Fairness Act

On March 10, 1999, NSA General Counsel participated in the Senate Committee on Small Business roundtable discussion of shared goals on improving agency compliance with the Regulatory Flexibility Act of 1980 (Reg Flex Act) and the Small Business Regulatory Enforcement Fairness Act of 1996 (Red Tape Reduction Act). The Committee Chairman, Senator Christopher "Kit" Bond (R-MO), and the Committee Ranking Minority Member, John F. Kerry (D-MA), led the discussion, while the roundtable agenda was managed by the Committee staff member for Senator Bond, Suey Howe. Also participating were Kevin Wheeler, for Senator Kerry, and approximately two dozen other representatives of the small business community across the United States.

The whole body of this legislation is referred to as the Small Business Enforcement Fairness Act (SBREFA). It was enacted into law on March 29, 1996, and is intended to provide small businesses federal regulatory compliance assistance, and simplification. It is also designed to police and lessen regulatory burdens placed on small businesses. The statute establishes regulatory oversight within the Small Business Administration of all federal agency rule-making. Mandates are placed on agencies to establish procedures whereby their compliance with SBREFA can be monitored and made public. SBREFA places new mandates on federal agencies to both periodically review the impact of their rule making on small businesses and to provide compliance assistance. Further, where the agencies fail to adhere to SBREFA mandates, the law establishes expedited avenues for Congressional and judicial review.

In a broader sense, the intent of the legislation is to force federal agencies to seek compliance, from small businesses acting in good faith, by use of the carrot and not the stick. The policy discussed by roundtable participants was that federal regulation has a disproportionate impact on small businesses. It is disproportionate in the sense that when measured by an objective standard, such as the cost of regulatory compliance as a percent of gross receipts, small businesses pay a higher price for their good faith effort to comply with the myriad of complicated agency regulations.

Under the current law the application of one form of oversight, Small Business Advocacy Review Panels, is not applied to the Internal Revenue Service. Advocacy Review Panels would require the IRS to seek input from affected small businesses before publishing proposed rules. Extending review panels to the IRS was an item discussed within the roundtable agenda. The extension of SBREFA review panels to the IRS would promote and complement other reform efforts underway at that agency.

NSA will continue to emphasize the application of the SBREFA review panel provisions to the IRS, and support the application and enforcement of SBREFA in general.

Self-Employment Health Care Deduction

On February 3, 1999, Senate Small Business Committee Chairman Kit Bond (R-MO) introduced the "Self-Employment Health Insurance Fairness Act of 1999,' [S343]. House Small Business Committee Chairman Jim Talent (R-MO) introduced the House companion bill, H.R. 980, on March 4, 1999. The Senate bill currently has 17 cosponsors while the House version has 50. These bills have been referred to committee, respectively the Finance and Ways and Means Committees, and are awaiting action. On March 16, 1999, Senator Bond's office announced that Senator Pete Domenici (R-NM) will set aside funding for S343 in the Budget Committee's annual budget resolution. Domenici's assurance essentially paves the way for the bill through the U.S. Senate.

The legislation would accelerate the health care deduction for the self-employed to 100% as of January 1, 1999. As a result of legislation passed by the last Congress, and signed by President Clinton on October, 21, 1998, [PL 105-277], the deduction is currently set to rise to 100% in 2003. The deduction of health insurance expenses of self-employed individuals is now 60% for taxable years beginning in 1999 through 2001, rising automatically to 70% in 2002 and 100% in 2003. The Congressional Budget Office estimates that the legislation would affect approximately 5 million American families.

The likelihood of this legislation passing, and being signed by President Clinton, this year is considered good. NSA vigorously supports the Self-Employed Health Insurance Fairness Act of 1999. The issue is primarily one of equity in the tax code. There is no justification for permitting some businesses, generally larger incorporated businesses, and not others to fully deduct health care costs. The Act would promote the viability of small businesses, and meet the important social concern of making health insurance more affordable for the self-employed and their families.

Internal Revenue Reform Update

NSA follow-up on IRS Restructuring and Reform legislation enacted in July of 1998 continues. IRS Commissioner Charles O. Rossotti stated in a recent Congressional panel discussion that the efforts of the Service, thus far, to comply with Congressional reform mandates represent only a beginning. The reform agenda for this coming Spring is ambitious, albeit somewhat behind schedule.

The immediate priorities under the 1998 Act include; forwarding nominations to President Clinton for the yet appointed IRS oversight board; a restructuring blueprint for the entire agency due on April 15, 1999; the publication of detailed guidance on new offers in compromise flexibility; the 1999 Treasury / IRS business plan; and, the results of a study on the Service's Criminal Investigation Division.

Mandates Information Act

The Mandates Information Act directs the Congressional Budget Office to assess the impact of private sector mandates contained in any bill introduced in either the House or the Senate. For mandates that cost more that $100 million, it allows any member of Congress to force a separate debate and vote specifically on whether to impose the mandate on the private sector.

The bill was reintroduced in the House on January 20, 1999, by representatives Gary Condit (D-CA), and Rob Portman (ROH). On February 10, 1999, HR350 passed by a vote of 274-149. A late amendment, which would have derailed passage, was offered by Representative Sherwood Boehlert (R-NY). The amendment failed to pass by the slim margin of 210-216.

Possibly the most significant aspect of this legislation to date is that it demonstrates how unpredictable votes in the 106th House of Representatives will be. In this case, Representative Boehlert (R-NY), a moderate Republican with a strong pro-environmental voting record, was joined by 29 Democrats in support of an amendment which nearly defeated passage of the Act. The vote on Representative Boehlert's amendment demonstrates the force of moderate Republicans and conservative Democrats in the 106th House. Further, the vote may suggest that in the coming months, more controversial legislation will only succeed through the ideological middle.
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Title Annotation:the National Society of Accountants monitors pending legislation in Congress
Author:Boyd, Harlan
Publication:The National Public Accountant
Date:May 1, 1999
Previous Article:Client report.
Next Article:Questions to the tax desk.

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