Off The Hook Proposed bill gives small business a break for first-time paperwork violations.

It could happen to any small-business owner: forgetting tosubmit a crucial piece of federal paperwork. Whether it's aform permitting the IRS to automatically withdraw taxes from anemployee's checking account, COBRA insurance information oranother federal form, an error of omission can mean hefty federalfines.

That could change, though, if the Small Business PaperworkReduction Act passes. The bill (S.1867) would take small businessesoff the hook for first-time federal paperwork violations if theysend in the missing paperwork up to six months after they'refound out of compliance. The bill, which at press time was headedfor the Senate Committee on Governmental Affairs, is sponsored bySen. Susan Collins (R-ME); the House version (H.R. 3310), sponsoredby Rep. David McIntosh (R-IN), passed in March.

To qualify for the six months of breathing room, a company mustmeet the SBA definition of small, which is generally a company withfewer than 500 employees or less than $5 million in annual revenue.The six-month reprieve would only apply to one violation percompany, not one per federal statute. And it wouldn't apply ifthe violation relates to a tax matter, impedes the detection ofcriminal activity, or causes or poses a threat of serious harm tothe public.