This was sent to me by one of our members. I was not going to send it out to all of you but I thought you might be interested. These are the state agencies and Commissions. Make sure you scroll to the end. Thank you Richard.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
California Academic Performance Index (API) * California Access for Infants and Mothers * California Acupuncture Board * California Administrative Office of the Courts * California Adoptions Branch * California African American Museum * California Agricultural Export Program * California Agricultural Labor Relations Board * California Agricultural Statistics Service * California Air Resources Board (CARB) * California Allocation Board * California Alternative Energy and Advanced Transportation Financing Authority * California Animal Health and Food Safety Services * California Anti-Terrorism Information Center * California Apprenticeship Council * California Arbitration Certification Program * California Architects Board * California Area VI Developmental Disabilities Board * California Arts Council * California Asian Pacific Islander Legislative Caucus * California Assembly Democratic Caucus * California Assembly Republican Caucus * California Athletic Commission * California Attorney General * California Bay Conservation and Development Commission * California Bay-Delta Authority * California Bay-Delta Office * California Biodiversity Council * California Board for Geologists and Geophysicists * California Board for Professional Engineers and Land Surveyors * California Board of Accountancy * California Board of Barbering and Cosmetology * California Board of Behavioral Sciences * California Board of Chiropractic Examiners * California Board of Equalization (BOE) * California Board of Forestry and Fire Protection * California Board of Guide Dogs for the Blind * California Board of Occupational Therapy * California Board of Optometry * California Board of Pharmacy * California Board of Podiatric Medicine * California Board of Prison Terms * California Board of Psychology * California Board of Registered Nursing * California Board of Trustees * California Board of Vocational Nursing and Psychiatric Technicians * California Braille and Talking Book Library * California Building Standards Commission * California Bureau for Private Postsecondary and Vocational Education * California Bureau of Automotive Repair * California Bureau of Electronic and Appliance Repair * California Bureau of Home Furnishings and Thermal Insulation * California Bureau of Naturopathic Medicine * California Bureau of Security and Investigative Services * California Bureau of State Audits * California Business Agency * California Business Investment Services (CalBIS) * California Business Permit Information (CalGOLD) * California Business Portal * California Business, Transportation and Housing Agency * California Cal Grants * California CalJOBS * California Cal-Learn Program * California CalVet Home Loan Program * California Career Resource Network * California Cemetery and Funeral Bureau * California Center for Analytical Chemistry * California Center for Distributed Learning * California Center for Teaching Careers (Teach California) * California Chancellors Office * California Charter Schools * California Children and Families Commission * California Children and Family Services Division * California Citizens Compensation Commission * California Civil Rights Bureau * California Coastal Commission * California Coastal Conservancy * California Code of Regulations * California Collaborative Projects with UC Davis * California Commission for Jobs and Economic Growth * California Commission on Aging * California Commission on Health and Safety and Workers Compensation * California Commission on Judicial Performance * California Commission on State Mandates * California Commission on Status of Women * California Commission on Teacher Credentialing * California Commission on the Status of Women * California Committee on Dental Auxiliaries * California Community Colleges Chancellors Office, Junior Colleges * California Community Colleges Chancellors Office * California Complaint Mediation Program * California Conservation Corps * California Constitution Revision Commission * California Consumer Hotline * California Consumer Information Center * California Consumer Information * California Consumer Services Division * California Consumers and Families Agency * California Contractors State License Board * California Corrections Standards Authority * California Council for the Humanities * California Council on Criminal Justice * California Council on Developmental Disabilities * California Court Reporters Board * California Courts of Appeal * California Crime and Violence Prevention Center * California Criminal Justice Statistics Center * California Criminalist Institute Forensic Library * California CSGnet Network Management * California Cultural and Historical Endowment * California Cultural Resources Division * California Curriculum and Instructional Leadership Branch * California Data Exchange Center * California Data Management Division * California Debt and Investment Advisory Commission * California Delta Protection Commission * California Democratic Caucus * California Demographic Research Unit * California Dental Auxiliaries * California Department of Aging * California Department of Alcohol and Drug Programs * California Department of Alcoholic Beverage Control Appeals Board * California Department of Alcoholic Beverage Control * California Department of Boating and Waterways (Cal Boating) * California Department of Child Support Services (CDCSS) * California Department of Community Services and Development * California Department of Conservation * California Department of Consumer Affairs * California Department of Corporations * California Department of Corrections and Rehabilitation * California Department of Developmental Services * California Department of Education * California Department of Fair Employment and Housing * California Department of Finance * California Department of Financial Institutions * California Department of Fish and Game * California Department of Food and Agriculture * California Department of Forestry and Fire Protection (CDF) * California Department of General Services * California Department of General Services, Office of State Publishing * California Department of Health Care Services * California Department of Housing and Community Development * California Department of Industrial Relations (DIR) * California Department of Insurance * California Department of Justice Firearms Division * California Department of Justice Opinion Unit * California Department of Justice, Consumer Information, Public Inquiry Unit * California Department of Justice * California Department of Managed Health Care * California Department of Mental Health * California Department of Motor Vehicles (DMV) * California Department of Personnel Administration * California Department of Pesticide Regulation * California Department of Public Health * California Department of Real Estate * California Department of Rehabilitation * California Department of Social Services Adoptions Branch * California Department of Social Services * California Department of Technology Services Training Center (DTSTC) * California Department of Technology Services (DTS) * California Department of Toxic Substances Control * California Department of Transportation (Caltrans) * California Department of Veterans Affairs (CalVets) * California Department of Water Resources * California Departmento de Vehiculos Motorizados * California Digital Library * California Disabled Veteran Business Enterprise Certification Program * California Division of Apprenticeship Standards * California Division of Codes and Standards * California Division of Communicable Disease Control * California Division of Engineering * California Division of Environmental and Occupational Disease Control * California Division of Gambling Control * California Division of Housing Policy Development * California Division of Labor Standards Enforcement * California Division of Labor Statistics and Research * California Division of Land and Right of Way * California Division of Land Resource Protection * California Division of Law Enforcement General Library * California Division of Measurement Standards * California Division of Mines and Geology * California Division of Occupational Safety and Health (Cal/OSHA) * California Division of Oil, Gas and Geothermal Resources * California Division of Planning and Local Assistance * California Division of Recycling * California Division of Safety of Dams * California Division of the State Architect * California Division of Tourism * California Division of Workers Compensation Medical Unit * California Division of Workers Compensation * California Economic Assistance, Business and Community Resources * California Economic Strategy Panel * California Education and Training Agency * California Education Audit Appeals Panel * California Educational Facilities Authority * California Elections Division * California Electricity Oversight Board * California Emergency Management Agency * California Emergency Medical Services Authority * California Employment Development Department (EDD) * California Employment Information State Jobs * California Employment Training Panel * California Energy Commission * California Environment and Natural Resources Agency * California Environmental Protection Agency (Cal/EPA) * California Environmental Resources Evaluation System (CERES) * California Executive Office * California Export Laboratory Services * California Exposition and State Fair (Cal Expo) * California Fair Political Practices Commission * California Fairs and Expositions Division * California Film Commission * California Fire and Resource Assessment Program * California Firearms Division * California Fiscal Services * California Fish and Game Commission * California Fisheries Program Branch * California Floodplain Management * California Foster Youth Help * California Franchise Tax Board (FTB) * California Fraud Division * California Gambling Control Commission * California Geographic Information Systems Council (GIS) * California Geological Survey * California Government Claims and Victim Compensation Board * California Governors Committee for Employment of Disabled Persons * California Governors Mentoring Partnership * California Governor's Office of Emergency Services * California Governor's Office of Homeland Security * California Governor's Office of Planning and Research * California Governor's Office * California Grant and Enterprise Zone Programs HCD Loan * California Health and Human Services Agency * California Health and Safety Agency * California Healthy Families Program * California Hearing Aid Dispensers Bureau * California High-Speed Rail Authority * California Highway Patrol (CHP) * California History and Culture Agency * California Horse Racing Board * California Housing Finance Agency * California Indoor Air Quality Program * California Industrial Development Financing Advisory Commission * California Industrial Welfare Commission * California Info People * California Information Center for the Environment * California Infrastructure and Economic Development Bank (I-Bank) * California Inspection Services * California Institute for County Government * California Institute for Education Reform * California Integrated Waste Management Board * California Interagency Ecological Program * California Job Service * California Junta Estatal de Personal * California Labor and Employment Agency * California Labor and Workforce Development Agency * California Labor Market Information Division * California Land Use Planning Information Network (LUPIN) * California Lands Commission * California Landscape Architects Technical Committee * California Latino Legislative Caucus * California Law Enforcement Branch * California Law Enforcement General Library * California Law Revision Commission * California Legislative Analyst's Office * California Legislative Black Caucus * California Legislative Counsel * California Legislative Division * California Legislative Information * California Legislative Lesbian, Gay, Bisexual, and Transgender (LGBT) Caucus * California Legislature Internet Caucus * California Library De velopment Services * California License and Revenue Branch * California Major Risk Medical Insurance Program * California Managed Risk Medical Insurance Board * California Maritime Academy * California Marketing Services * California Measurement Standards * California Medical Assistance Commission * California Medical Care Services * California Military Department * California Mining and Geology Board * California Museum for History, Women, and the Arts * California Museum Resource Center * California National Guard * California Native American Heritage Commission * California Natural Community Conservation Planning Program * California New Motor Vehicle Board * California Nursing Home Administrator Program * California Occupational Safety and Health Appeals Board * California Occupational Safety and Health Standards Board * California Ocean Resources Management Program * California Office of Administrative Hearings * California Office of Administrative Law * California Office of AIDS * California Office of Binational Border Health * California Office of Child Abuse Prevention * California Office of Deaf Access * California Office of Emergency Services (OES) * California Office of Environmental Health Hazard Assessment * California Office of Fiscal Services * California Office of Fleet Administration * California Office of Health Insurance Portability and Accountability Act (HIPAA) Implementation (CalOHI) * California Office of Historic Preservation * California Office of Homeland Security * California Office of Human Resources * California Office of Legal Services * California Office of Legislation * California Office of Lieutenant Governor * California Office of Military and Aerospace Support * California Office of Mine Reclamation * California Office of Natural Resource Education * California Office of Privacy Protection * California Office of Public School Construction * California Office of Real Estate Appraisers * California Office of Risk and Insurance Management * California Office of Services to the Blind * California Office of Spill Prevention and Response * California Office of State Publishing (OSP) * California Office of Statewide Health Planning and Development * California Office of Systems Integration * California Office of the Inspector General * California Office of the Ombudsman * California Office of the Patient Advocate * California Office of the President * California Office of the Secretary for Education * California Office of the State Fire Marshal * California Office of the State Public Defender * California Office of Traffic Safety * California Office of Vital Records * California Online Directory * California Operations Control Office * California Opinion Unit * California Outreach and Technical Assistance Network (OTAN) * California Park and Recreation Commission * California Peace Officer Standards and Training (POST) * California Performance Review (CPR) * California Permit Information for Business (CalGOLD) * California Physical Therapy Board * California Physician Assistant Committee * California Plant Health and Pest Prevention Services * California Policy and Evaluation Division * California Political Reform Division * California Pollution Control Financing Authority * California Polytechnic State University, San Luis Obispo * California Postsecondary Education Commission * California Prevention Services * California Primary Care and Family Health * California Prison Industry Authority * California Procurement Division * California Public Employees Retirement System (CalPERS) * California Public Employment Relations Board (PERB) * California Public Utilities Commission (PUC) * California Real Estate Services Division * California Refugee Programs Branch * California Regional Water Quality Control Boards * California Registered Veterinary Technician Committee * California Registrar of Charitable Trusts * California Republican Caucus * California Research and Development Division * California Research Bureau * California Resources Agency * California Respiratory Care Board * California Rivers Assessment * California Rural Health Policy Council * California Safe Schools * California San Francisco Bay Conservation and Development Commission * California San Gabriel and Lower Los Angeles Rivers and Mountains Conservancy * California San Joaquin River Conservancy * California School to Career * California Science Center * California Scripps Institution of Oceanography * California Secretary of State Business Portal * California Secretary of State * California Seismic Safety Commission * California Self Insurance Plans (SIP) * California Senate Office of Research * California Small Business and Disabled Veteran Business Enterprise Certification Program * California Small Business Development Center Program * California Smart Growth Caucus * California Smog Check Information Center * California Spatial Information Library * California Special Education Division * California Speech-Language Pathology and Audiology Board * California Standardized Testing and Reporting (STAR) * California Standards and Assessment Division * California State Administrative Manual (SAM) * California State Allocation Board * California State and Consumer Services Agency * California State Architect * California State Archives * California State Assembly * California State Association of Counties (CSAC) * California State Board of Education * California State Board of Food and Agriculture *California Office of the Chief Information Officer (OCIO) * California State Children's Trust Fund * California State Compensation Insurance Fund * California State Contracts Register Program * California State Contracts Register * California State Controller * California State Council on Developmental Disabilities (SCDD) * California State Disability Insurance (SDI) * California State Fair (Cal Expo) * California State Jobs Employment Information * California State Lands Commission * California State Legislative Portal * California State Legislature * California State Library Catalog * California State Library Services Bureau * California State Library * California State Lottery * California State Mediation and Conciliation Service * California State Mining and Geology Board * California State Park and Recreation Commission * California State Parks * California State Personnel Board * California State Polytechnic University, Pomona * California State Railroad Museum * California State Science Fair * California State Senate * California State Summer School for Mathematics and Science (COSMOS) * California State Summer School for the Arts * California State Superintendent of Public Instruction * California State Teachers Retirement System (CalSTRS) * California State Treasurer * California State University Center for Distributed Learning * California State University, Bakersfield * California State University, Channel Islands * California State University, Chico * California State University, Dominguez Hills * California State University, East Bay * California State University, Fresno * California State University, Fullerton * California State University, Long Beach * California State University, Los Angeles * California State University, Monterey Bay * California State University, Northridge * California State University, Sacramento * California State University, San Bernardino * California State University, San Marcos * California State University, Stanislaus * California State University (CSU) * California State Water Project Analysis Office * California State Water Project * California State Water Resources Control Board * California Structural Pest Control Board * California Student Aid Commission * California Superintendent of Public Instruction * California Superior Courts * California Tahoe Conservancy * California Task Force on Culturally and Linguistically Competent Physicians and Dentists * California Tax Information Center * California Technology and Administration Branch Finance * California Telecommunications Division * California Telephone Medical Advice Services (TAMS) * California Transportation Commission * California Travel and Transportation Agency * California Unclaimed Property Program * California Unemployment Insurance Appeals Board * California Unemployment Insurance Program * California Uniform Construction Cost Accounting Commission * California Veterans Board * California Veterans Memorial * California Veterinary Medical Board and Registered Veterinary Technician Examining Committee * California Veterinary Medical Board * California Victim Compensation and Government Claims Board * California Volunteers * California Voter Registration * California Water Commission * California Water Environment Association (COWPEA) * California Water Resources Control Board * California Welfare to Work Division * California Wetlands Information System * California Wildlife and Habitat Data Analysis Branch * California Wildlife Conservation Board * California Wildlife Programs Branch * California Work Opportunity and Responsibility to Kids (CalWORKs) * California Workers Compensation Appeals Board * California Workforce and Labor Development Agency * California Workforce Investment Board * California Youth Authority (CYA) * Central Valley Flood Protection Board * Center for California Studies * Colorado River Board of California * Counting California * Dental Board of California * Health Insurance Plan of California (PacAdvantage) * Humboldt State University * Jobs with the State of California * Judicial Council of California * Learn California * Library of California * Lieutenant Governors Commission for One California * Little Hoover Commission (on California State Government Organization and Economy) * Medical Board of California * Medi-Cal * Osteopathic Medical Board of California * Physical Therapy Board of California * Regents of the University of California * San Diego State University * San Francisco State University * San Jose State University * Santa Monica Mountains Conservancy * State Bar of California * Supreme Court of California * Teach California * University of California * University of California, Berkeley * University of California, Davis * University of California, Hastings College of the Law * University of California, Irvine * University of California, Los Angeles * University of California, Merced * University of California, Riverside * University of California, San Diego * University of California, San Francisco * University of California, Santa Barbara * University of California, Santa Cruz * Veterans Home of California
Friday, August 06, 2010
30% Workers Compensation Rate increase/ 1099s
Yesterday the Workers Compensation Insurance Rating Bureau chief actuary estimated a 30% workers compensation rate increase for January 1 2011. This will have to go to the Board of WCIRB.
The WCIRB recommendation is purely advisory and can be rejected or modified by the Insurance Commissioner Poizner. Last fall the bureau called for a 22.8 percent increase which Poizner rejected citing the poor economy and need for insurers to cut costs. WCIRB makes annual or semi-annual rate recommendations. This latest recommendation is consistent with their last proposed rate increase of 23.7 percent. The WCIRB cited escalating claims costs and recent court decisions as the basis for the need to increase rates.
The Senate Jobs bill will be coming back to the Senate in September. As you know by prior emails they are looking at adding an amendment to change the requirement of 1099s for all goods and service providers who receive over $600 from your business.
An amendment has been put forth by Senator Baucus to eliminate filing for businesses with less than 25 employees and for those over 25 increase the threshold from $600 to $5000. To make up the revenues they would charge a tax on the 5 largest oil companies.
It has not been reported how much this will raise but the health bill with 1099 requirement would raise $17 billion over 10 years.
The question is if this tax raises $17 billion or more why not repeal the requirement completely. Small Business California is looking into this.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
The WCIRB recommendation is purely advisory and can be rejected or modified by the Insurance Commissioner Poizner. Last fall the bureau called for a 22.8 percent increase which Poizner rejected citing the poor economy and need for insurers to cut costs. WCIRB makes annual or semi-annual rate recommendations. This latest recommendation is consistent with their last proposed rate increase of 23.7 percent. The WCIRB cited escalating claims costs and recent court decisions as the basis for the need to increase rates.
The Senate Jobs bill will be coming back to the Senate in September. As you know by prior emails they are looking at adding an amendment to change the requirement of 1099s for all goods and service providers who receive over $600 from your business.
An amendment has been put forth by Senator Baucus to eliminate filing for businesses with less than 25 employees and for those over 25 increase the threshold from $600 to $5000. To make up the revenues they would charge a tax on the 5 largest oil companies.
It has not been reported how much this will raise but the health bill with 1099 requirement would raise $17 billion over 10 years.
The question is if this tax raises $17 billion or more why not repeal the requirement completely. Small Business California is looking into this.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
Monday, August 02, 2010
Tax Hike Misinformation
I have received four emails that begin with the below information. I have deleted the other things this email pointed out because there are numerous errors and I do not have time to go line by line.
The assertion that people will have to pay taxes on their employer provided health insurance is wrong unless in 2018 it is deemed to be a Cadillac plan. Employers will however have to include health insurance in W2s beginning 2011 but again employees will not pay taxes.
Do not forward these kind of emails. I would also be interested to know if you have received this. From what I can tell these emails are being sent without a signature and getting forwarded by recipients.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
-------------------------------------------------------------------------------------------------
2011 TAX HIKES Read it and weep! Notice they thought they could put it in after this November election: Past this on to likely voters. Small business are smart people, they are not hiring or expanding because they see lower or no profits, increased cost and a worsening economy.
In just six months, the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2011:
Biggest surprise to working Americans:
Now your insurance is INCOME on your W2's...... One of the surprises we'll find come next year, is what follows - - a little "surprise" that 99% of us had no idea was included in the "new and improved" healthcare legislation
Starting in 2011, (next year folks), your W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are given by the company.
You will now be required to pay taxes on a large sum of money that you have never seen.
Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to your Tax debt. That's what you'll pay next year. For many, it also puts you into a new higher bracket so it's even worse.
Here is an explanation of the rest.
The assertion that people will have to pay taxes on their employer provided health insurance is wrong unless in 2018 it is deemed to be a Cadillac plan. Employers will however have to include health insurance in W2s beginning 2011 but again employees will not pay taxes.
Do not forward these kind of emails. I would also be interested to know if you have received this. From what I can tell these emails are being sent without a signature and getting forwarded by recipients.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
-------------------------------------------------------------------------------------------------
2011 TAX HIKES Read it and weep! Notice they thought they could put it in after this November election: Past this on to likely voters. Small business are smart people, they are not hiring or expanding because they see lower or no profits, increased cost and a worsening economy.
In just six months, the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2011:
Biggest surprise to working Americans:
Now your insurance is INCOME on your W2's...... One of the surprises we'll find come next year, is what follows - - a little "surprise" that 99% of us had no idea was included in the "new and improved" healthcare legislation
Starting in 2011, (next year folks), your W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are given by the company.
You will now be required to pay taxes on a large sum of money that you have never seen.
Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to your Tax debt. That's what you'll pay next year. For many, it also puts you into a new higher bracket so it's even worse.
Here is an explanation of the rest.
Friday, July 30, 2010
1099 Issue/ Health Coverage
The 1099 bill just failed about 10 minutes ago according to our good friend Tom Sullivan the prior Small Business Advocate.
Note it would have taken a two thirds vote so never really had a chance.
The Lungren bill to repeal the requirement continues to gather steam with 160 cosponsors and I believe 7 Democrats.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
Note it would have taken a two thirds vote so never really had a chance.
The Lungren bill to repeal the requirement continues to gather steam with 160 cosponsors and I believe 7 Democrats.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
Breaking News on 1099 Requirement
Please see email I received from Jackie Speier’s office. It appears there is movement on the 1099 issue. I would like your comments on the tax implications. Seems like most would not affect small business except for filings.
Small Business California and the National Small Business Association have been very vocal on this issue.
Thank you Erin for sending
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
Scott and Brian, wanted to let you know that the House is taking up a bill on the floor today that was just introduced today—HR 5982 the Small Business Tax Relief Act—that will repeal the 1099 provision in the healthcare bill. You should also know that its $19 billion cost (revenue that would have been raised over 10 years) is being paid for through a variety of other tax measures.
“This bill repeals a provision in the health care overhaul law (PL 111-148) that requires small businesses to file a 1099 form to the IRS for payments of more than $600 that they make to any vendor during a tax year. To offset the estimated $19.2 billion cost of this provision, the bill makes changes to foreign tax rules, requires a minimum term before certain trusts could make gifts with minimal tax consequences, and makes tall crude oil ineligible for the biofuel producer tax credit”.
Jackie was unable to sign on as a co-sponsor because of the speed with which this was introduced and taken up, but she will support it.
FLOOR SITUATION
The House is scheduled to consider H.R. 5982 on Thursday, July 29, 2010, under suspension of the rules, requiring a two-thirds majority vote for passage. This legislation was introduced by Rep. Tim Murphy (D-NY).
EXECUTIVE SUMMARY
H.R. 5982 would repeal the business (1099) filing requirements under ObamaCare. Offsets to this bill include $149 million in tax increases.
Note: This bill is in response to the Republican MTR for H.R. 5893, Investing in American Jobs and Closing Tax Loopholes Act that was pulled from the floor as a result of the MTR.
Title I: Repeal of Certain Information Reporting Requirements
The bill repeals section 9006 of the Patient Protection and Affordable Care Act. As a result businesses, starting in 2012, will be required to file information returns (1099 tax form) with respect to any person (including corporations) that receive $600 or more from the business in exchange for property or merchandise. Corporations would also have to file information returns when they receive $600 or more in exchange for services or other determinable gains. According to JCT, this provision will cost $19.206 billion over ten years.
Title II: Revenue Provisions
Rules to Prevent Splitting Foreign Tax Credits from the Income to Which They Relate:
This provision would implement a matching rule that suspends the recognition of foreign tax credits until the related foreign income is taken into account for taxing purposes in the U.S. This provision would apply to all split foreign taxes claimed by taxpayers after the date of introduction. According to JCT, this provision would increase revenues by $4.250 billion over ten years.
Denial of Foreign Tax Credit with Respect to Foreign Income Not Subject to U.S. Taxation by Reason of Covered Asset Acquisition:
This provision would prohibit taxpayers from claiming the foreign tax credit with regard to foreign income that is never subject to U.S. taxation because of a covered asset acquisition. The legislation would apply to related party transactions occurring after the date of introduction. According to JCT, this provision would increase revenues by $3.645 billion over ten years.
Separate Application of Foreign Tax Credit Limitation to Items Resourced Under Treaties:
The legislation abides by the treaty commitment to treating income as a foreign source, but segregates the income so that it is not the basis for claiming foreign tax credits that have nothing to do with double taxation. The bill would conform the foreign tax credit treatment of taxpayers operating abroad through foreign branches and disregarded entities to the treatment already afforded to taxpayers operating through foreign corporations. According to JCT, this provision would increase revenues by $250 million over ten years.
Limitation on the Amount of Foreign Taxes Deemed Paid with Respect to Section 956 Inclusions:
The bill would limit the amount of foreign tax credits that may be claimed on a deemed dividend under section 956 to the amount that would have been allowed with respect to an actual dividend. According to JCT, this provision would increase revenues by $704 million over ten years
Special Rule with Respect to Certain Redemptions by Foreign Subsidiaries:
The bill would eliminate a tax planning technique that allows foreign-based multinationals (e.g. a foreign-based company that owns a U.S. company, and that U.S. company owns a foreign subsidiary) earnings to bypass the U.S. tax system. According to JCT, this provision would increase revenues by $203 million over ten years.
Modification of Affiliation Rule for Purposes of Rules Allocating Interest Expense:
The bill would prevent taxpayers from using certain techniques to minimize the amount of foreign source interest expense, which has the effect of boosting foreign source income – thus allowing taxpayer to utilize more foreign tax credits. According to JCT, this provision would increase revenues by $390 million over ten years.
Termination of Special Rules for Interest and Dividend Received from Persons Meeting the 80-percent Foreign Business Requirement:
The bill terminates the “80/20” rule that allowed a corporation with gross income of at least 80 percent from a foreign source income and attributable to foreign trade or business during a three-year period. Some corporations that meet specific requirements and are not abusing the “80/20” rule company rules may receive relief. According to JCT, this provision would increase revenues by $153 million over ten years.
Source Rule for Income on Guarantees:
The bill would stipulate that guarantees on indebtedness issues after the date of enactment will be sourced like interest; if paid by U.S. taxpayers to foreign persons - it will be subject to withholding. According to JCT, this provision would increase revenues by $2 billion over ten years.
Limitation on Extension of Statute of Limitations for Failure to Notify Secretary of Certain Foreign Transfers:
The bill would make a technical correction to the Hiring Incentives to Restore Employment (HIRE). This provision would clarify the circumstances in which the statute of limitations period for corporations that fail to provide certain information on cross-border transactions or foreign assets. According to JCT, this provision would have no revenue impact over ten years.
Require minimum 10-year term, etc. for Grantor Retained Annuity Trusts:
The bill would require a minimum 10-year term for grantors to retain annuity trusts [GRATS]. This provision would prevent individuals from using short-term GRATs to transfer the remaining portion of the grantors interest in the trust tax free; thus this would require that GRATs have a minimum of 10 years, and the amount of the annuity does not decrease during the decrease during the term. According to JCT, this provision is estimated to raise revenues by $5.272 billion over 10 years.
Possible Member Concerns:
Some members may be concerned about using estate and gift taxes as offsets to a bill.
Crude Tall Oil Ineligible for Cellulosic Biofuel Producer Credit:
The bill would exclude crude tall oil (CTO) from receiving the current $1.01/gallon, non-refundable cellulosic biofuel producer credit for the production of certain cellulosic-based alternative fuels. The provision would exclude CTO from eligibility for this credit. According to JCT, this provision would increase revenue by $1.849 billion over 10 years.
Increase Penalties for failure to file information returns:
Increase the information return penalties:
Any person required to file information returns are subject to penalties for failure to file. This provision would increase the penalties, based on the following table:
Time of Filing: Not more than 30 days late
Current Law: $15 per return / $75,000 cap
Proposed Change: $30 per return / $250,000 cap
Time of Filing: 31 days late - August 1st
Current Law: $30 per return / $150,000 cap
Proposed Change: $60 per return / $500,000 cap
Time of Filing: After August 1st
Current Law: $50 per return / $250,000 cap
Proposed Law: $100 per return / $1,500,000 cap
Time of Filing: Intentional disregard
Current Law: $100 per return / no cap
Proposed Law: $250 per return / no cap
Under both current law and the provision, reduced caps apply to small filers with gross receipts under $5 million. These caps are also increased:
Time of Filing (Small Filers): Not more than 30 days late
Current Law: $15 per return / $25,000 cap
Proposed Change: $30 per return / $75,000 cap
Time of Filing (Small Filers): 31 days late - August 1st
Current Law: $30 per return / $50,000 cap
Proposed Law: $60 per return / $200,000 cap
Time of Filing (Small Filers): After August 1st
Current Law: $50 per return / $100,000 cap
Proposed Law: $100 per return / $500,000 cap
Time of Filing (Small Filers): Intentional disregard
Current Law: $100 per return / no cap
Proposed Law: $250 per return / no cap
According to JCT, this provision would increase revenue by $421 million over 10 years.
Treatment of Securities of a Controlled Corporation Exchanged for Assets in Certain Reorganizations:
The bill would change the rules for treatment of securities transferred from a controlled-corporation for assets during reorganization. Under current law, shareholders and corporations are generally allowed to defer tax on gains relating to some corporate reorganizations such as certain mergers and spin-offs, provided the reorganization meets numerous requirements in the Code and regulations. Under the bill, no loss would be recognized if a corporation transfers assets for stock during reorganization. However, the sum of gains transferred and not distributed in the reorganization would be immediately recognized for tax purposes. According to JCT, this provision would increase taxes by $218 million over ten years.
COST
According to JCT, this bill would increase revenue by $149 million over 10 years.
Small Business California and the National Small Business Association have been very vocal on this issue.
Thank you Erin for sending
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
Scott and Brian, wanted to let you know that the House is taking up a bill on the floor today that was just introduced today—HR 5982 the Small Business Tax Relief Act—that will repeal the 1099 provision in the healthcare bill. You should also know that its $19 billion cost (revenue that would have been raised over 10 years) is being paid for through a variety of other tax measures.
“This bill repeals a provision in the health care overhaul law (PL 111-148) that requires small businesses to file a 1099 form to the IRS for payments of more than $600 that they make to any vendor during a tax year. To offset the estimated $19.2 billion cost of this provision, the bill makes changes to foreign tax rules, requires a minimum term before certain trusts could make gifts with minimal tax consequences, and makes tall crude oil ineligible for the biofuel producer tax credit”.
Jackie was unable to sign on as a co-sponsor because of the speed with which this was introduced and taken up, but she will support it.
FLOOR SITUATION
The House is scheduled to consider H.R. 5982 on Thursday, July 29, 2010, under suspension of the rules, requiring a two-thirds majority vote for passage. This legislation was introduced by Rep. Tim Murphy (D-NY).
EXECUTIVE SUMMARY
H.R. 5982 would repeal the business (1099) filing requirements under ObamaCare. Offsets to this bill include $149 million in tax increases.
Note: This bill is in response to the Republican MTR for H.R. 5893, Investing in American Jobs and Closing Tax Loopholes Act that was pulled from the floor as a result of the MTR.
Title I: Repeal of Certain Information Reporting Requirements
The bill repeals section 9006 of the Patient Protection and Affordable Care Act. As a result businesses, starting in 2012, will be required to file information returns (1099 tax form) with respect to any person (including corporations) that receive $600 or more from the business in exchange for property or merchandise. Corporations would also have to file information returns when they receive $600 or more in exchange for services or other determinable gains. According to JCT, this provision will cost $19.206 billion over ten years.
Title II: Revenue Provisions
Rules to Prevent Splitting Foreign Tax Credits from the Income to Which They Relate:
This provision would implement a matching rule that suspends the recognition of foreign tax credits until the related foreign income is taken into account for taxing purposes in the U.S. This provision would apply to all split foreign taxes claimed by taxpayers after the date of introduction. According to JCT, this provision would increase revenues by $4.250 billion over ten years.
Denial of Foreign Tax Credit with Respect to Foreign Income Not Subject to U.S. Taxation by Reason of Covered Asset Acquisition:
This provision would prohibit taxpayers from claiming the foreign tax credit with regard to foreign income that is never subject to U.S. taxation because of a covered asset acquisition. The legislation would apply to related party transactions occurring after the date of introduction. According to JCT, this provision would increase revenues by $3.645 billion over ten years.
Separate Application of Foreign Tax Credit Limitation to Items Resourced Under Treaties:
The legislation abides by the treaty commitment to treating income as a foreign source, but segregates the income so that it is not the basis for claiming foreign tax credits that have nothing to do with double taxation. The bill would conform the foreign tax credit treatment of taxpayers operating abroad through foreign branches and disregarded entities to the treatment already afforded to taxpayers operating through foreign corporations. According to JCT, this provision would increase revenues by $250 million over ten years.
Limitation on the Amount of Foreign Taxes Deemed Paid with Respect to Section 956 Inclusions:
The bill would limit the amount of foreign tax credits that may be claimed on a deemed dividend under section 956 to the amount that would have been allowed with respect to an actual dividend. According to JCT, this provision would increase revenues by $704 million over ten years
Special Rule with Respect to Certain Redemptions by Foreign Subsidiaries:
The bill would eliminate a tax planning technique that allows foreign-based multinationals (e.g. a foreign-based company that owns a U.S. company, and that U.S. company owns a foreign subsidiary) earnings to bypass the U.S. tax system. According to JCT, this provision would increase revenues by $203 million over ten years.
Modification of Affiliation Rule for Purposes of Rules Allocating Interest Expense:
The bill would prevent taxpayers from using certain techniques to minimize the amount of foreign source interest expense, which has the effect of boosting foreign source income – thus allowing taxpayer to utilize more foreign tax credits. According to JCT, this provision would increase revenues by $390 million over ten years.
Termination of Special Rules for Interest and Dividend Received from Persons Meeting the 80-percent Foreign Business Requirement:
The bill terminates the “80/20” rule that allowed a corporation with gross income of at least 80 percent from a foreign source income and attributable to foreign trade or business during a three-year period. Some corporations that meet specific requirements and are not abusing the “80/20” rule company rules may receive relief. According to JCT, this provision would increase revenues by $153 million over ten years.
Source Rule for Income on Guarantees:
The bill would stipulate that guarantees on indebtedness issues after the date of enactment will be sourced like interest; if paid by U.S. taxpayers to foreign persons - it will be subject to withholding. According to JCT, this provision would increase revenues by $2 billion over ten years.
Limitation on Extension of Statute of Limitations for Failure to Notify Secretary of Certain Foreign Transfers:
The bill would make a technical correction to the Hiring Incentives to Restore Employment (HIRE). This provision would clarify the circumstances in which the statute of limitations period for corporations that fail to provide certain information on cross-border transactions or foreign assets. According to JCT, this provision would have no revenue impact over ten years.
Require minimum 10-year term, etc. for Grantor Retained Annuity Trusts:
The bill would require a minimum 10-year term for grantors to retain annuity trusts [GRATS]. This provision would prevent individuals from using short-term GRATs to transfer the remaining portion of the grantors interest in the trust tax free; thus this would require that GRATs have a minimum of 10 years, and the amount of the annuity does not decrease during the decrease during the term. According to JCT, this provision is estimated to raise revenues by $5.272 billion over 10 years.
Possible Member Concerns:
Some members may be concerned about using estate and gift taxes as offsets to a bill.
Crude Tall Oil Ineligible for Cellulosic Biofuel Producer Credit:
The bill would exclude crude tall oil (CTO) from receiving the current $1.01/gallon, non-refundable cellulosic biofuel producer credit for the production of certain cellulosic-based alternative fuels. The provision would exclude CTO from eligibility for this credit. According to JCT, this provision would increase revenue by $1.849 billion over 10 years.
Increase Penalties for failure to file information returns:
Increase the information return penalties:
Any person required to file information returns are subject to penalties for failure to file. This provision would increase the penalties, based on the following table:
Time of Filing: Not more than 30 days late
Current Law: $15 per return / $75,000 cap
Proposed Change: $30 per return / $250,000 cap
Time of Filing: 31 days late - August 1st
Current Law: $30 per return / $150,000 cap
Proposed Change: $60 per return / $500,000 cap
Time of Filing: After August 1st
Current Law: $50 per return / $250,000 cap
Proposed Law: $100 per return / $1,500,000 cap
Time of Filing: Intentional disregard
Current Law: $100 per return / no cap
Proposed Law: $250 per return / no cap
Under both current law and the provision, reduced caps apply to small filers with gross receipts under $5 million. These caps are also increased:
Time of Filing (Small Filers): Not more than 30 days late
Current Law: $15 per return / $25,000 cap
Proposed Change: $30 per return / $75,000 cap
Time of Filing (Small Filers): 31 days late - August 1st
Current Law: $30 per return / $50,000 cap
Proposed Law: $60 per return / $200,000 cap
Time of Filing (Small Filers): After August 1st
Current Law: $50 per return / $100,000 cap
Proposed Law: $100 per return / $500,000 cap
Time of Filing (Small Filers): Intentional disregard
Current Law: $100 per return / no cap
Proposed Law: $250 per return / no cap
According to JCT, this provision would increase revenue by $421 million over 10 years.
Treatment of Securities of a Controlled Corporation Exchanged for Assets in Certain Reorganizations:
The bill would change the rules for treatment of securities transferred from a controlled-corporation for assets during reorganization. Under current law, shareholders and corporations are generally allowed to defer tax on gains relating to some corporate reorganizations such as certain mergers and spin-offs, provided the reorganization meets numerous requirements in the Code and regulations. Under the bill, no loss would be recognized if a corporation transfers assets for stock during reorganization. However, the sum of gains transferred and not distributed in the reorganization would be immediately recognized for tax purposes. According to JCT, this provision would increase taxes by $218 million over ten years.
COST
According to JCT, this bill would increase revenue by $149 million over 10 years.
Thursday, July 29, 2010
The debate on HR 5297 continues since...
If any Republican staff people in the Senate want to respond to this I will send it to the over 4000 small businesses and over small business associations that receive this email
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
CQ POLITICS NEWS
July 29, 2010 – 1:11 p.m.
Republican objections blocked progress on a small-business bill in the Senate Thursday, leaving the measure’s future in doubt.
An effort by Majority Leader Harry Reid , D-Nev., to limit debate on a substitute amendment to the bill fell short of the 60 votes needed as all 41 Republicans united against it.
The vote diminished but did not entirely extinguish prospects for passage of the bill before the August recess. Democrats and President Obama continue to urge the Senate to act quickly.
Republicans complained that they were not given a fair chance to get votes on amendments. Democrats on Wednesday night had offered them votes on three amendments, but Minority Leader Mitch McConnell , R-Ky., wanted to consider eight amendments, including votes on the estate tax, nuclear-plant loan guarantees and border security.
“My frustration is pretty high,” Reid said after further talks with McConnell failed to produce a deal.
McConnell insisted the bill was not dead. “We’re getting closer,” he said of his negotiations with Reid. “There’s a chance of significant progress very soon.”
Reid remained skeptical. “I don’t think they want an agreement. We agreed to everything they wanted,” he said.
The measure pending before the Senate would create a $30 billion small business lending fund, extend $12 billion in tax breaks and enhance federal programs designed to help small businesses.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
CQ POLITICS NEWS
July 29, 2010 – 1:11 p.m.
Republican objections blocked progress on a small-business bill in the Senate Thursday, leaving the measure’s future in doubt.
An effort by Majority Leader Harry Reid , D-Nev., to limit debate on a substitute amendment to the bill fell short of the 60 votes needed as all 41 Republicans united against it.
The vote diminished but did not entirely extinguish prospects for passage of the bill before the August recess. Democrats and President Obama continue to urge the Senate to act quickly.
Republicans complained that they were not given a fair chance to get votes on amendments. Democrats on Wednesday night had offered them votes on three amendments, but Minority Leader Mitch McConnell , R-Ky., wanted to consider eight amendments, including votes on the estate tax, nuclear-plant loan guarantees and border security.
“My frustration is pretty high,” Reid said after further talks with McConnell failed to produce a deal.
McConnell insisted the bill was not dead. “We’re getting closer,” he said of his negotiations with Reid. “There’s a chance of significant progress very soon.”
Reid remained skeptical. “I don’t think they want an agreement. We agreed to everything they wanted,” he said.
The measure pending before the Senate would create a $30 billion small business lending fund, extend $12 billion in tax breaks and enhance federal programs designed to help small businesses.
Summary of Changes Made in the Substitute Amendment - July 27, 2010
Here is additional Information on the Small Business Jobs Act:
Elimination of Advanced EITC. Presently, low- and moderate-income individuals may qualify for a refundable earned income tax credit (EITC). Individuals have the option of requesting advanced payments of the EITC throughout the year by having their payments of withheld income reduced by their employer. The advanced EITC payment option, however, is not popular and only about three percent of eligible EITC recipients choose this option. The substitute eliminates the advanced EITC payment option. The provision is estimated to raise $1.131 billion over 10 years.
Addition of Small Business Lending Fund. The substitute authorizes the creation of the Small Business Lending Fund to provide Treasury with the ability to purchase preferred stock and other debt instruments from eligible financial institutions with less than $10 billion in total assets. Eligible institutions include insured depositories, bank and savings and loan holding companies, and certain community development loan funds. Eligible institutions with less than $1 billion in total assets can apply to receive investments of up to five percent of their risk-weighted assets. Eligible institutions between $1 billion and $10 billion in total assets can receive investments of up to three percent of risk-weighted assets. Participating institutions will pay a five percent dividend rate on the preferred stock, but this rate can be reduced to as low as one percent if a bank demonstrates a 10 percent increase in small business lending relative to a baseline set using the four quarters prior to enactment. The dividend rate is increased to seven percent after two years, if the bank does not increase its small business lending. To encourage timely repayment, the rate increases to nine percent after four and a half years. Treasury’s authority to make capital investments under the program is terminated one year after the date of enactment. This provision is estimated to raise $1.1 billion over ten years.
Addition of the Export Promotion Act. The substitute would assist U.S. small and mid-sized businesses that are looking to export their products but do not have the resources or know-how to find new international customers. First, it increases the activities and staffing of the Department of Commerce in carrying out its mission to promote U.S. exports. Second, it authorizes increased funding for export grants available to industry associations and non-profit institutions. Finally, the amendment requires that decisions to fund manufacturing and innovation grants include exporting potential as one of the application considerations. Based on estimates provided by the Department of Commerce, this legislation is projected to create over 43,000 jobs once the funds are appropriated. This change has no cost associated with it.
Addition of Agriculture Disaster Relief. The substitute would provide assistance for 2009 agricultural losses for crops, including specialty crops, livestock, sugar, aquaculture, cottonseed, and poultry. In addition to approximately $1 billion in supplemental direct payments to producers with a minimum five percent loss in production, the bill would provide $42 million in cottonseed assistance, $25 million in aquaculture assistance, $21 million to a Hawaiian sugar cane cooperative, $75 million to poultry producers, $50 million for livestock producers, and $300 million for specialty crop producers. The program is designed for payments to be issued quickly through USDA and State block grants. States may continue to receive Conservation Reserve Program payments for the purposes of school funding. This provision is estimated to cost $1.4 79 billion over ten years.
Addition of a Provision to Reallocate Future Spending. The substitute reallocates $500 million of future spending allotted in the Recovery Act and returns Supplemental Nutrition Assistance Program (SNAP), or food stamps, benefits to the levels that individuals would have received in 2017 under pre-Recovery Act law, effective August 31, 2017. This modification reduces the cost of the bill by $500 million over ten years.
Use of Predictive Modeling and Other Analytics Technologies to Identify and Prevent Waste, Fraud and Abuse in the Medicare Fee-for Service Program. The substitute would require the Secretary to contract with private companies to conduct predictive modeling and other analytics technologies to identify and prevent payment of improper claims submitted under Parts A and B of Medicare. The Secretary would be required to identify the ten states that have the highest risk of waste, fraud and abuse in the Medicare program, and for one year, predictive modeling and other analytics technologies would be used to identify and stop fraudulent claims in these states. After this initial year, the Inspector General of the Department of HHS (HHS OIG) would report to Congress on the actual savings to the Medicare fee-for-service during the preceding year, projected future savings to the program as a result of the use of these technologies, and the return on investments as a result of the predictive analytics technologies. The Secretary would be required to report to Congress on the effect, if any, the technologies have on Medicare beneficiaries and providers. If the HHS OIG certifies more than nominal savings from the use of the technology, its use would be expanded to ten additional states for another year. After the second year of use, the Secretary and the HHS OIG, would conduct a second analysis and certification. If this analysis and certification are positive, the technologies would be expanded to the Medicare fee-forservice program in every state for an additional year. Finally, after that additional year, a third analysis would be conducted, and if positive, the Secretary would expand the use of the technologies to Medicaid and the Children’s Health Insurance Program (CHIP). If during any evaluation and certification, the HHS OIG does not certify savings, a moratorium would be imposed on the expansion of the technologies for one year. This change increases the cost of the bill by $930 million over ten years.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
Elimination of Advanced EITC. Presently, low- and moderate-income individuals may qualify for a refundable earned income tax credit (EITC). Individuals have the option of requesting advanced payments of the EITC throughout the year by having their payments of withheld income reduced by their employer. The advanced EITC payment option, however, is not popular and only about three percent of eligible EITC recipients choose this option. The substitute eliminates the advanced EITC payment option. The provision is estimated to raise $1.131 billion over 10 years.
Addition of Small Business Lending Fund. The substitute authorizes the creation of the Small Business Lending Fund to provide Treasury with the ability to purchase preferred stock and other debt instruments from eligible financial institutions with less than $10 billion in total assets. Eligible institutions include insured depositories, bank and savings and loan holding companies, and certain community development loan funds. Eligible institutions with less than $1 billion in total assets can apply to receive investments of up to five percent of their risk-weighted assets. Eligible institutions between $1 billion and $10 billion in total assets can receive investments of up to three percent of risk-weighted assets. Participating institutions will pay a five percent dividend rate on the preferred stock, but this rate can be reduced to as low as one percent if a bank demonstrates a 10 percent increase in small business lending relative to a baseline set using the four quarters prior to enactment. The dividend rate is increased to seven percent after two years, if the bank does not increase its small business lending. To encourage timely repayment, the rate increases to nine percent after four and a half years. Treasury’s authority to make capital investments under the program is terminated one year after the date of enactment. This provision is estimated to raise $1.1 billion over ten years.
Addition of the Export Promotion Act. The substitute would assist U.S. small and mid-sized businesses that are looking to export their products but do not have the resources or know-how to find new international customers. First, it increases the activities and staffing of the Department of Commerce in carrying out its mission to promote U.S. exports. Second, it authorizes increased funding for export grants available to industry associations and non-profit institutions. Finally, the amendment requires that decisions to fund manufacturing and innovation grants include exporting potential as one of the application considerations. Based on estimates provided by the Department of Commerce, this legislation is projected to create over 43,000 jobs once the funds are appropriated. This change has no cost associated with it.
Addition of Agriculture Disaster Relief. The substitute would provide assistance for 2009 agricultural losses for crops, including specialty crops, livestock, sugar, aquaculture, cottonseed, and poultry. In addition to approximately $1 billion in supplemental direct payments to producers with a minimum five percent loss in production, the bill would provide $42 million in cottonseed assistance, $25 million in aquaculture assistance, $21 million to a Hawaiian sugar cane cooperative, $75 million to poultry producers, $50 million for livestock producers, and $300 million for specialty crop producers. The program is designed for payments to be issued quickly through USDA and State block grants. States may continue to receive Conservation Reserve Program payments for the purposes of school funding. This provision is estimated to cost $1.4 79 billion over ten years.
Addition of a Provision to Reallocate Future Spending. The substitute reallocates $500 million of future spending allotted in the Recovery Act and returns Supplemental Nutrition Assistance Program (SNAP), or food stamps, benefits to the levels that individuals would have received in 2017 under pre-Recovery Act law, effective August 31, 2017. This modification reduces the cost of the bill by $500 million over ten years.
Use of Predictive Modeling and Other Analytics Technologies to Identify and Prevent Waste, Fraud and Abuse in the Medicare Fee-for Service Program. The substitute would require the Secretary to contract with private companies to conduct predictive modeling and other analytics technologies to identify and prevent payment of improper claims submitted under Parts A and B of Medicare. The Secretary would be required to identify the ten states that have the highest risk of waste, fraud and abuse in the Medicare program, and for one year, predictive modeling and other analytics technologies would be used to identify and stop fraudulent claims in these states. After this initial year, the Inspector General of the Department of HHS (HHS OIG) would report to Congress on the actual savings to the Medicare fee-for-service during the preceding year, projected future savings to the program as a result of the use of these technologies, and the return on investments as a result of the predictive analytics technologies. The Secretary would be required to report to Congress on the effect, if any, the technologies have on Medicare beneficiaries and providers. If the HHS OIG certifies more than nominal savings from the use of the technology, its use would be expanded to ten additional states for another year. After the second year of use, the Secretary and the HHS OIG, would conduct a second analysis and certification. If this analysis and certification are positive, the technologies would be expanded to the Medicare fee-forservice program in every state for an additional year. Finally, after that additional year, a third analysis would be conducted, and if positive, the Secretary would expand the use of the technologies to Medicaid and the Children’s Health Insurance Program (CHIP). If during any evaluation and certification, the HHS OIG does not certify savings, a moratorium would be imposed on the expansion of the technologies for one year. This change increases the cost of the bill by $930 million over ten years.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
July 21, 2010 - Summary of the Substitute Amendment to the Small Business Jobs Act2
Sorry for the long email but please find below provisions of S 5297. This hopefully will be coming up in the Senate today. The Dems have agreed to take amendments and one amendment is to repeal of the 1099 requirement. It probably will be defeated by the Dems.
Regardless of what happens on the 1099 issue the bill can be voted on today. If the bill passes we are hoping that the House will not ask for a conference committee. As you will recall the House has passed a bill. If they do ask for a reconcile committee we probably won’t see anything move forward until September. The ideal situation is for the House to accept the Senate bill and pass it tomorrow.
A lot of ifs. I will see what happens today and may get back to you asking you to contact your House member and ask them to support the Senate bill.
Sharon Bernstein of the LA Times is writing a piece on this legislation and is looking for someone who is working with the SBA for a 7a or 504 loan. As of yesterday there were over 700 loans in the queue. Are any of you in the queue? Have any of you received an SBA loan since the end of May and paid the SBA fees? It would be best if you were in the LA area but if you meet the above criteria please contact Sharon at 213-237-7962.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
Summary of the Small Business Jobs ActJuly 21, 2010
Provisions to Provide Access to Capital
100% Exclusion of Small Business Capital Gains. Generally, non-corporate taxpayers may exclude 50 percent of the gain from the sale of certain small business stock acquired at original issue and held for more than five years. For stock acquired after February 17, 2009 and before January 1, 2011, the exclusion is increased to 75 percent. At the time of sale, however, 28% of the excluded gain will be treated as a tax preference item subject to the alternative minimum tax (AMT). Qualifying small business stock is from a C corporation whose gross assets do not exceed $50 million (including the proceeds received from the issuance of the stock) and who meets a specific active business requirement. The amount of gain eligible for the exclusion is limited to the greater of ten times the taxpayer’s basis in the stock or $10 million of gain from stock in that corporation. This bill would temporarily increase further the amount of the exclusion to 100 percent of the gain from the sale of qualifying small business stock that is acquired after the date of enactment in 2010 and held for more than five years. Additionally, the bill eliminates the AMT preference item attributable for that sale. This provision is estimated to cost $517 million over ten years.
General Business Credit Carried Back Five Years. Under current law, a business’ unused general business credit may generally be carried back to offset taxes paid in the previous year, and the remaining amount may be carried forward for 20 years to offset future tax liabilities. This bill extends the one year carryback for general business credits to five years for certain small businesses. This applies to general business credits for those sole proprietorships, partnerships and non-publicly traded corporations with $50 million or less in average annual gross receipts for the prior three years. This provision is estimated to cost $107 million over ten years.
General Business Credit Not Subject to AMT. Under the Alternative Minimum Tax (AMT), taxpayers may generally only claim allowable general business credits against their regular tax liability, and only to the extent that their regular tax liability exceeds their AMT liability. A few credits may be used to offset AMT liability, such as the credit for small business employee health insurance expense. This bill allows certain small businesses to use all types of general business credits against their AMT. This applies to general business credits for those sole proprietorships, partnerships and non-publicly traded corporations with $50 million or less in average annual gross receipts for the prior three years. This provision is estimated to cost $977 million over ten years.
S Corp Holding Period. Generally, a C corporation converting to an S corporation must hold onto any appreciated assets for 10 years following its conversion or face a business-level tax imposed on the built-in gain at the highest corporate rate of 35 percent. This holding period is reduced where the 7th taxable year in the holding period preceded the taxable year beginning in 2009 or 2010. This bill temporarily shortens the holding period of assets subject to the built-in gains tax to 5 years if the 5th taxable year in the holding period precedes the taxable year beginning in 2011. This provision is estimated to cost $70 million over ten years.
Increase Small Business Administration (SBA) Loan Limits. This provision increases 7(a) loan limits from $2 million to $5 million, 504 loans from $1.5 million to $5.5 million, and microloans from $35,000 to $50,000. It also increases the government guarantee on 7(a) loan limits, while providing the elimination of borrower fees on 7(a) and 504 loans through December 31, 2010. It increases the 7(a) Express Loans from $300,000 to $1 million to increase working capital to small businesses. The package also includes Intermediary Lending Pilot program, which allows the SBA to make direct loans to eligible nonprofit lending intermediaries, in turn allowing them to make loans to new or growing small businesses. SBA has estimated that the loan increase would increase lending to small businesses by $5 billion in the first year. This provision is estimated to cost $26 million over two years.
Extend Elimination of Small Business Administration (SBA) Loan Fees. This provision extends the American Recovery and Reinvestment Act small business lending program that eliminates the fees normally charged for loans through the SBA 7(a) and 504 loan programs and increases the government guarantees on 7(a) loans from 75% to 90%. Since its creation, the program has supported over $26 billion in small business lending, which has helped to create or retain over 650,000 jobs. This provision was added in the substitute amendment introduced on July 21, 2010. This provision is estimated to cost $505 million over ten years.
State Small Business Credit Initiative (SSBCI). The bill provides $1.5 billion in grants to States to support small business lending programs. States will apply for the funds to be used for approved programs that leverage private lenders to extend greater credit to small businesses and manufacturers. The program allows States to build upon successful models for state small business programs, including capital access, loan participation, collateral support, State-run venture capital, and credit guarantee programs. Funds are allocated to the States using formulas based on certain State employment and unemployment rate data. States have nine months to apply for the program. If the state does not apply, the largest municipalities of the states can apply. This provision was increased by $600 million in the substitute amendment introduced on July 21, 2010. This provision is estimated to cost $1.5 billion over ten years.
Provisions to Encourage Investment
Increase of Section 179 Expensing and Expansion to Certain Real Property. Under current law, taxpayers may elect to write-off the costs of certain tangible personal property that is purchased for use in the active conduct of a trade or business in the year of acquisition in lieu of recovering these costs over time through depreciation. For the taxable year beginning in 2010, taxpayers may write-off up to $250,000 of these capital expenditures subject to a phase-out once these capital expenditures exceed $800,000. After 2010, the thresholds revert to $25,000 and $200,000, respectively. This bill would increase the thresholds to $500,000 and $2,000,000 for the taxable years beginning in 2010 and 2011. Within those thresholds, this bill would allow taxpayers to expense up to $250,000 of the cost of qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property. This provision is estimated to cost $2.2 billion over ten years.
Extension of Bonus Depreciation. Businesses are allowed to recover the cost of capital expenditures over time according to a depreciation schedule. Congress temporarily allowed businesses to recover the costs of certain capital expenditures made in 2008 and 2009 more quickly than under ordinary depreciation schedules by permitting those businesses to immediately write-off 50 percent of the cost of depreciable property placed in service in those years. This bill extends the additional, first-year 50 percent depreciation for qualifying property purchased and placed in service in 2010. This provision is estimated to cost $5.5 billion over ten years.
Special Rule for Long-Term Contract Accounting. This provision decouples bonus depreciation from allocation of contract costs under the percentage of completion accounting method rules for assets with a depreciable life of seven years or less in order to allow contractors that do not complete contracts within the same year in which they are entered into to benefit from bonus depreciation. This provision was added in the substitute amendment introduced on July 21, 2010. This provision is estimated to have no cost over ten years.
Provisions to Promote Entrepreneurship
Increased Deduction for Start-up Expenditures. Under current law, taxpayers may deduct up to $5,000 in trade or business start-up expenditures. The amount that a business may deduct is reduced by the amount by which start-up expenditures exceed $50,000. Start-up expenditures are defined as expenses paid or incurred in connection with investigating or creating an active trade or business, which would be deductible if paid or incurred in connection with the operation of an existing trade or business. For the taxable year beginning in 2010, this bill would temporarily increase the amount of start-up expenditures that may be deducted to $10,000 subject to a $60,000 phase-out threshold. This provision is estimated to cost $230 million over ten years.
Small Business Export Promotion. The Office of the United States Trade Representative (USTR) plays an important role in promoting U.S. exports, and recently increased its focus on small business export promotion in particular. USTR has done so in several respects, including the creation of the position of Assistant USTR for Small Business, Market Access, and Industrial Competitiveness within USTR. This official will help ensure that USTR’s trade policy addresses the challenges facing smaller U.S. exporters and promotes global export opportunities for them. The bill authorizes funds for USTR’s market access and trade enforcement activities targeted at helping small business increase market access and ensure a level playing field on which to sell their U.S. made goods. This provision has no cost associated with it.
Enhanced Small Business Trade Opportunities. This provision improves the SBA’s trade and export finance programs and elevates the Office of International Trade within the SBA. It adds Export Finance Specialists to the SBA’s trade counseling programs. It also establishes the State Export Promotion Grant Program (STEP), which would increase the number of small businesses that export. In addition, it improves coordination between federal and state agencies and SBA resource partners. This leverages more than $1 billion in export capitol for small businesses, which will create or save as many as 40,000 – 50,000 jobs in 2010. This provision is estimated to cost $58 million over two years.
Improved Small Business Contracting. Removes the red tape and closes loopholes that too often put government work into the hands of multinational corporations instead of Main Street businesses. Increasing contracts to small businesses by just 2 percent can create more than 60,000 jobs. This legislation also provides for a periodic review of small business size standards to ensure that size indicators are consistent with inflation and industry growth of small businesses. It establishes accountability of large business prime contractors for prompt payment to small business subcontractors. This provision is estimated to cost $142 million over two years.
Relief for Community Partners. This provision allows SBA to waive or reduce the non-federal share of its funding requirements for up to one year, through fiscal year 2012. It also gives relief to Women’s Business Centers (WBCs) and microloan intermediaries, which provide assistance to underserved communities to start and grow small businesses. The SBA estimates that the microloan program will create or save more than 10,000 jobs in Fiscal Year 2011. This legislation also provides an additional $50 million for the Small Business Development Centers to provide technical assistance to small business owners and entrepreneurs. This provision is estimated to cost $50 million for one year.
Provisions to Promote Small Business Fairness
Modify Section 6707A Penalty. The bill revises section 6707A of the Internal Revenue Code to make the penalty for failing to disclose a reportable transaction proportionate to the underlying tax savings. The penalty for failure to disclose reportable transactions to the IRS would be set at 75 percent of the tax benefit received. Reportable transactions are defined as investments in transactions that the IRS has identified as listed tax shelters or that have characteristics of tax shelters, including large losses or confidentiality agreements. The minimum penalty under this bill is $10,000 for corporations and $5,000 for individuals, and the maximum penalty is $200,000 for corporations and $100,000 for individuals. The bill also requires the IRS to provide an annual report to the Senate Finance Committee and to the House Ways and Means Committee giving an account of certain tax-shelter related penalties asserted during the year. This provision is estimated to cost $176 million over ten years.
Deductibility of Health Insurance for the Purposes of Calculating Self-Employment Tax. Under current law, business owners are not permitted to deduct the cost of health insurance for themselves and their family members for purposes of calculating self-employment tax. This provision would allow business owners to deduct the cost of health insurance incurred in 2010 for themselves and their family members in the calculation of their 2010 self-employment tax. This provision is estimated to cost $1.96 billion over ten years.
Enhancements to Small Business Contracting Parity Programs. This provision removes the priority one contracting program has over another, making clear that no single restricted competition program has priority over another. It places the small business contracting programs, HUBZone, 8(a), Service-Disabled Veterans and Women-Owned Businesses on a level playing field when competing for Federal contracts. This provision has no cost associated with it.
Improvements to Disaster Recovery to Include Aquaculture. Currently, the SBA excludes aquaculture businesses from receiving SBA Economic Injury Disaster Loans (EIDL). This section would allow SBA, provided it does not duplicate other Federal disaster programs for that disaster, to make economic injury disaster loans to these businesses. This provision has no cost associated with it.
Require Federal Agencies to Expand Their Assessments of Economic Effects on Small Businesses. This provision strengthens the Regulatory Flexibility Act by requiring agencies to respond to the SBA Chief Counsel of Advocacy’s comments in the final rule. It also seeks more independence for the Office of Advocacy by mandating a separate line item in the SBA’s annual budget. This provision has no cost associated with it.
Remove Cellular Phones from “Listed Property.” This provision would “delist” cell phones so their cost can be deducted or depreciated like other business property, without onerous recordkeeping requirements. This provision was added in the substitute amendment introduced on July 21, 2010. This provision is estimated to cost $410 million over ten years.
Offsets – Reducing the Tax Gap
Require Information Reporting for Rental Property Expense Payments. The bill requires persons receiving rental income from real property to file information returns to the IRS and to service providers reporting payments of $600 or more during the year for rental property expenses. In general, there is an exception for individuals renting their principal residences, including active members of the military, from the reporting requirements. This provision is estimated to raise $2.5 billion over ten years.
Increase Penalties for Failure to File Information Returns. The bill increases penalties for failure to timely file information returns to the IRS. The first-tier penalty is increased from $15 to $30, and the calendar year maximum is increased from $75,000 to $250,000. The second-tier penalty is increased from $30 to $60, and the calendar year maximum is increased from $150,000 to $500,000. The third-tier penalty is increased from $50 to $100, and the calendar year maximum is increased from $250,000 to $1.5 million. For small filers, the calendar year maximum is increased from $25,000 to $75,000 for the first-tier penalty, from $50,000 to $200,000 for the second-tier penalty, and from $100,000 to $500,000 for the third-tier penalty. The minimum penalty for each failure due to intentional disregard is increased from $100 to $250. The penalty amounts are adjusted every five years for inflation. Penalties for failure to file information returns to payees are similarly increased. This provision is estimated to raise $421 million over ten years.
Application of Continuous Levy to Tax Liabilities of Certain Federal Contractors. Generally, before the IRS can issue a levy for an unpaid Federal tax liability, it must give the taxpayer an opportunity for a collection due process (CDP) hearing. Prior to the Federal government making disbursements to Federal contractors, an automated check for a Federal tax liability occurs. When such a liability is identified, the IRS issues a CDP notice to the contractor but cannot levy on payments to the contractor until the CDP requirements are complete. The bill allows IRS to issue levies prior to a CDP hearing on Federal tax liabilities of Federal contractors. It also provides the taxpayer with an opportunity for a CDP hearing within a reasonable time after a levy is issued. This provision is estimated to raise $1.1 billion over ten years.
Offsets – Promoting Retirement Preparation
Allow Participants in Governmental 457 Plans to Treat Elective Deferrals as Roth Contributions. Beginning in 2011, the bill would allow retirement savings plans sponsored by state and local governments (governmental 457(b) plans) to include Roth accounts, which are currently available only in 401(k) and 403(b) plans and will be available in the federal Thrift Savings Plan in 2011. Contributions to Roth accounts are made on an after-tax basis, but distributions of both principal and earnings are generally tax-free. This provision is estimated to raise $506 million over ten years.
Allow Rollovers from Elective Deferral Plans to Roth Designated Accounts. The bill would allow 401(k), 403(b), and governmental 457(b) plans to permit participants to roll their pre-tax account balances into a Roth account. The amount of the rollover would be includible in taxable income except to the extent it is the return of after-tax contributions. If the rollover is made in 2010, the participant can elect to pay the tax in 2011 and 2012. Plans would be able to allow these rollovers immediately upon enactment. This provision is estimated to raise $5.1 billion over ten years.
Permit Partial Annuitization of a Nonqualified Annuity Contract. The substitute would allow holders of nonqualified annuities (that is, annuity contracts held outside of a tax-qualified retirement plan or IRA) to elect to receive a portion of the contract in the form of a stream of annuity contracts, leaving the remainder of the contract to accumulate income on a tax-deferred basis. This provision was added in the substitute amendment introduced on July 21, 2010. This provision is estimated to raise $956 million over ten years.
Offsets – Closing Unintended Loopholes
Crude Tall Oil Ineligible for Cellulosic Biofuel Producer Credit. In 2008, Congress enacted a $1.01 per gallon tax credit for the production of biofuel from cellulosic feedstocks in order to encourage the development of new production capacity for biofuels that are not derived from food source materials. Some taxpayers are seeking to claim the cellulosic biofuel tax credit for processed fuels that are highly corrosive, such as crude tall oil (another waste by-product of the paper manufacturing process). The bill limits eligibility for the tax credit to fuels that are not highly corrosive (i.e., fuels that could be used in a car engine or in a home heating application). This provision is estimated to raise $1.8 billion over ten years.
Source Rules on Guarantees. Under current law, the treatment of guarantee fees under the source rules is unclear. If guarantee fees are sourced like services, they are sourced according to the location in which the services were performed. If the guarantee fees are sourced like interest, they are sourced by reference to the country of residence of the payor. A recent court case determined that guarantee fees should be sourced like services. Sourcing guarantee fees in a manner similar to services would permit U.S. subsidiaries of foreign corporations to engage in earning stripping transactions by making deductible payments to foreign affiliates (thereby reducing their U.S. income tax liability) without the imposition of U.S. withholding tax on the payment. The substitute would provide that amounts received directly or indirectly for guarantees of indebtedness of the payor issued after the date of enactment will be sourced like interest and, as a result, if paid by U.S. taxpayers to foreign persons will generally be subject to withholding tax. No inference is intended with respect to the treatment of guarantees issued before the date of enactment. This provision was added in the substitute amendment introduced on July 21, 2010. This provision is estimated to raise $2 billion over ten years.
Regardless of what happens on the 1099 issue the bill can be voted on today. If the bill passes we are hoping that the House will not ask for a conference committee. As you will recall the House has passed a bill. If they do ask for a reconcile committee we probably won’t see anything move forward until September. The ideal situation is for the House to accept the Senate bill and pass it tomorrow.
A lot of ifs. I will see what happens today and may get back to you asking you to contact your House member and ask them to support the Senate bill.
Sharon Bernstein of the LA Times is writing a piece on this legislation and is looking for someone who is working with the SBA for a 7a or 504 loan. As of yesterday there were over 700 loans in the queue. Are any of you in the queue? Have any of you received an SBA loan since the end of May and paid the SBA fees? It would be best if you were in the LA area but if you meet the above criteria please contact Sharon at 213-237-7962.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
Summary of the Small Business Jobs ActJuly 21, 2010
Provisions to Provide Access to Capital
100% Exclusion of Small Business Capital Gains. Generally, non-corporate taxpayers may exclude 50 percent of the gain from the sale of certain small business stock acquired at original issue and held for more than five years. For stock acquired after February 17, 2009 and before January 1, 2011, the exclusion is increased to 75 percent. At the time of sale, however, 28% of the excluded gain will be treated as a tax preference item subject to the alternative minimum tax (AMT). Qualifying small business stock is from a C corporation whose gross assets do not exceed $50 million (including the proceeds received from the issuance of the stock) and who meets a specific active business requirement. The amount of gain eligible for the exclusion is limited to the greater of ten times the taxpayer’s basis in the stock or $10 million of gain from stock in that corporation. This bill would temporarily increase further the amount of the exclusion to 100 percent of the gain from the sale of qualifying small business stock that is acquired after the date of enactment in 2010 and held for more than five years. Additionally, the bill eliminates the AMT preference item attributable for that sale. This provision is estimated to cost $517 million over ten years.
General Business Credit Carried Back Five Years. Under current law, a business’ unused general business credit may generally be carried back to offset taxes paid in the previous year, and the remaining amount may be carried forward for 20 years to offset future tax liabilities. This bill extends the one year carryback for general business credits to five years for certain small businesses. This applies to general business credits for those sole proprietorships, partnerships and non-publicly traded corporations with $50 million or less in average annual gross receipts for the prior three years. This provision is estimated to cost $107 million over ten years.
General Business Credit Not Subject to AMT. Under the Alternative Minimum Tax (AMT), taxpayers may generally only claim allowable general business credits against their regular tax liability, and only to the extent that their regular tax liability exceeds their AMT liability. A few credits may be used to offset AMT liability, such as the credit for small business employee health insurance expense. This bill allows certain small businesses to use all types of general business credits against their AMT. This applies to general business credits for those sole proprietorships, partnerships and non-publicly traded corporations with $50 million or less in average annual gross receipts for the prior three years. This provision is estimated to cost $977 million over ten years.
S Corp Holding Period. Generally, a C corporation converting to an S corporation must hold onto any appreciated assets for 10 years following its conversion or face a business-level tax imposed on the built-in gain at the highest corporate rate of 35 percent. This holding period is reduced where the 7th taxable year in the holding period preceded the taxable year beginning in 2009 or 2010. This bill temporarily shortens the holding period of assets subject to the built-in gains tax to 5 years if the 5th taxable year in the holding period precedes the taxable year beginning in 2011. This provision is estimated to cost $70 million over ten years.
Increase Small Business Administration (SBA) Loan Limits. This provision increases 7(a) loan limits from $2 million to $5 million, 504 loans from $1.5 million to $5.5 million, and microloans from $35,000 to $50,000. It also increases the government guarantee on 7(a) loan limits, while providing the elimination of borrower fees on 7(a) and 504 loans through December 31, 2010. It increases the 7(a) Express Loans from $300,000 to $1 million to increase working capital to small businesses. The package also includes Intermediary Lending Pilot program, which allows the SBA to make direct loans to eligible nonprofit lending intermediaries, in turn allowing them to make loans to new or growing small businesses. SBA has estimated that the loan increase would increase lending to small businesses by $5 billion in the first year. This provision is estimated to cost $26 million over two years.
Extend Elimination of Small Business Administration (SBA) Loan Fees. This provision extends the American Recovery and Reinvestment Act small business lending program that eliminates the fees normally charged for loans through the SBA 7(a) and 504 loan programs and increases the government guarantees on 7(a) loans from 75% to 90%. Since its creation, the program has supported over $26 billion in small business lending, which has helped to create or retain over 650,000 jobs. This provision was added in the substitute amendment introduced on July 21, 2010. This provision is estimated to cost $505 million over ten years.
State Small Business Credit Initiative (SSBCI). The bill provides $1.5 billion in grants to States to support small business lending programs. States will apply for the funds to be used for approved programs that leverage private lenders to extend greater credit to small businesses and manufacturers. The program allows States to build upon successful models for state small business programs, including capital access, loan participation, collateral support, State-run venture capital, and credit guarantee programs. Funds are allocated to the States using formulas based on certain State employment and unemployment rate data. States have nine months to apply for the program. If the state does not apply, the largest municipalities of the states can apply. This provision was increased by $600 million in the substitute amendment introduced on July 21, 2010. This provision is estimated to cost $1.5 billion over ten years.
Provisions to Encourage Investment
Increase of Section 179 Expensing and Expansion to Certain Real Property. Under current law, taxpayers may elect to write-off the costs of certain tangible personal property that is purchased for use in the active conduct of a trade or business in the year of acquisition in lieu of recovering these costs over time through depreciation. For the taxable year beginning in 2010, taxpayers may write-off up to $250,000 of these capital expenditures subject to a phase-out once these capital expenditures exceed $800,000. After 2010, the thresholds revert to $25,000 and $200,000, respectively. This bill would increase the thresholds to $500,000 and $2,000,000 for the taxable years beginning in 2010 and 2011. Within those thresholds, this bill would allow taxpayers to expense up to $250,000 of the cost of qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property. This provision is estimated to cost $2.2 billion over ten years.
Extension of Bonus Depreciation. Businesses are allowed to recover the cost of capital expenditures over time according to a depreciation schedule. Congress temporarily allowed businesses to recover the costs of certain capital expenditures made in 2008 and 2009 more quickly than under ordinary depreciation schedules by permitting those businesses to immediately write-off 50 percent of the cost of depreciable property placed in service in those years. This bill extends the additional, first-year 50 percent depreciation for qualifying property purchased and placed in service in 2010. This provision is estimated to cost $5.5 billion over ten years.
Special Rule for Long-Term Contract Accounting. This provision decouples bonus depreciation from allocation of contract costs under the percentage of completion accounting method rules for assets with a depreciable life of seven years or less in order to allow contractors that do not complete contracts within the same year in which they are entered into to benefit from bonus depreciation. This provision was added in the substitute amendment introduced on July 21, 2010. This provision is estimated to have no cost over ten years.
Provisions to Promote Entrepreneurship
Increased Deduction for Start-up Expenditures. Under current law, taxpayers may deduct up to $5,000 in trade or business start-up expenditures. The amount that a business may deduct is reduced by the amount by which start-up expenditures exceed $50,000. Start-up expenditures are defined as expenses paid or incurred in connection with investigating or creating an active trade or business, which would be deductible if paid or incurred in connection with the operation of an existing trade or business. For the taxable year beginning in 2010, this bill would temporarily increase the amount of start-up expenditures that may be deducted to $10,000 subject to a $60,000 phase-out threshold. This provision is estimated to cost $230 million over ten years.
Small Business Export Promotion. The Office of the United States Trade Representative (USTR) plays an important role in promoting U.S. exports, and recently increased its focus on small business export promotion in particular. USTR has done so in several respects, including the creation of the position of Assistant USTR for Small Business, Market Access, and Industrial Competitiveness within USTR. This official will help ensure that USTR’s trade policy addresses the challenges facing smaller U.S. exporters and promotes global export opportunities for them. The bill authorizes funds for USTR’s market access and trade enforcement activities targeted at helping small business increase market access and ensure a level playing field on which to sell their U.S. made goods. This provision has no cost associated with it.
Enhanced Small Business Trade Opportunities. This provision improves the SBA’s trade and export finance programs and elevates the Office of International Trade within the SBA. It adds Export Finance Specialists to the SBA’s trade counseling programs. It also establishes the State Export Promotion Grant Program (STEP), which would increase the number of small businesses that export. In addition, it improves coordination between federal and state agencies and SBA resource partners. This leverages more than $1 billion in export capitol for small businesses, which will create or save as many as 40,000 – 50,000 jobs in 2010. This provision is estimated to cost $58 million over two years.
Improved Small Business Contracting. Removes the red tape and closes loopholes that too often put government work into the hands of multinational corporations instead of Main Street businesses. Increasing contracts to small businesses by just 2 percent can create more than 60,000 jobs. This legislation also provides for a periodic review of small business size standards to ensure that size indicators are consistent with inflation and industry growth of small businesses. It establishes accountability of large business prime contractors for prompt payment to small business subcontractors. This provision is estimated to cost $142 million over two years.
Relief for Community Partners. This provision allows SBA to waive or reduce the non-federal share of its funding requirements for up to one year, through fiscal year 2012. It also gives relief to Women’s Business Centers (WBCs) and microloan intermediaries, which provide assistance to underserved communities to start and grow small businesses. The SBA estimates that the microloan program will create or save more than 10,000 jobs in Fiscal Year 2011. This legislation also provides an additional $50 million for the Small Business Development Centers to provide technical assistance to small business owners and entrepreneurs. This provision is estimated to cost $50 million for one year.
Provisions to Promote Small Business Fairness
Modify Section 6707A Penalty. The bill revises section 6707A of the Internal Revenue Code to make the penalty for failing to disclose a reportable transaction proportionate to the underlying tax savings. The penalty for failure to disclose reportable transactions to the IRS would be set at 75 percent of the tax benefit received. Reportable transactions are defined as investments in transactions that the IRS has identified as listed tax shelters or that have characteristics of tax shelters, including large losses or confidentiality agreements. The minimum penalty under this bill is $10,000 for corporations and $5,000 for individuals, and the maximum penalty is $200,000 for corporations and $100,000 for individuals. The bill also requires the IRS to provide an annual report to the Senate Finance Committee and to the House Ways and Means Committee giving an account of certain tax-shelter related penalties asserted during the year. This provision is estimated to cost $176 million over ten years.
Deductibility of Health Insurance for the Purposes of Calculating Self-Employment Tax. Under current law, business owners are not permitted to deduct the cost of health insurance for themselves and their family members for purposes of calculating self-employment tax. This provision would allow business owners to deduct the cost of health insurance incurred in 2010 for themselves and their family members in the calculation of their 2010 self-employment tax. This provision is estimated to cost $1.96 billion over ten years.
Enhancements to Small Business Contracting Parity Programs. This provision removes the priority one contracting program has over another, making clear that no single restricted competition program has priority over another. It places the small business contracting programs, HUBZone, 8(a), Service-Disabled Veterans and Women-Owned Businesses on a level playing field when competing for Federal contracts. This provision has no cost associated with it.
Improvements to Disaster Recovery to Include Aquaculture. Currently, the SBA excludes aquaculture businesses from receiving SBA Economic Injury Disaster Loans (EIDL). This section would allow SBA, provided it does not duplicate other Federal disaster programs for that disaster, to make economic injury disaster loans to these businesses. This provision has no cost associated with it.
Require Federal Agencies to Expand Their Assessments of Economic Effects on Small Businesses. This provision strengthens the Regulatory Flexibility Act by requiring agencies to respond to the SBA Chief Counsel of Advocacy’s comments in the final rule. It also seeks more independence for the Office of Advocacy by mandating a separate line item in the SBA’s annual budget. This provision has no cost associated with it.
Remove Cellular Phones from “Listed Property.” This provision would “delist” cell phones so their cost can be deducted or depreciated like other business property, without onerous recordkeeping requirements. This provision was added in the substitute amendment introduced on July 21, 2010. This provision is estimated to cost $410 million over ten years.
Offsets – Reducing the Tax Gap
Require Information Reporting for Rental Property Expense Payments. The bill requires persons receiving rental income from real property to file information returns to the IRS and to service providers reporting payments of $600 or more during the year for rental property expenses. In general, there is an exception for individuals renting their principal residences, including active members of the military, from the reporting requirements. This provision is estimated to raise $2.5 billion over ten years.
Increase Penalties for Failure to File Information Returns. The bill increases penalties for failure to timely file information returns to the IRS. The first-tier penalty is increased from $15 to $30, and the calendar year maximum is increased from $75,000 to $250,000. The second-tier penalty is increased from $30 to $60, and the calendar year maximum is increased from $150,000 to $500,000. The third-tier penalty is increased from $50 to $100, and the calendar year maximum is increased from $250,000 to $1.5 million. For small filers, the calendar year maximum is increased from $25,000 to $75,000 for the first-tier penalty, from $50,000 to $200,000 for the second-tier penalty, and from $100,000 to $500,000 for the third-tier penalty. The minimum penalty for each failure due to intentional disregard is increased from $100 to $250. The penalty amounts are adjusted every five years for inflation. Penalties for failure to file information returns to payees are similarly increased. This provision is estimated to raise $421 million over ten years.
Application of Continuous Levy to Tax Liabilities of Certain Federal Contractors. Generally, before the IRS can issue a levy for an unpaid Federal tax liability, it must give the taxpayer an opportunity for a collection due process (CDP) hearing. Prior to the Federal government making disbursements to Federal contractors, an automated check for a Federal tax liability occurs. When such a liability is identified, the IRS issues a CDP notice to the contractor but cannot levy on payments to the contractor until the CDP requirements are complete. The bill allows IRS to issue levies prior to a CDP hearing on Federal tax liabilities of Federal contractors. It also provides the taxpayer with an opportunity for a CDP hearing within a reasonable time after a levy is issued. This provision is estimated to raise $1.1 billion over ten years.
Offsets – Promoting Retirement Preparation
Allow Participants in Governmental 457 Plans to Treat Elective Deferrals as Roth Contributions. Beginning in 2011, the bill would allow retirement savings plans sponsored by state and local governments (governmental 457(b) plans) to include Roth accounts, which are currently available only in 401(k) and 403(b) plans and will be available in the federal Thrift Savings Plan in 2011. Contributions to Roth accounts are made on an after-tax basis, but distributions of both principal and earnings are generally tax-free. This provision is estimated to raise $506 million over ten years.
Allow Rollovers from Elective Deferral Plans to Roth Designated Accounts. The bill would allow 401(k), 403(b), and governmental 457(b) plans to permit participants to roll their pre-tax account balances into a Roth account. The amount of the rollover would be includible in taxable income except to the extent it is the return of after-tax contributions. If the rollover is made in 2010, the participant can elect to pay the tax in 2011 and 2012. Plans would be able to allow these rollovers immediately upon enactment. This provision is estimated to raise $5.1 billion over ten years.
Permit Partial Annuitization of a Nonqualified Annuity Contract. The substitute would allow holders of nonqualified annuities (that is, annuity contracts held outside of a tax-qualified retirement plan or IRA) to elect to receive a portion of the contract in the form of a stream of annuity contracts, leaving the remainder of the contract to accumulate income on a tax-deferred basis. This provision was added in the substitute amendment introduced on July 21, 2010. This provision is estimated to raise $956 million over ten years.
Offsets – Closing Unintended Loopholes
Crude Tall Oil Ineligible for Cellulosic Biofuel Producer Credit. In 2008, Congress enacted a $1.01 per gallon tax credit for the production of biofuel from cellulosic feedstocks in order to encourage the development of new production capacity for biofuels that are not derived from food source materials. Some taxpayers are seeking to claim the cellulosic biofuel tax credit for processed fuels that are highly corrosive, such as crude tall oil (another waste by-product of the paper manufacturing process). The bill limits eligibility for the tax credit to fuels that are not highly corrosive (i.e., fuels that could be used in a car engine or in a home heating application). This provision is estimated to raise $1.8 billion over ten years.
Source Rules on Guarantees. Under current law, the treatment of guarantee fees under the source rules is unclear. If guarantee fees are sourced like services, they are sourced according to the location in which the services were performed. If the guarantee fees are sourced like interest, they are sourced by reference to the country of residence of the payor. A recent court case determined that guarantee fees should be sourced like services. Sourcing guarantee fees in a manner similar to services would permit U.S. subsidiaries of foreign corporations to engage in earning stripping transactions by making deductible payments to foreign affiliates (thereby reducing their U.S. income tax liability) without the imposition of U.S. withholding tax on the payment. The substitute would provide that amounts received directly or indirectly for guarantees of indebtedness of the payor issued after the date of enactment will be sourced like interest and, as a result, if paid by U.S. taxpayers to foreign persons will generally be subject to withholding tax. No inference is intended with respect to the treatment of guarantees issued before the date of enactment. This provision was added in the substitute amendment introduced on July 21, 2010. This provision is estimated to raise $2 billion over ten years.
Monday, July 26, 2010
New Employer Insurance Reporting Requirements (PPACA)
Please find information sent to me by Small Business California affiliate member the Plumbing Heating and Cooling Contractors of California. For those of you providing medical insurance do you see this as a significant burden on you.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
NEW EMPLOYER FORM W‐2 HEALTH INSURANCE REPORTING REQUIREMENTS
IN THE PATIENT PROTECTION AND AFFORDABLE CARE ACT
July 2010
NOTE: As of this writing, the IRS not issued any guidance on this reporting requirement. We will update you as soon as such, guidance becomes available.
The Patient Protection and Affordable Care Act (PPACA) adds a new reporting requirement aimed at improving health care transparency and cost awareness by requiring employers to report the value of employees’ health benefits on Form W‐2s.
For taxable years beginning after December 31, 2010, employers will be required to calculate and report the aggregate cost of applicable employer‐sponsored health insurance coverage on employees' Form W‐2s.[1]
This new reporting requirement applies for employees' tax years beginning after December 31, 2010. However, because employees are entitled to request their Form W‐2 early if they terminate employment during the year, [2] payroll systems need to be updated for this change by January 2011.
Therefore, while most W‐2s for tax year 2011 will be issued in January 2012, W‐2s reflecting the new health insurance information must be available no later than February 1, 2011, in the event that a terminating employee requests one.[3]
It is important to note that the aggregate cost of an employee's health benefits will not be included in the employee's taxable income. The W‐2 reporting will be a way to track coverage values for the 40% excise tax(starting in 2018) on “high‐cost” employer‐based medical coverage above certain thresholds (the so‐called “Cadillac plan tax”).[4]
The coverage costs (whether under an insured or self‐insured plan) that must be reported under the new requirement includes:
• Medical plans
• Prescription drug plans
• Dental and vision plans, unless they are “stand alone” plans (i.e., an employee may elect only dental or
only vision and is not required to also enroll in medical coverage)
• Employer funding contributions to Health Reimbursement Arrangements (HRAs)
• Executive physicals
• On‐site clinics if they provide more than de minimis care [5]
• Medicare supplemental policies
• Employee assistance programs [6]
If an employee enrolls in employer‐sponsored health insurance coverage under multiple plans, the aggregate value of all such health coverage (except certain benefits, discussed in section below) must be disclosed. For example, if an employee enrolls in employer‐sponsored health insurance coverage under a major medical plan, a dental plan and a vision plan, the employer is required to report the total value of the combination of all of these health‐related insurance policies. For this purpose, employers generally use the same value for all similarly situated employees receiving the same category of coverage (such as single or family health insurance coverage).[7]
Employers will not be required to provide a specific breakdown of the various types of coverage, but must only report an aggregate cost. For example, if an employee enrolls in medical, dental and prescription drug coverage, the employer only has to report the total value of all coverage, not a value for each individual benefit.
Benefits Exempt from Form W‐2 Reporting Requirements -
The following employer provided benefits are not required to be reported on Form W‐2 under the new health care law:
• Long‐term care, accident or disability income benefits
• Specific disease or illness policies (such as cancer policies), and hospital (or other) indemnity insurance
policies where the full premium is paid by the employee on an after‐tax basis
• Archer MSA or HSA contributions of the employee or the employee’s spouse
• Salary reduction contributions to a Health FSA
Valuing Plans
The most challenging aspect of this new reporting requirement is determining the value of the employer sponsored health coverage for each employee. In determining the value of health insurance coverage, the employer will calculate the applicable premiums for the taxable year for such health coverage for the employee under the rules for COBRA continuation coverage under IRC Sec. 4980B(f)(4) (and accompanying Treasury regulations). The value that the employer is required to report is the aggregate premium calculated under the COBRA rules, not the portion of the premium that the employee has to pay.
If the employer’s plan provides for the same COBRA continuation coverage premium for both individual coverage and family coverage, the employer plan would be required to calculate separate individual and family premiums and the employer would report the value of the coverage the employee received.[8]
For example, if one employee received family coverage, the employer would report the premium amount for family coverage for that employee. For another employee that receives individual coverage, the employer would report the premium amount for individual coverage.
A particular challenge for employers might be that some of the plans covered by the new reporting requirement, such as on‐site medical clinics, are not plans that they have previously valued for COBRA purposes. With the new requirements, employers will need to come up with reportable values for coverage provided under these programs, and we understand that the IRS is currently working on this guidance.[9]
____________________________________________________________________________________________
1 Sec. 9002 of PPACA amended Internal Revenue Code section 6051(a) by adding a new subsection (14) to provide for this
reporting requirement.
2 Treas. Reg. section 31.6051‐1(d)(1).
3 Maureen M. Maly, Faegre & Benson, LLP, “Health Care Reform Includes Form W‐2 Reporting Requirement,” Society for Human
Resource Management, May 7, 2010.
4 PPACA § 9001 and the Health Care and Education Reconciliation Act § 1401 adding new IRC section 4980I.
5 The term de minimis means (as provided by IRC Sec. 132(e)(1)) any property or service, the value of which is (after taking into
account the frequency with which similar fringe benefits are provided by the employer to the employer’s employees) so small as
to make accounting for it unreasonable or administratively impracticable. In other instances where the IRS was interpreting
whether a medical clinic provided de minimis benefits, an on‐site nurse who provided emergency services was considered a de
minimis benefit, while a clinic at a hospital that provided full‐scale medical treatment was not considered de minimis.
6 Maly, Faegre & Benson, LLP, Society for Human Resource Management.
7 Joint Committee on Taxation, “Technical Explanation of the Revenue Provisions of the Reconciliation Act of 2010, as Amended,
in Combination with the Patient Protection and Affordable Care Act” (March 21, 2010); JCX‐18‐10, pg. 67.
8 Ibid.
9 Maly, Faegre & Benson, LLP, Society for Human Resource Management.
Thank you,
Tiffany Fournier
Association Coordinator
PHCC of California
5816 Roseville Road, Suite 1
Sacramento, CA 95842
916-925-7390 Ph
916-925-7623 Fx
916-221-1120 Mb
http://www.caphcc.org/
The Plumbing-Heating-Cooling Contractors Association is dedicated to the promotion, advancement, education and training of the industry for the protection of our environment and the health, safety and comfort of society.
***This information is intended for California PHCC Members and not necessarily endorsed by NAPHCC.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
NEW EMPLOYER FORM W‐2 HEALTH INSURANCE REPORTING REQUIREMENTS
IN THE PATIENT PROTECTION AND AFFORDABLE CARE ACT
July 2010
NOTE: As of this writing, the IRS not issued any guidance on this reporting requirement. We will update you as soon as such, guidance becomes available.
The Patient Protection and Affordable Care Act (PPACA) adds a new reporting requirement aimed at improving health care transparency and cost awareness by requiring employers to report the value of employees’ health benefits on Form W‐2s.
For taxable years beginning after December 31, 2010, employers will be required to calculate and report the aggregate cost of applicable employer‐sponsored health insurance coverage on employees' Form W‐2s.[1]
This new reporting requirement applies for employees' tax years beginning after December 31, 2010. However, because employees are entitled to request their Form W‐2 early if they terminate employment during the year, [2] payroll systems need to be updated for this change by January 2011.
Therefore, while most W‐2s for tax year 2011 will be issued in January 2012, W‐2s reflecting the new health insurance information must be available no later than February 1, 2011, in the event that a terminating employee requests one.[3]
It is important to note that the aggregate cost of an employee's health benefits will not be included in the employee's taxable income. The W‐2 reporting will be a way to track coverage values for the 40% excise tax(starting in 2018) on “high‐cost” employer‐based medical coverage above certain thresholds (the so‐called “Cadillac plan tax”).[4]
The coverage costs (whether under an insured or self‐insured plan) that must be reported under the new requirement includes:
• Medical plans
• Prescription drug plans
• Dental and vision plans, unless they are “stand alone” plans (i.e., an employee may elect only dental or
only vision and is not required to also enroll in medical coverage)
• Employer funding contributions to Health Reimbursement Arrangements (HRAs)
• Executive physicals
• On‐site clinics if they provide more than de minimis care [5]
• Medicare supplemental policies
• Employee assistance programs [6]
If an employee enrolls in employer‐sponsored health insurance coverage under multiple plans, the aggregate value of all such health coverage (except certain benefits, discussed in section below) must be disclosed. For example, if an employee enrolls in employer‐sponsored health insurance coverage under a major medical plan, a dental plan and a vision plan, the employer is required to report the total value of the combination of all of these health‐related insurance policies. For this purpose, employers generally use the same value for all similarly situated employees receiving the same category of coverage (such as single or family health insurance coverage).[7]
Employers will not be required to provide a specific breakdown of the various types of coverage, but must only report an aggregate cost. For example, if an employee enrolls in medical, dental and prescription drug coverage, the employer only has to report the total value of all coverage, not a value for each individual benefit.
Benefits Exempt from Form W‐2 Reporting Requirements -
The following employer provided benefits are not required to be reported on Form W‐2 under the new health care law:
• Long‐term care, accident or disability income benefits
• Specific disease or illness policies (such as cancer policies), and hospital (or other) indemnity insurance
policies where the full premium is paid by the employee on an after‐tax basis
• Archer MSA or HSA contributions of the employee or the employee’s spouse
• Salary reduction contributions to a Health FSA
Valuing Plans
The most challenging aspect of this new reporting requirement is determining the value of the employer sponsored health coverage for each employee. In determining the value of health insurance coverage, the employer will calculate the applicable premiums for the taxable year for such health coverage for the employee under the rules for COBRA continuation coverage under IRC Sec. 4980B(f)(4) (and accompanying Treasury regulations). The value that the employer is required to report is the aggregate premium calculated under the COBRA rules, not the portion of the premium that the employee has to pay.
If the employer’s plan provides for the same COBRA continuation coverage premium for both individual coverage and family coverage, the employer plan would be required to calculate separate individual and family premiums and the employer would report the value of the coverage the employee received.[8]
For example, if one employee received family coverage, the employer would report the premium amount for family coverage for that employee. For another employee that receives individual coverage, the employer would report the premium amount for individual coverage.
A particular challenge for employers might be that some of the plans covered by the new reporting requirement, such as on‐site medical clinics, are not plans that they have previously valued for COBRA purposes. With the new requirements, employers will need to come up with reportable values for coverage provided under these programs, and we understand that the IRS is currently working on this guidance.[9]
____________________________________________________________________________________________
1 Sec. 9002 of PPACA amended Internal Revenue Code section 6051(a) by adding a new subsection (14) to provide for this
reporting requirement.
2 Treas. Reg. section 31.6051‐1(d)(1).
3 Maureen M. Maly, Faegre & Benson, LLP, “Health Care Reform Includes Form W‐2 Reporting Requirement,” Society for Human
Resource Management, May 7, 2010.
4 PPACA § 9001 and the Health Care and Education Reconciliation Act § 1401 adding new IRC section 4980I.
5 The term de minimis means (as provided by IRC Sec. 132(e)(1)) any property or service, the value of which is (after taking into
account the frequency with which similar fringe benefits are provided by the employer to the employer’s employees) so small as
to make accounting for it unreasonable or administratively impracticable. In other instances where the IRS was interpreting
whether a medical clinic provided de minimis benefits, an on‐site nurse who provided emergency services was considered a de
minimis benefit, while a clinic at a hospital that provided full‐scale medical treatment was not considered de minimis.
6 Maly, Faegre & Benson, LLP, Society for Human Resource Management.
7 Joint Committee on Taxation, “Technical Explanation of the Revenue Provisions of the Reconciliation Act of 2010, as Amended,
in Combination with the Patient Protection and Affordable Care Act” (March 21, 2010); JCX‐18‐10, pg. 67.
8 Ibid.
9 Maly, Faegre & Benson, LLP, Society for Human Resource Management.
Thank you,
Tiffany Fournier
Association Coordinator
PHCC of California
5816 Roseville Road, Suite 1
Sacramento, CA 95842
916-925-7390 Ph
916-925-7623 Fx
916-221-1120 Mb
http://www.caphcc.org/
The Plumbing-Heating-Cooling Contractors Association is dedicated to the promotion, advancement, education and training of the industry for the protection of our environment and the health, safety and comfort of society.
***This information is intended for California PHCC Members and not necessarily endorsed by NAPHCC.
Thursday, July 22, 2010
Michaela Wins Suit/ Jobs Now
For the SF recipients of this email decision was made this morning by the court to uphold Michaela Alioto Pier’s laws suit allowing her to run in November. She therefore will be running in District 2.
This morning I attended and event for Jobs Now. To date 3620 San Franciscans have been hired through the Jobs Now program. Over 700 employers have used the program and it is estimated that $55 million in wages have been pumped into the SF economy.
I have always said this was a great program. Early on I was critical of its implementation by the City. My issues and those brought forth by other by other small businesses were addressed by Trent Rohr working closely with Tony Lugo. I would like to say publically that they were very responsive and really made it a program that SF can be proud of. Thank you Trent and Tony.
I would also like to applaud the Mayor for his leadership and making this the best program of its kind in the US. Thank you Mayor Newsom.
A big thanks to Speaker Pelosi and Mark please pass on our appreciation .
Now we all need to work to get funding continued beyond September 30. I will be working with a few Senators around the country. Senators Feinstein and Boxer are on board and I want to thank them for their help but quite frankly we need support from Republican Senators. For the Board members of NSBA that receive this email can you help us in your states. Nationally over 200000 people have been hired and we are looking for $2.5 billion. It is expected this will be taken up after recess.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
This morning I attended and event for Jobs Now. To date 3620 San Franciscans have been hired through the Jobs Now program. Over 700 employers have used the program and it is estimated that $55 million in wages have been pumped into the SF economy.
I have always said this was a great program. Early on I was critical of its implementation by the City. My issues and those brought forth by other by other small businesses were addressed by Trent Rohr working closely with Tony Lugo. I would like to say publically that they were very responsive and really made it a program that SF can be proud of. Thank you Trent and Tony.
I would also like to applaud the Mayor for his leadership and making this the best program of its kind in the US. Thank you Mayor Newsom.
A big thanks to Speaker Pelosi and Mark please pass on our appreciation .
Now we all need to work to get funding continued beyond September 30. I will be working with a few Senators around the country. Senators Feinstein and Boxer are on board and I want to thank them for their help but quite frankly we need support from Republican Senators. For the Board members of NSBA that receive this email can you help us in your states. Nationally over 200000 people have been hired and we are looking for $2.5 billion. It is expected this will be taken up after recess.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
Wednesday, July 21, 2010
FW: URGENT - NADCO Legislative Update and Request for Urgent Phone Calls to Senators TODAY
Please see email from NADCO[ 504 lenders]. It clearly spells out where we are with our SBA situation on financing.
Note HR 4213 is gone now and we are down to one last shot with HR 5297. Senators Boxer and Feinstein are supporting this.
SB Cal is working with NADCVO and the National Association of Government Lenders on getting this passed. The National Small Business Association is also working on this and did a press conference this morning with Senator Boxer.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
6764 Old McLean
Village Dr.
McLean, VA 22101703-748-2575
July 21, 2010
NADCO Legislative Update and Request for Urgent Phone Calls to Senators TODAY
This is an update on recent Senate actions on key legislation and an urgent request for your immediate actions to contact your Senators to ask for their support of HR 5297.
HR 4213 status: Last night, the Senate invoked cloture on a substitute amendment to HR 4213. This new amendment extends unemployment benefits, but nothing else. The original 504 and 7a fee offset funding and the 90% 7a loan guarantee we expected were stripped from this Senate amendment. We expect the Senate to pass this new bill language today. We also expect the House to quickly pass this narrow bill, and the President to sign it shortly. Again, this new bill does not contain any funding for SBA program fee reductions.
HR 5297 status: Still pending in the Senate is HR 5297, or the small business lending fund bill that could provide up to $30 billion in re-cycled TARP funds to community banks for lending purposes.
Senate majority leader Reid is expected to introduce an amendment to this bill that will NOT include the $30 billion in bank loan funds. Due to the efforts of the Senate Small Business Committee leadership, Senators Mary Landrieu (D-La) and Olympia Snowe (R-Me), we expect Reid’s amendment to include:
• Increase the 504 loan size to $5 million• Increase the 7a loan size to $5 million• Expand refinancing by 504 for businesses to retain jobs• Increase the size standards for 504• Extend the ARRA 504 first mortgage guarantee program for two years Further, and again due to the efforts of the Senate Committee leadership, an amendment may be included that extends and provides funds for 504 and 7a borrower fee relief until 12/31/2010. This would also extend the 7a 90% loan guarantee.
REQUEST TO EVERY CDC: With this new amended bill containing so many benefits for our small business borrowers now and in the future, we urgently request that you make immediate phone calls (letters and emails will not be read or have time to get there) to all Senate offices for states that your CDCs serve.
Ask every Senator to support and vote for HR 5297. If necessary, explain to them how these program enhancements will help the small businesses you serve to preserve and create jobs. THAT is the most important issue that will sway Senate votes.
Please call both Democrats and Republicans. Members of both parties should support this bill. You can access Senate offices either by going to the NADCO.ORG web site legislative section and getting your Senator’s phone numbers from our on-line directory (CapWiz), or be calling the Senate switchboard at 202-224-3121, and asking for the Senator’s office.
Please get back to us with a brief email on what your Senators agree to do. Thank you for your immediate action on this request. This is likely the last opportunity to get these changes done in this Congress. It must be done today.
Chris Crawford
President/CEO
703-748-2575
chris@nadco.org
Note HR 4213 is gone now and we are down to one last shot with HR 5297. Senators Boxer and Feinstein are supporting this.
SB Cal is working with NADCVO and the National Association of Government Lenders on getting this passed. The National Small Business Association is also working on this and did a press conference this morning with Senator Boxer.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
6764 Old McLean
Village Dr.
McLean, VA 22101703-748-2575
July 21, 2010
NADCO Legislative Update and Request for Urgent Phone Calls to Senators TODAY
This is an update on recent Senate actions on key legislation and an urgent request for your immediate actions to contact your Senators to ask for their support of HR 5297.
HR 4213 status: Last night, the Senate invoked cloture on a substitute amendment to HR 4213. This new amendment extends unemployment benefits, but nothing else. The original 504 and 7a fee offset funding and the 90% 7a loan guarantee we expected were stripped from this Senate amendment. We expect the Senate to pass this new bill language today. We also expect the House to quickly pass this narrow bill, and the President to sign it shortly. Again, this new bill does not contain any funding for SBA program fee reductions.
HR 5297 status: Still pending in the Senate is HR 5297, or the small business lending fund bill that could provide up to $30 billion in re-cycled TARP funds to community banks for lending purposes.
Senate majority leader Reid is expected to introduce an amendment to this bill that will NOT include the $30 billion in bank loan funds. Due to the efforts of the Senate Small Business Committee leadership, Senators Mary Landrieu (D-La) and Olympia Snowe (R-Me), we expect Reid’s amendment to include:
• Increase the 504 loan size to $5 million• Increase the 7a loan size to $5 million• Expand refinancing by 504 for businesses to retain jobs• Increase the size standards for 504• Extend the ARRA 504 first mortgage guarantee program for two years Further, and again due to the efforts of the Senate Committee leadership, an amendment may be included that extends and provides funds for 504 and 7a borrower fee relief until 12/31/2010. This would also extend the 7a 90% loan guarantee.
REQUEST TO EVERY CDC: With this new amended bill containing so many benefits for our small business borrowers now and in the future, we urgently request that you make immediate phone calls (letters and emails will not be read or have time to get there) to all Senate offices for states that your CDCs serve.
Ask every Senator to support and vote for HR 5297. If necessary, explain to them how these program enhancements will help the small businesses you serve to preserve and create jobs. THAT is the most important issue that will sway Senate votes.
Please call both Democrats and Republicans. Members of both parties should support this bill. You can access Senate offices either by going to the NADCO.ORG web site legislative section and getting your Senator’s phone numbers from our on-line directory (CapWiz), or be calling the Senate switchboard at 202-224-3121, and asking for the Senator’s office.
Please get back to us with a brief email on what your Senators agree to do. Thank you for your immediate action on this request. This is likely the last opportunity to get these changes done in this Congress. It must be done today.
Chris Crawford
President/CEO
703-748-2575
chris@nadco.org
Tuesday, July 20, 2010
UPDATE: 1099 Issue/ Health Coverage
We are beginning to get a lot of attention to the requirement that all businesses that purchase $600 or more from a provider of goods and services fill out a 1099 form. HR 5141 by Congressman Lungren, which repeals this requirement, now has about 100 cosigners. I believe they are all Republican.
In the Senate 12 Democratic Senators have sent a letter to Commissioner Douglas Shulman at the IRS to make revisions to the requirement saying it “may negatively impact day to day operations of American businesses, especially small businesses” The letter also points out and concludes by saying:
“we insist the IRS develop ways in which small businesses can reduce expected paperwork from this requirement-possibly through consolidating existing forms, for example-and that the IRS report its proposed solutions to the Senate Committee on Small Business and Entrepreneurship prior to implementation of the new law”
Those signing the letter are Senators Begich, Ben Nelson, Shaheen, Bayh, Johnson, Stabenow, Murray, Merkley, Brown, Franken, Klobuehar and Bennet.
I have been in contact with Senator Boxer’s office and the Senator is also looking to do something on this.
We have to keep the pressure on. See below.
On Friday the Sacramento Business Journal will be holding its annual health care breakfast. The topic will be health care reform. I will be a panelist giving the small business perspective. This is the 6th presentation around the state I have given on this subject. One question I have been asked to address is:
“If you are a small business owner and already offer health coverage to employees how will health care reform affect you? What would be the most cost effective approach-as well as the best move for your employees-as far as health care coverage? “
I would appreciate your comments on this.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
Subject: 1099 CHANGES AFOOT from Politico Pulse
1099 CHANGES AFOOT - Momentum is swinging toward altering the so-called 1099 provision in the reform law, which requires small businesses to file a 1099 form for every company from which they buy more than $600 in good and services. The Treasury department is aware of the business community's concerns that the provision is potentially burdensome and recently asked for formal comments on how to limit it. Four Democratic senators have asked Treasury to look into the problem and several Republicans have signed on to an amendment from Sen. Johanns to repeal the whole provision.
Drafters had hoped the provision would generate $17 billion to help pay for reform. But James Gelfand, director of health policy at the U.S. Chamber of Commerce, says he's rarely seen an issue on which members are so strongly united in opposition, calling them "apoplectic" over the provision. An administration source tells Pulse that the comments from the business community are "obviously something we take seriously" and that there's been significant outreach to them. Treasury has already made one change: Transactions on credit and debit cards won't have to reported on a 1099.
In the Senate 12 Democratic Senators have sent a letter to Commissioner Douglas Shulman at the IRS to make revisions to the requirement saying it “may negatively impact day to day operations of American businesses, especially small businesses” The letter also points out and concludes by saying:
“we insist the IRS develop ways in which small businesses can reduce expected paperwork from this requirement-possibly through consolidating existing forms, for example-and that the IRS report its proposed solutions to the Senate Committee on Small Business and Entrepreneurship prior to implementation of the new law”
Those signing the letter are Senators Begich, Ben Nelson, Shaheen, Bayh, Johnson, Stabenow, Murray, Merkley, Brown, Franken, Klobuehar and Bennet.
I have been in contact with Senator Boxer’s office and the Senator is also looking to do something on this.
We have to keep the pressure on. See below.
On Friday the Sacramento Business Journal will be holding its annual health care breakfast. The topic will be health care reform. I will be a panelist giving the small business perspective. This is the 6th presentation around the state I have given on this subject. One question I have been asked to address is:
“If you are a small business owner and already offer health coverage to employees how will health care reform affect you? What would be the most cost effective approach-as well as the best move for your employees-as far as health care coverage? “
I would appreciate your comments on this.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
Subject: 1099 CHANGES AFOOT from Politico Pulse
1099 CHANGES AFOOT - Momentum is swinging toward altering the so-called 1099 provision in the reform law, which requires small businesses to file a 1099 form for every company from which they buy more than $600 in good and services. The Treasury department is aware of the business community's concerns that the provision is potentially burdensome and recently asked for formal comments on how to limit it. Four Democratic senators have asked Treasury to look into the problem and several Republicans have signed on to an amendment from Sen. Johanns to repeal the whole provision.
Drafters had hoped the provision would generate $17 billion to help pay for reform. But James Gelfand, director of health policy at the U.S. Chamber of Commerce, says he's rarely seen an issue on which members are so strongly united in opposition, calling them "apoplectic" over the provision. An administration source tells Pulse that the comments from the business community are "obviously something we take seriously" and that there's been significant outreach to them. Treasury has already made one change: Transactions on credit and debit cards won't have to reported on a 1099.
Monday, July 12, 2010
1099 requirements/ Small Business Lending
We all recognize the serious burden small businesses will face in 2012 when they will be required to file 1099s for anyone that provides you goods and services with a value of over $600. Please see below email from Congressman Lungrens office. I talked to Kevin and Alex and they asked for your help.
Note your comments must be in by September 29th.
Today Fed Chair Ben Bernanke announced that ways must be found to help small businesses with getting loans. There is legislation in Washington that will do this but it is tied up due to ideological bickering. So if the legislation doesn’t pass what can be done.
I don’t know about you but it getting tiring to hear that we create the jobs and are the engine of the economy yet nothing seems to happen in Washington to help solve the problem.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
From: Holsclaw, Kevin [mailto:Kevin.Holsclaw@mail.house.gov]
Sent: Wednesday, July 07, 2010 9:05 AM
To: Scott Hauge
Subject: FW: HR 5141 / IRS Comments 499
Scott:
We obtained this information and I wanted to make sure that you were aware of it. We obviously are fully committed to fight for the repeal of this provision. At the same time our interest has always been a concern for small business and to make sure that we get the information out there to the affected parties.
Alex Snyder (in our office) and I will try to call you today. Again, thank your hard work on this issue.
Best Regards,
Kevin Holsclaw
L.D., Cong. Lungren
From: Snyder, Alexandra
Sent: Wednesday, July 07, 2010 12:02 PM
To: Holsclaw, Kevin
Subject: HR 5141 / IRS Comments 499
Dear Friend,
As you are no doubt aware, the health care reform bill passed by Congress in March of this year will have many implications for your business. Hidden within the bill’s 1200 pages is a short provision that will expand the form 1099 reporting requirement. Currently, business owners are required to file 1099 forms for non-corporate services. However, under the Patient Protection and Affordable Care Act (PPACA), the 1099 reporting requirement will be expanded to include businesses transactions, corporate and non-corporate, involving goods and services totaling more than $600 in a given year. This means filing 1099’s for such basic business expenses as phone and internet service, shipping, office supplies, maintenance and travel, not to mention all of the component parts of a particular product.
This provision is especially onerous for small business owners, many of whom are responsible for preparing their own tax documents. Some of my constituents have told me that instead of filing a handful of 1099 forms, as they do now, the PPACA will require them to submit hundreds of 1099’s.
In April, I introduced legislation to repeal this expanded tax reporting mandate. In my view, it simply does not make sense to impose yet another tax burden on small business owners, who provide much-needed jobs for Americans. My bill, H.R. 5141, has received widespread support from Members of Congress as well as from numerous business associations across the nation. I recently received a letter of support from an organization representing more than 70,000 small business owners in California.
The Internal Revenue Service is currently evaluating how to implement the 1099 expansion under the health care bill. The IRS has invited the public to comment on its proposal to exempt credit or debit card transactions from the new reporting requirement. I would encourage you to submit your comments to the IRS by e-mail or “snail mail,” as follows:
E-mail to: Notice.Comments@irscounsel.treas.gov. Include “Notice 2010-51" in the subject line.
Mail to:
Internal Revenue Service,
CC:PA:LPD:PR ( Notice 2010-51),
Room 5203, P.O. Box 7604
Ben Franklin Station
Washington, DC 20044
The deadline is September 29, 2010.
Further details are available at http://www.irs.gov/pub/irs-drop/n-10-51.pdf.
If you have any questions regarding the new 1099 filing requirement, please feel free to contact my Washington, D.C. office at 202.225.5716.
Sincerely,
Dan Lungren
Alexandra Snyder
Legislative Counsel
Office of Congressman Dan Lungren
2262 Rayburn House Office Building
Washington DC 20515
O: 202.225.5716
F: 202.226.1298
Note your comments must be in by September 29th.
Today Fed Chair Ben Bernanke announced that ways must be found to help small businesses with getting loans. There is legislation in Washington that will do this but it is tied up due to ideological bickering. So if the legislation doesn’t pass what can be done.
I don’t know about you but it getting tiring to hear that we create the jobs and are the engine of the economy yet nothing seems to happen in Washington to help solve the problem.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
From: Holsclaw, Kevin [mailto:Kevin.Holsclaw@mail.house.gov]
Sent: Wednesday, July 07, 2010 9:05 AM
To: Scott Hauge
Subject: FW: HR 5141 / IRS Comments 499
Scott:
We obtained this information and I wanted to make sure that you were aware of it. We obviously are fully committed to fight for the repeal of this provision. At the same time our interest has always been a concern for small business and to make sure that we get the information out there to the affected parties.
Alex Snyder (in our office) and I will try to call you today. Again, thank your hard work on this issue.
Best Regards,
Kevin Holsclaw
L.D., Cong. Lungren
From: Snyder, Alexandra
Sent: Wednesday, July 07, 2010 12:02 PM
To: Holsclaw, Kevin
Subject: HR 5141 / IRS Comments 499
Dear Friend,
As you are no doubt aware, the health care reform bill passed by Congress in March of this year will have many implications for your business. Hidden within the bill’s 1200 pages is a short provision that will expand the form 1099 reporting requirement. Currently, business owners are required to file 1099 forms for non-corporate services. However, under the Patient Protection and Affordable Care Act (PPACA), the 1099 reporting requirement will be expanded to include businesses transactions, corporate and non-corporate, involving goods and services totaling more than $600 in a given year. This means filing 1099’s for such basic business expenses as phone and internet service, shipping, office supplies, maintenance and travel, not to mention all of the component parts of a particular product.
This provision is especially onerous for small business owners, many of whom are responsible for preparing their own tax documents. Some of my constituents have told me that instead of filing a handful of 1099 forms, as they do now, the PPACA will require them to submit hundreds of 1099’s.
In April, I introduced legislation to repeal this expanded tax reporting mandate. In my view, it simply does not make sense to impose yet another tax burden on small business owners, who provide much-needed jobs for Americans. My bill, H.R. 5141, has received widespread support from Members of Congress as well as from numerous business associations across the nation. I recently received a letter of support from an organization representing more than 70,000 small business owners in California.
The Internal Revenue Service is currently evaluating how to implement the 1099 expansion under the health care bill. The IRS has invited the public to comment on its proposal to exempt credit or debit card transactions from the new reporting requirement. I would encourage you to submit your comments to the IRS by e-mail or “snail mail,” as follows:
E-mail to: Notice.Comments@irscounsel.treas.gov. Include “Notice 2010-51" in the subject line.
Mail to:
Internal Revenue Service,
CC:PA:LPD:PR ( Notice 2010-51),
Room 5203, P.O. Box 7604
Ben Franklin Station
Washington, DC 20044
The deadline is September 29, 2010.
Further details are available at http://www.irs.gov/pub/irs-drop/n-10-51.pdf.
If you have any questions regarding the new 1099 filing requirement, please feel free to contact my Washington, D.C. office at 202.225.5716.
Sincerely,
Dan Lungren
Alexandra Snyder
Legislative Counsel
Office of Congressman Dan Lungren
2262 Rayburn House Office Building
Washington DC 20515
O: 202.225.5716
F: 202.226.1298
Wednesday, July 07, 2010
Regional Administrator/ Reporter Request
I hope you all had a great weekend. Last week Elizabeth Echols was named to be the Regional Director of District 9. She has deep roots in the Democratic party and currently heads up the US Green Building Council. I do not know her but Small Business California plans to hold a reception for her after labor day. I hope those of you in the Bay Area can attend.
For those of you in the LA area please see request of Sharon Bernstein of the LA Times. If you are in the LA and have been putting off hiring someone please give her a call this morning. If you call please let me know.
For those of you outside LA I would also like to hear from you if you are in this situation. Is it because you don’t think the consumer demand picture is clear, you can’t get capital, you can’t find qualified people or is there some other reason.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
Hi Scott,
I need to speak to a couple of small business owners who would like to hire people but are putting it off. For a deadline story Wednesday morning. Do you think you might ask your members? I’m at 213-280-0706 (my cell.) It’s for a story on data showing a slowdown in small business hiring.
Sharon Bernstein
Staff Writer/Assistant Business Editor
Los Angeles Times
202 W. First Street
Los Angeles, CA 90012
213-237-7962 phone
213-237-4712 fax
sharon.bernstein@latimes.com
For those of you in the LA area please see request of Sharon Bernstein of the LA Times. If you are in the LA and have been putting off hiring someone please give her a call this morning. If you call please let me know.
For those of you outside LA I would also like to hear from you if you are in this situation. Is it because you don’t think the consumer demand picture is clear, you can’t get capital, you can’t find qualified people or is there some other reason.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
Hi Scott,
I need to speak to a couple of small business owners who would like to hire people but are putting it off. For a deadline story Wednesday morning. Do you think you might ask your members? I’m at 213-280-0706 (my cell.) It’s for a story on data showing a slowdown in small business hiring.
Sharon Bernstein
Staff Writer/Assistant Business Editor
Los Angeles Times
202 W. First Street
Los Angeles, CA 90012
213-237-7962 phone
213-237-4712 fax
sharon.bernstein@latimes.com
Friday, July 02, 2010
Employee/Independent Contractors/ NORTEC Receives $3.5 million grant
Trying to figure out who is an independent contractor and who is an employee can be difficult and confusing. It can also have some serious financial ramifications if you mistakenly classify someone as an independent contractor and you get audited by the IRS or EDD.
Our good friends at the California Employers Association have put together this very informative newsletter and given you a great link to help you make the determination. For those of you looking for help in dealing with Human Resource issues I highly recommend you consider joining their organization.
"The misclassification of employees as independent contractors is a nationwide problem affecting millions of employees," J. Russell George, Treasury Inspector General for Tax Administration stated. "Left unchecked, it will continue to grow and contribute to the tax gap. The IRS should do more to ensure that the burden of uncollected taxes is not shifted to compliant taxpayers."
What is really intriguing is why it is so difficult for employers to determine whether someone is an independent contractors or an employee? There are several EDD resources out there and the best one's we’ve found over the years is a simple yes and no questionnaire.
Answer too many questions with a “yes” and you know you’ve got an employee on your hands no matter how much you’d wish the person could be classified as an independent contractor.
Small Business California Board member Ginne Mistal sent me this note about NORTEC. Ginne is also serves on the Board of NORTEC. Small Business California has worked closely with NORTEC over the years and know they are a great resource for small businesses in the Redding/Chico . They have a unique philosophy in Job Training. Their philosophy is that if you serve the employer they will provide the jobs.
Congratulations to NORTEC! NORTEC was awarded $3.5M, a 'Green Innovation Challenge' grant, with the emphasis on 'Renewable Energy Generation'. They were one of six to be awarded a grant. The grants that were awarded totaled $19M. This is under California Labor & Workforce Development Agency, News Release No: 10-04.
Secretary Victoria Bradshaw said that she was impressed with NORTEC's application with respect to working with small businesses.
One for small business!
Scott Hauge
Our good friends at the California Employers Association have put together this very informative newsletter and given you a great link to help you make the determination. For those of you looking for help in dealing with Human Resource issues I highly recommend you consider joining their organization.
Why is this so difficult for employers?
(Read time less than 3 minutes)
A recent report from the Treasury Inspector General For Tax Administration (TIGTA), said they found weaknesses in the IRS's procedures for ensuring taxpayer compliance with worker status determinations.
"The misclassification of employees as independent contractors is a nationwide problem affecting millions of employees," J. Russell George, Treasury Inspector General for Tax Administration stated. "Left unchecked, it will continue to grow and contribute to the tax gap. The IRS should do more to ensure that the burden of uncollected taxes is not shifted to compliant taxpayers."
The IRS allows both employers and workers to request determination letters from the agency regarding the worker's tax status as an employee or independent contractor. While this determination is binding, TIGTA reported that employers often fail to withhold taxes even though the IRS has stated that the worker is properly classified as an employee. The IRS created Form 8919 so that employees in these circumstances could report their personal liability for Social Security and Medicare wages. Nevertheless, TIGTA found that employees may be abusing Form 8919 in order to avoid payment of employment taxes and estimated that 74,068 taxpayers avoided $26.2 million in Social Security and Medicare taxes, and the IRS could lose $131 million in Social Security and Medicare taxes over the course of the next five years as a result.
The IRS disagreed with TIGTA's valuation of this amount, pointing out situations where a taxpayer could receive relief when the taxpayer could be ruled an independent contractor by a court and would not have an employment tax liability.
What is really intriguing is why it is so difficult for employers to determine whether someone is an independent contractors or an employee? There are several EDD resources out there and the best one's we’ve found over the years is a simple yes and no questionnaire.
Answer too many questions with a “yes” and you know you’ve got an employee on your hands no matter how much you’d wish the person could be classified as an independent contractor.
http://www.employers.org/800 399-5331
Small Business California Board member Ginne Mistal sent me this note about NORTEC. Ginne is also serves on the Board of NORTEC. Small Business California has worked closely with NORTEC over the years and know they are a great resource for small businesses in the Redding/Chico . They have a unique philosophy in Job Training. Their philosophy is that if you serve the employer they will provide the jobs.
For more information go to http://www.nortec.org/
Congratulations to NORTEC! NORTEC was awarded $3.5M, a 'Green Innovation Challenge' grant, with the emphasis on 'Renewable Energy Generation'. They were one of six to be awarded a grant. The grants that were awarded totaled $19M. This is under California Labor & Workforce Development Agency, News Release No: 10-04.
Secretary Victoria Bradshaw said that she was impressed with NORTEC's application with respect to working with small businesses.
One for small business!
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
415-680-2188
Wednesday, June 30, 2010
Text and Summary of the Small Business Jobs Act
Please see information on the Small Business Jobs Act.
Small Business California has been asked to comment on this bill. Caroline Bruckner in Senator Landrieu’s office is looking for your comments and support (Caroline_Bruckner@sbc.senate.gov).
Note one of the provisions is to allow full deductions for the self employed purchasing health insurance. We have worked on that for years and Senator Landrieu has always been there for us.
I have received a call from Caroline advising that she may not be able to respond to your email but know she appreciates it.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
For Immediate Release
June 29, 2010
BAUCUS, LANDRIEU UNVEIL BILL TO CREATE JOBS
AND HELP SMALL BUSINESSES GROW
Finance and Small Business Chairs Release Small Business Jobs Act
Washington, DC - Senate Finance Committee Chairman Max Baucus (D-Mont.) and Senate Committee on Small Business and Entrepreneurship Chair Mary Landrieu (D-La.) today released the Small Business Jobs Act, a bill to help small businesses access capital, stimulate investment in small businesses and promote entrepreneurship - all of which will help small business create jobs.
"Small businesses are the engine of our economy and need to be a critical focus of our job-creation efforts. Helping small businesses helps get Americans back to work," said Baucus. "Working together, we crafted our bill to promote entrepreneurship and investment in small businesses and provide small businesses with the vital access to capital they need to create jobs."
"Every day, headline after headline goes to big business layoffs and losses, but in reality it is the small businesses and their employees that are bearing the brunt of this crisis," said Landrieu. "Since the start of the economic downturn, 80 percent of the country's job losses came from small businesses. It is time to turn our attention to the small businesses and entrepreneurs to get Americans back to work. By providing some cost-effective and commonsense changes to lending, contracting and technical assistance programs, we can build on successful programs implemented in the Recovery Act to help small businesses keep their doors open. Ranking Member Snowe and I have crafted this package to include provisions that we have both advocated for, and I am very pleased with the finished product. As we finalize our package, I look forward to working with my colleagues on both sides of the aisle, as well as the other committees, to ensure the swift passage of this legislation."
The Small Business Jobs Act will:
Help Small Businesses Access Capital
· The legislation encourages investment in small businesses by allowing investors to exclude the gains from the sale of certain small business stock from their income for tax purposes if the stock is held for more than five years. This policy helps small business owners access more private capital to finance an expansion and hire new workers.
· The legislation reduces the tax burden for small businesses by allowing them to carry back general business tax credits to offset their tax burdens from the previous five years. Small businesses will also be able to count the general business credits against the Alternative Minimum Tax (AMT), freeing up capital for expansion and job growth.
The legislation establishes a Small Business Lending Fund of $30 billion to provide capital investments to small community banks to increase small business lending. The fund is limited to only the smallest banks, those who hold less than $10 billion in assets, and the performance-based program would incentivize only those lenders that extend new credit by decreasing the dividend rate banks pay as they increase lending.
The legislation establishes the State Small Business Credit Initiative to provide $900 million in grants to existing successful state small business programs that help private lenders extend more credit to small businesses.
The legislation raises the cap on small business loans to increase lending by $5 billion in the first year after enactment, and refinances commercial real estate debt into long-term, fixed-rate loans, provisions that are expected to be budget neutral and could create or save 200,000 jobs.
Building on successful initiatives we put in place through the Recovery Act, by making simple and cost-effective changes to the SBA's two largest lending programs and to its microloan program, we were able to pump more than $20 billion into more than 40,000 businesses in our economy. This legislation calls for an extension of these lending provisions through December 31, 2010.
Increase Small Businesses' Ability to Make Investments
· The legislation allows taxpayers to write off more of the cost of purchases for their business, such as equipment and machinery, in the year the purchase is made. The legislation also expands the types of purchases that would qualify for special expensing to include some types of real property, such as leasehold, retail and restaurant improvements. When small businesses are able to deduct the cost of purchases more quickly, they have more cash on hand to create jobs.
Promote Entrepreneurship
· The legislation doubles the amount of start-up expenditures that may be deducted by someone starting a small business, making it easier for new businesses to open.
· The legislation increases resources to support the Office of the United States Trade Representative's small business export promotion and trade enforcement activities. These efforts help U.S. small business exports grow in foreign markets and ensure small businesses compete on a level playing field.
· The legislation allows self-employed individuals to deduct health insurance costs for purposes of paying the self-employment tax.
The legislation improves the Small Business Administration's (SBA) trade and export finance programs, elevates the Office of International Trade within the SBA and adds export finance specialists to the SBA's counseling programs.
The legislation establishes the State Export Promotion Grant Program (STEP), which would increase the number of small businesses that export.
The legislation allows the SBA to waive or reduce the state-matching share of its funding requirement for up to one year to continue providing technical assistance to underserved communities to start and grow small businesses.
Promote Equity
· The legislation promotes tax fairness by preventing small businesses from incurring large tax penalties aimed at large corporations and wealthy individuals investing in tax shelters.
The legislation removes the red tape and closes loopholes that too often put government work into the hands of multinational corporations, instead of Main Street businesses.
The legislation makes clear that no single contracting program receives priority over another program when competing for federal contracts.
The legislation is fully paid for, closes unintended tax loopholes and reduces the tax gap.
Small Business California has been asked to comment on this bill. Caroline Bruckner in Senator Landrieu’s office is looking for your comments and support (Caroline_Bruckner@sbc.senate.gov).
Note one of the provisions is to allow full deductions for the self employed purchasing health insurance. We have worked on that for years and Senator Landrieu has always been there for us.
I have received a call from Caroline advising that she may not be able to respond to your email but know she appreciates it.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
For Immediate Release
June 29, 2010
BAUCUS, LANDRIEU UNVEIL BILL TO CREATE JOBS
AND HELP SMALL BUSINESSES GROW
Finance and Small Business Chairs Release Small Business Jobs Act
Washington, DC - Senate Finance Committee Chairman Max Baucus (D-Mont.) and Senate Committee on Small Business and Entrepreneurship Chair Mary Landrieu (D-La.) today released the Small Business Jobs Act, a bill to help small businesses access capital, stimulate investment in small businesses and promote entrepreneurship - all of which will help small business create jobs.
"Small businesses are the engine of our economy and need to be a critical focus of our job-creation efforts. Helping small businesses helps get Americans back to work," said Baucus. "Working together, we crafted our bill to promote entrepreneurship and investment in small businesses and provide small businesses with the vital access to capital they need to create jobs."
"Every day, headline after headline goes to big business layoffs and losses, but in reality it is the small businesses and their employees that are bearing the brunt of this crisis," said Landrieu. "Since the start of the economic downturn, 80 percent of the country's job losses came from small businesses. It is time to turn our attention to the small businesses and entrepreneurs to get Americans back to work. By providing some cost-effective and commonsense changes to lending, contracting and technical assistance programs, we can build on successful programs implemented in the Recovery Act to help small businesses keep their doors open. Ranking Member Snowe and I have crafted this package to include provisions that we have both advocated for, and I am very pleased with the finished product. As we finalize our package, I look forward to working with my colleagues on both sides of the aisle, as well as the other committees, to ensure the swift passage of this legislation."
The Small Business Jobs Act will:
Help Small Businesses Access Capital
· The legislation encourages investment in small businesses by allowing investors to exclude the gains from the sale of certain small business stock from their income for tax purposes if the stock is held for more than five years. This policy helps small business owners access more private capital to finance an expansion and hire new workers.
· The legislation reduces the tax burden for small businesses by allowing them to carry back general business tax credits to offset their tax burdens from the previous five years. Small businesses will also be able to count the general business credits against the Alternative Minimum Tax (AMT), freeing up capital for expansion and job growth.
The legislation establishes a Small Business Lending Fund of $30 billion to provide capital investments to small community banks to increase small business lending. The fund is limited to only the smallest banks, those who hold less than $10 billion in assets, and the performance-based program would incentivize only those lenders that extend new credit by decreasing the dividend rate banks pay as they increase lending.
The legislation establishes the State Small Business Credit Initiative to provide $900 million in grants to existing successful state small business programs that help private lenders extend more credit to small businesses.
The legislation raises the cap on small business loans to increase lending by $5 billion in the first year after enactment, and refinances commercial real estate debt into long-term, fixed-rate loans, provisions that are expected to be budget neutral and could create or save 200,000 jobs.
Building on successful initiatives we put in place through the Recovery Act, by making simple and cost-effective changes to the SBA's two largest lending programs and to its microloan program, we were able to pump more than $20 billion into more than 40,000 businesses in our economy. This legislation calls for an extension of these lending provisions through December 31, 2010.
Increase Small Businesses' Ability to Make Investments
· The legislation allows taxpayers to write off more of the cost of purchases for their business, such as equipment and machinery, in the year the purchase is made. The legislation also expands the types of purchases that would qualify for special expensing to include some types of real property, such as leasehold, retail and restaurant improvements. When small businesses are able to deduct the cost of purchases more quickly, they have more cash on hand to create jobs.
Promote Entrepreneurship
· The legislation doubles the amount of start-up expenditures that may be deducted by someone starting a small business, making it easier for new businesses to open.
· The legislation increases resources to support the Office of the United States Trade Representative's small business export promotion and trade enforcement activities. These efforts help U.S. small business exports grow in foreign markets and ensure small businesses compete on a level playing field.
· The legislation allows self-employed individuals to deduct health insurance costs for purposes of paying the self-employment tax.
The legislation improves the Small Business Administration's (SBA) trade and export finance programs, elevates the Office of International Trade within the SBA and adds export finance specialists to the SBA's counseling programs.
The legislation establishes the State Export Promotion Grant Program (STEP), which would increase the number of small businesses that export.
The legislation allows the SBA to waive or reduce the state-matching share of its funding requirement for up to one year to continue providing technical assistance to underserved communities to start and grow small businesses.
Promote Equity
· The legislation promotes tax fairness by preventing small businesses from incurring large tax penalties aimed at large corporations and wealthy individuals investing in tax shelters.
The legislation removes the red tape and closes loopholes that too often put government work into the hands of multinational corporations, instead of Main Street businesses.
The legislation makes clear that no single contracting program receives priority over another program when competing for federal contracts.
The legislation is fully paid for, closes unintended tax loopholes and reduces the tax gap.
Monday, June 28, 2010
Grandfathered Health Plans
On June 14 regulations were put forth explaining how health plans can be grandfathered. It appears that the regulations as written will mean very few businesses will be able to keep their current health plans. My personal comment is that this is very disappointing.
Plans in effect on March 23, 2010 and plans maintained pursuant to one or more collective bargaining agreements ratified before March 23, 2010, are “grandfathered” in certain respects.
For individuals and small business, who are more likely to significantly change the plan design (such as increase out of pocket expense or copayments) and/or change carriers, will lose their “grandfathered” status.
In order for a plan to not lose “grandfathered” status, it cannot do any of the things below:
Cannot Significantly Cut or Reduce Benefits.
Cannot Raise Co-Insurance Charges.
Cannot Significantly Raise Co-Payment Charges.
Cannot Significantly Raise Deductibles.
Cannot Significantly Lower Employer Contributions.
Cannot Add or Tighten an Annual Limit on What the Insurer Pays.
Cannot Change Insurance Companies.
There will be thousands of regulations written in the coming years and many will define what the health bill really is.
Scott Hauge
President
Small Business California
2311 Taravel Street
San Francisco, CA 94116
415-680-2188
shauge@cal-insure.com
Plans in effect on March 23, 2010 and plans maintained pursuant to one or more collective bargaining agreements ratified before March 23, 2010, are “grandfathered” in certain respects.
For individuals and small business, who are more likely to significantly change the plan design (such as increase out of pocket expense or copayments) and/or change carriers, will lose their “grandfathered” status.
In order for a plan to not lose “grandfathered” status, it cannot do any of the things below:
Cannot Significantly Cut or Reduce Benefits.
Cannot Raise Co-Insurance Charges.
Cannot Significantly Raise Co-Payment Charges.
Cannot Significantly Raise Deductibles.
Cannot Significantly Lower Employer Contributions.
Cannot Add or Tighten an Annual Limit on What the Insurer Pays.
Cannot Change Insurance Companies.
There will be thousands of regulations written in the coming years and many will define what the health bill really is.
Scott Hauge
President
Small Business California
2311 Taravel Street
San Francisco, CA 94116
415-680-2188
shauge@cal-insure.com
Tuesday, June 22, 2010
Doug Urbick's Comments
Five and a half years ago I founded Small Business California. My goal was to give small businesses a voice in Sacramento. A couple of weeks ago we presented our sales tax bill SB 1373 to the Revenue and Taxation Committee.
Testifying for our bill was Doug Ubrick from Hazard Construction. Chairman Wolk asked if this issue had ever come up before the legislature. Here is Doug’s answer
Question from Chairwoman Wolk:
A) Has there been prior legislation proposed on this and if not, why not?
To the best of our knowledge, there has not. The truth is that paving contractors are a fairly disjointed and unsophisticated group. The trade associations like the AGC (Associated General Contractors) tend to be lead by the larger more sophisticated contractors, included many of those who are vertically integrated. Trying to ‘change laws’ is just something that seems way beyond the grasp of the normal paving contractor. Small Business California has brought the ‘know-how’ to this group to finally address this inequity.
While these are paving contractors we have done the same thing in one way or the other for all of small businesses around the state. If you are not a member please consider joining.
You can do so by going to www.smallbusinesscalifornia.org
I am frequently asked if small businesses are using social marketing. Quite frankly in my business I have not done so.
Are you? Do you use Facebook, You Tube, Twitter or Yelp to market your business? Does it help you? If you use any of these what advice would you give to other businesses in how to effectively use these social marketing vehicles?
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
Testifying for our bill was Doug Ubrick from Hazard Construction. Chairman Wolk asked if this issue had ever come up before the legislature. Here is Doug’s answer
Question from Chairwoman Wolk:
A) Has there been prior legislation proposed on this and if not, why not?
To the best of our knowledge, there has not. The truth is that paving contractors are a fairly disjointed and unsophisticated group. The trade associations like the AGC (Associated General Contractors) tend to be lead by the larger more sophisticated contractors, included many of those who are vertically integrated. Trying to ‘change laws’ is just something that seems way beyond the grasp of the normal paving contractor. Small Business California has brought the ‘know-how’ to this group to finally address this inequity.
While these are paving contractors we have done the same thing in one way or the other for all of small businesses around the state. If you are not a member please consider joining.
You can do so by going to www.smallbusinesscalifornia.org
I am frequently asked if small businesses are using social marketing. Quite frankly in my business I have not done so.
Are you? Do you use Facebook, You Tube, Twitter or Yelp to market your business? Does it help you? If you use any of these what advice would you give to other businesses in how to effectively use these social marketing vehicles?
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
Monday, June 07, 2010
Support SB 1373/ 1099s
On Wednesday Small Business California sponsored bill SB 1373 will be coming before the Senate Revenue and Tax committee.
This bill will level the playing field between paving contractors and vertically integrated manufactuers/ contractors. Currently vertically integrated manufacturers/ contractors pay a sales tax based on the cost of materials that go into products like asphalt and paving contractors pay a sales tax based on the cost of the final product. This gives the vertically integrated manufacturer/contractor a 4% to 5% bid advantage.
Most of the paving contractors are small businesses and the vertically integrated manufacturers/ contractors are for the most part big business. We have seen many cases where these paving contractors have lost bids due to the sales tax advantage.
Many of you have sent emails to Senator Leno, author of 1373, supporting his legislation. Please see below members of the members of the Revenue and Tax Committee. If you are in one of the committee members district please send an email supporting SB1373. I know this probably doesn’t impact you directly but we need to show small business solidarity.
Lois Wolk (Sacramento, San Joaquin, Solano, Yolo), Chair: Senator.Wolk@senate.ca.gov
Mimi Walters (Orange, Tustin, Laguna Niguel, Laguna Hills) Vice Chair: Senator.Walters@sen.ca.gov
Elaine Alquist (Santa Clara): Senator.Alquist@sen.ca.gov
Roy Ashburn: (Bakersfield): Senator.Asburn@sen.ca.gov
Alex Padilla: (Los Angeles) Senator.Padilla@sen.ca.gov
Last week Harry Moos represented Small Business California and the Plumbing Heating and Cooling Contractors of California at a Dan Lungren press conference supporting Congressman Lungrens HR 5141.
As you have read here before the recently passed health bill had a provision that would require businesses to file 1099s on all businesses that you pay$600 or more to. Currently you only need to file 1099s for businesses that provide you services and who are not incorporated. What this means for my business, CAL Insurance, is that I currently file 25 1099s. Under the new law I will have to file about 700.
HR 5141 will repeal this requirement. Currently there are 70 cosigners on this bill. All are Republicans. The Democrats many of which recognize the burden this places on small business are not supporting this because the Congessional Budget Office has said this requirement will raise $17 billion over 10 years.
Write your Congressman and ask them to support HR5141.
One final comment. I don’t want anyone to think my above comments are a slap at Democrats. There is another bill HR 4302 which will provide for the waiver of fees on SBA loans, 90% guarantees on SBA loans and increase the size of SBA loans to $5 million. On that bill we have 63 Democrats and no Republicans. The partisianship in Washington is really hurting not just small business but the people of this country.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
This bill will level the playing field between paving contractors and vertically integrated manufactuers/ contractors. Currently vertically integrated manufacturers/ contractors pay a sales tax based on the cost of materials that go into products like asphalt and paving contractors pay a sales tax based on the cost of the final product. This gives the vertically integrated manufacturer/contractor a 4% to 5% bid advantage.
Most of the paving contractors are small businesses and the vertically integrated manufacturers/ contractors are for the most part big business. We have seen many cases where these paving contractors have lost bids due to the sales tax advantage.
Many of you have sent emails to Senator Leno, author of 1373, supporting his legislation. Please see below members of the members of the Revenue and Tax Committee. If you are in one of the committee members district please send an email supporting SB1373. I know this probably doesn’t impact you directly but we need to show small business solidarity.
Lois Wolk (Sacramento, San Joaquin, Solano, Yolo), Chair: Senator.Wolk@senate.ca.gov
Mimi Walters (Orange, Tustin, Laguna Niguel, Laguna Hills) Vice Chair: Senator.Walters@sen.ca.gov
Elaine Alquist (Santa Clara): Senator.Alquist@sen.ca.gov
Roy Ashburn: (Bakersfield): Senator.Asburn@sen.ca.gov
Alex Padilla: (Los Angeles) Senator.Padilla@sen.ca.gov
Last week Harry Moos represented Small Business California and the Plumbing Heating and Cooling Contractors of California at a Dan Lungren press conference supporting Congressman Lungrens HR 5141.
As you have read here before the recently passed health bill had a provision that would require businesses to file 1099s on all businesses that you pay$600 or more to. Currently you only need to file 1099s for businesses that provide you services and who are not incorporated. What this means for my business, CAL Insurance, is that I currently file 25 1099s. Under the new law I will have to file about 700.
HR 5141 will repeal this requirement. Currently there are 70 cosigners on this bill. All are Republicans. The Democrats many of which recognize the burden this places on small business are not supporting this because the Congessional Budget Office has said this requirement will raise $17 billion over 10 years.
Write your Congressman and ask them to support HR5141.
One final comment. I don’t want anyone to think my above comments are a slap at Democrats. There is another bill HR 4302 which will provide for the waiver of fees on SBA loans, 90% guarantees on SBA loans and increase the size of SBA loans to $5 million. On that bill we have 63 Democrats and no Republicans. The partisianship in Washington is really hurting not just small business but the people of this country.
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188
Tuesday, June 01, 2010
HR4213 Arises from the ashes/ Prop 16 results
A surprise occurred Friday in that HR4213 passed the House after looking dead Thursday.
While funding of the SBA program to waive fees and extend the 90% guarantee on 7a and 504 loans is a very small piece of the bill it is critical for small business and its ability to access capital. The bill started as a $200 billion measure it got passed as a $113 billion measure.
Unfortuately the Senate did not take up 4213 as they were in recess so funding has run out for the waiver and the guarantee. Hopefully it will get taken up quickly when the Senators return but it is no sure thing it can get the 60 votes needed for passage.
I found the results of the question on Prop 16 interesting. This is the PG&E measure that would require a two thirds vote for Community Aggregation/Public Power. The Small Manufacturers Association of California supports the Measure and the Golden Gate Business Association opposes. Most associations that responded did not have a position.
What was more interesting is that of the 25 individuals that responded only two supported and 22 opposed with one undecided. This certainly is not a large enough number to make any conclusions but I was surprised how lopsided it was.
One would think that small business would be opposed to government getting into any business but it seems as though the two thirds vote is perceived by many as wrong.
Lets try one more time. If you didn’t respond what is your position on Prop 16?
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge-cal-insure.com
415-680-2188
While funding of the SBA program to waive fees and extend the 90% guarantee on 7a and 504 loans is a very small piece of the bill it is critical for small business and its ability to access capital. The bill started as a $200 billion measure it got passed as a $113 billion measure.
Unfortuately the Senate did not take up 4213 as they were in recess so funding has run out for the waiver and the guarantee. Hopefully it will get taken up quickly when the Senators return but it is no sure thing it can get the 60 votes needed for passage.
I found the results of the question on Prop 16 interesting. This is the PG&E measure that would require a two thirds vote for Community Aggregation/Public Power. The Small Manufacturers Association of California supports the Measure and the Golden Gate Business Association opposes. Most associations that responded did not have a position.
What was more interesting is that of the 25 individuals that responded only two supported and 22 opposed with one undecided. This certainly is not a large enough number to make any conclusions but I was surprised how lopsided it was.
One would think that small business would be opposed to government getting into any business but it seems as though the two thirds vote is perceived by many as wrong.
Lets try one more time. If you didn’t respond what is your position on Prop 16?
Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge-cal-insure.com
415-680-2188
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