It could happen to any small-business owner: forgetting to
submit a crucial piece of federal paperwork. Whether it's a
form permitting the IRS to automatically withdraw taxes from an
employee's checking account, COBRA insurance information or
another federal form, an error of omission can mean hefty federal
fines.
That could change, though, if the Small Business Paperwork
Reduction Act passes. The bill (S.1867) would take small businesses
off the hook for first-time federal paperwork violations if they
send in the missing paperwork up to six months after they're
found out of compliance. The bill, which at press time was headed
for the Senate Committee on Governmental Affairs, is sponsored by
Sen. Susan Collins (R-ME); the House version (H.R. 3310), sponsored
by Rep. David McIntosh (R-IN), passed in March.
To qualify for the six months of breathing room, a company must
meet the SBA definition of small, which is generally a company with
fewer than 500 employees or less than $5 million in annual revenue.
The six-month reprieve would only apply to one violation per
company, not one per federal statute. And it wouldn't apply if
the violation relates to a tax matter, impedes the detection of
criminal activity, or causes or poses a threat of serious harm to
the public.
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The exemption from first-time civil penalties will undoubtedly
be an issue when the Senate takes up the bill. But there are
several other noncontroversial provisions. For example, the White
House Office of Management and Budget would have to publish an
annual list of paperwork rules applicable to small business, and
every federal agency would have to establish a liaison to discuss
with entrepreneurs that agency's information requirements.
The bill's fate in the Senate may hinge on the contents of
the federal agencies' reports, which will be reviewed by the
Senate Committee on Small Business. The reports detail
"concessionary" fine policies for small businesses that
were developed per a provision in the 1996 Small Business
Regulatory Enforcement Fairness Act. Some of those policies may
touch on leeway for paperwork violations.
Staffers who have seen the reports from the Environmental
Protection Agency and the Occupational Safety and Health
Administration say they are woefully lacking in detail. What may be
worse, according to Committee on Small Business chairman Sen.
Christopher S. Bond (R-MO), is that 23 departments and
agencies--including the SBA and the IRS--have ignored the
requirement to submit reports. Says Bond, "This makes me
wonder whether these agencies are also ignoring the plight of small
businesses earnestly looking for help in understanding and
complying with complex federal regulations."
Stephen Barlas is a freelance business reporter who covers
the Washington beat for 15 magazines.
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