Tuesday, July 21, 2015

SBA 7a Loans/Penalties for Paying Health Expenses/Taxing Health Benefits/Labor Enforcement Task Force

Not a lot of good news for small business last week.

First - on Friday I received an email from Tony Wilkinson, the head of the National Association of Government Lenders,  about the status of 7a SBA loans. 7a loans are the largest source of government loans to small business.
The authorization level for this fiscal year is 2014 to 2015 is  $19.875 billion. It is now being estimated that around July 31 the loan program will exceed that level and therefore loans to small business will be cut off.

Keep in  mind there is no cost to the government to increase this authorization level.
What needs to be done is an increase in authorization. The Office of Management and Budget has sent a letter asking that the authorization be increased to $22.5 billion.

To increase the authorization an Appropriations Committee must approve and be passed by the House and the Senate. The conventional wisdom is that the  Highway bill or the Customs bill be amended to do this.  It is believed that a stand alone bill would not pass.

This is particularly  important to California small businesses, as California businesses receive about 20% of these loans.

A  key player in these discussions is Kevin Mc Carthy. He is in the 23rd Distract, which is in the Bakersfield area. If you are in his District call his office at 202 225-2913. You can also email him at Kevin.McCarthy@mail.house.gov

Second - if you are not providing health insurance to your employees but are contributing pre-tax dollars to their health insurance or health expenses, beware. As of July 1,  2015 the IRS will start enforcing this and a   a $100 dollar a day penalty can be assessed  for non compliance.

And last - Assemblyman  Marc Levine has introduced legislation  to tax health insurance that an employer provides to employees. This would raise $2 billion for the state. There are some that are looking at also taxing these benefits at the Federal levels. As of 2012, it is estimated that this would raise $250 billion for  the Federal government. Remember this would mean an employer would have to pay additional FICA taxes and Medicare,  and your employees would also have to pay income tax on this money.

Please see below information  sent by Dominic Forrest Chief of the Labor Enforcement Task Force: 

I wanted to let you know that the Labor Enforcement Task Force (LETF) has produced new educational materials to help employers understand their responsibilities and inform workers of their rights.
All of the materials are available on our website: http://www.dir.ca.gov/letf/Information_for_workers_and_employers.html
We have designed fact sheets specifically for construction and restaurants to help those businesses understand and follow labor, licensing and payroll tax laws. We are also working on employer fact sheets for other industries, including agriculture, automotive repair and garment.
We have worker booklets available in various languages including Spanish, Chinese, Korean and Vietnamese.
Here is a news release with more information. http://www.dir.ca.gov/DIRNews/2015/2015-55.pdf
Please let me know if you have any questions
Dominic Forrest
Chief, Labor Enforcement Task Force
Department of Industrial Relations
1515 Clay Street, 17th Floor
Oakland, CA 94612
(510) 622-3969

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA  94116


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