Bloomberg BNA: House Republican Challenges IRS on Complicated ACA Forms
By Brett Fergusen
October 8, 2014
Oct. 8 (BNA) - Draft forms and instructions for compliance with the Affordable Care Act are long and confusing, presenting tax preparers for small businesses with daunting new tasks, the chairman of the House Small Business Committee told IRS Commissioner John Koskinen.
Rep. Sam Graves (R-Mo.) asked for an accounting by Oct. 22 of what the tax agency is doing to help. In an Oct. 8 letter, Graves referred to Internal Revenue Service Form 8965 for claiming an exemption from the individual health insurance mandate. A draft of the form has “15 pages of complicated forms, instructions and worksheets,” which “millions of small business owners may be forced to rely on,” he said. Graves also referred to Form 8962 for claiming a premium tax credit, which involves 12 pages of worksheets and instructions.
Tax preparers have told the committee that the IRS hasn't issued guidance on the due diligence requirement they will face, according to Graves, who asked Koskinen whether the IRS was working with the Department of Health and Human Services to educate small business owners about the forms and issues, and what the IRS is doing to listen to the concerns.
Bloomberg BNA: House Republican Challenges IRS on Complicated ACA Forms
October 8, 2014
Small businesses and their tax preparers face the daunting tasks of understanding and completing new tax forms to comply with provisions of the Affordable Care Act, the chairman of the House Small Business Committee said.
“Most small businesses do not have tax advisors, attorneys or accountants on their staff. They must rely on outside assistance to navigate these complicated tax rules,” Chairman Sam Graves (R-Mo.) said in an Oct. 8 letter to IRS Commissioner John Koskinen.
Graves asked Koskinen to respond by Oct. 22 on whether the Internal Revenue Service is working with the Department of Health and Human Services to educate small business owners about the forms and issues, and what the IRS is doing to listen to the concerns of owners and tax preparers.
Tax preparers have told the committee the IRS hasn't issued guidance on the due-diligence requirement they will face, he said.
In his letter, Graves referred to Form 8965, Health Coverage Exemptions, which is used to claim an exemption from the individual health insurance mandate. A draft of the form has “15 pages of complicated forms, instructions and worksheets,” which “millions of small business owners may be forced to rely on to determine if they are entitled to an exemption and to claim it,” he said.
Graves also referred to Form 8962, Premium Tax Credit (PTC), which involves 12 pages of instructions and worksheets. The form is used to calculate the tax credit amount for qualified health plans purchased through a health insurance marketplace.
The Congressional Budget Office estimates that the individual mandate penalty may apply to 30 million people, of which 23 million may qualify for an exemption, Graves said.
The forms mention exemptions but “do not explain when taxpayers must apply for them, when or how that decision will be communicated, what appeals process will be used, and how long the exemption will be effective,” he wrote.
The IRS released draft instructions for Forms 8962 and 8965 in September (183 DTR G-2, 9/22/14).
Separately, the IRS reminded small employers about the value of the health care tax credit that begins in 2014.
“The maximum credit is 50 percent of premiums paid for small business employers, and 35 percent of premiums paid for tax-exempt small employers, such as charities,” the IRS said in an e-newsletter released Oct. 8.
The e-newsletter explains eligibility requirements and benefits and provides links to resources for more information.Read More
“In mid-September, the Internal Revenue Service (IRS) published numerous draft forms and instructions for compliance with the tax provisions of the Affordable Care Act. These documents are lengthy, complex and confusing to tax preparers who serve America’s small businesses,” the letter states.
The letter from Chairman Graves specifically inquires about two complicated and lengthy forms that millions of small businesses may encounter for the first time in tax preparations. Form 8965 is required for those claiming an exemption, and includes 15 pages of forms, instructions and worksheets.
“As you know, the Congressional Budget Office estimated that 30 million people could be subject to the individual mandate penalty, and 23 million of them may qualify for an exemption. This means that millions of small business owners may be forced to rely on these forms and instructions to determine whether they are entitled to an exemption and to claim it,” Graves states in the letter. “In addition, we are told that the Department of Health and Human Services (HHS) will issue some or all of the hardship exemptions. The forms mention those exemptions and that HHS or the exchanges will issue them, but do not explain when taxpayers must apply for them, when or how that decision will be communicated, what appeals process will be used, and how long the exemption will be effective.”
Similarly, Form 8962, which is required for taxpayers who wish to claim a premium tax credit, is 12 pages of forms, worksheets and instructions.
Graves concluded, “Most small businesses do not have tax advisors, attorneys or accountants on their staff. They must rely on outside assistance to navigate these complicated tax rules. On all of the above issues, is the IRS working with HHS to educate small business owners about these new forms and issues? What steps has the IRS undertaken to listen to the concerns of small business owners and their tax preparers?”
In his letter, Graves requests a response by October 22, 2014, to allow small businesses the necessary time for tax preparations. The full Graves letter to the IRS is available HERE.
WASHINGTON, DC – The House Small Business Committee Chairman Sam Graves (R-MO) today released the following statement regarding the Small Business Administration (SBA) Office of Advocacy’s new position that the Environmental Protection Agency (EPA) should withdraw their Waters of the U.S. rule:
“The SBA Office of Advocacy is saying what our Committee and small businesses all across America have been saying since April – the EPA Waters of the U.S. Rule is an unnecessary regulatory overreach and will have costly economic consequences,” said Chairman Graves. “I applaud the SBA Office of Advocacy for speaking up for small businesses, putting it at odds with another agency in the Executive Branch. They are 100 percent correct in their analysis of this rule-making process – the Waters of the U.S. Rule hasn’t been properly analyzed and it was created without legitimate small business input. I continue to maintain that the EPA must withdraw this rule.”
In April, the EPA and the Army Corps of Engineers proposed a rule that would redefine “waters of the United States” under the Clean Water Act. The Small Business Committee held hearings on the economic impact of this rule and the EPA rulemaking process on May 29, 2014 and July 30, 2014. In May, Graves and members of the Committee also wrote to EPA Administrator Gina McCarthy and Assistant Secretary of the Army Jo-Ellen Darcy, who oversees the U.S. Army Corps of Engineers, to urge withdrawal of the rule. Among their concerns, the EPA and Corps of Engineers did not adequately assess the impact of their proposed rule on small businesses and the EPA failed to conduct a Small Business Advocacy Review panel, as required by the Regulatory Flexibility Act. In September, the House passed the Waters of the United States Regulatory Overreach Protection Act (HR 5078), which would prohibit the EPA and the Army Corps of Engineers from finalizing their proposed rule.
CQ Roll Call: CMS: SBA Calls for Withdrawal of Water Rule
October 1, 2014
By Philip Brasher
The Small Business Administration said Wednesday that it is “extremely concerned” about the potential economic impact of a proposed Clean Water Act rule and called on the EPA and Army Corps of Engineers to withdraw it.
In a letter to those agencies, the SBA’s Office of Advocacy says they improperly analyzed the rule’s impact on agriculture, utilities and other sectors. Contrary to the language in the proposed rule, it would have “direct, significant impacts” on small businesses, the nine-page letter says.
The letter also says the EPA should convene a review panel to consider the rule’s impact on small businesses before proposing a revised version. The rule, issued this spring, would define the tributaries, wetlands and other bodies of water regulated by the law (PL 95-217).
The EPA and corps improperly certified that the rule would not have a significant economic impact on small businesses, in part because the agencies incorrectly compared the rule’s jurisdiction with a previous rule issued in 1986, according to the SBA. The proposed rule should have instead been analyzed in comparison to current practice, the letter says. According to the economic analysis that accompanied the rule, it would increase the area regulated under current practice by 3 percent.
“The 1986 regulation does not represent the current method for determining jurisdiction and has not served that purpose for more than 13 years. Using an obsolete baseline improperly diminishes the effects of this rule,” the letter says.
The letter also argues that the economic analysis cited in the rule itself contradicts the conclusion that the impact on businesses wouldn’t be direct or significant.
The letter echoes many complaints directed at the Obama administration during an intense lobbying campaign by farm groups, developers, mining companies and other interests.
The SBA also posted a fact sheet summarizing its comments.
Earlier this week, the EPA’s 52-member scientific advisory board approved a four-page letter that generally supports the rule but suggests it should be written more broadly in some ways.
House Small Business Committee Chairman Sam Graves (R-MO) today released the following statement about the ongoing problems of the Small Business Health Options Program (SHOP) one year into Obamacare’s troubled operations.
“From the time then-Speaker Pelosi proclaimed Obamacare should be passed ‘so you can find out what’s in it’ to today’s one-year anniversary of this burdensome law’s botched implementation, the administration has wildly over-promised and painfully under-delivered every step of the way. The past year has been littered with problems, including rising costs, cancellation notices and a faulty $2 billion website. Likewise, Obamacare’s Small Business Health Options Program has fallen woefully short of any kind of acceptable standard. To this day, the administration is unable to answer basic questions such as how many are enrolled in the program – the question this Committee has asked repeatedly since January. Instead of simplifying the health insurance process for small businesses, the SHOPs program has created confusion and uncertainty with five delays along the way. Small businesses have paid the price of this inept management. Many questions remain, including this straightforward one: How many small businesses are enrolled?”
During the recent September 18, 2014 hearing of the Small Business Subcommittee on Health and Technology, Chairman Chris Collins (R-NY) specifically asked the Centers for Medicare and Medicaid Services (CMS) witness, Director of State Exchange Group, Mayra Alvarez, about the SHOP enrollment data, yet the administration was still unable to provide the information, despite repeated claims of transparency. Beginning in January, Chairman Graves has repeatedly pressed the administration to provide data on the enrollment and updated compliance timeline of federal or state SHOPs, but the requests have gone unanswered. A June 2013 GAO report requested by Chairman Graves confirmed the administration was ill-equipped for the implementation of the SHOPs, as evidenced by the program’s track record since. The Committee’s first hearing on the SHOPs mismanagement took place in December 2013.
The SHOPs challenges have occurred while small businesses are grappling with rising health insurance costs; in fact, costs are increasing for nearly two-thirds of small businesses that provide health insurance to their employees. And the National Federation of Independent Business found that 64 percent of small business owners paid more per employee for health insurance in 2013 than in 2012.
“Washington’s mounting regulatory burden is destructive to America’s 28 million small businesses and harmful to the economy,” said Chairman Graves. “A recent study found that federal regulations cost $2 trillion in 2012 and that small businesses annually spend $11,724 per employee to comply with federal mandates. The provisions of the Regulatory Flexibility Improvements Act, now part of the Jobs for America Act, ensure that federal agencies fully consider the impact of new red tape on small businesses, and get valuable input from small businesses before a rule is completed. Too often, federal agencies ignore the requirements of the Regulatory Flexibility Act of 1980 (RFA) and implement regulations that impose unnecessary burdens on small businesses. Under this legislation, federal agencies can no longer exploit statutory loopholes to avoid meeting their obligations to America’s job creators. Not all regulations are bad, but many impose heavy costs on small businesses, and unnecessary barriers to growth and job creation should be reduced.”
TIMELINE: In September 2013, the Small Business Committee favorably reported out the Regulatory Flexibility Improvements Act of 2013 (HR 2542). In February 2014, HR 2542 was included as Title III of the ALERRT Act, which passed the House by a bipartisan vote of 236-179. To date, the Senate has failed to act. The transcript and video of Graves’ floor speech on the ALERRT Act can be viewed here. Last Congress, the similar Regulatory Flexibility Improvements Act of 2011 (H.R. 527) passed the House by a bipartisan vote of 263-159, but died in the Senate.
SMALL BUSINESS QUOTE: “Unfortunately, all too often federal agencies view RFA compliance as either a technicality of the federal rulemaking process or, worse yet, as unnecessary. In an effort to ensure that regulations are crafted in accordance with the Congressional intent of the RFA, I urge Congress to seek out ways to improve agency compliance with the Regulatory Flexibility Act.” – Carl Harris, Homebuilder from Wichita, Kansas. (3/14/2013 hearing)
View more quotes HERE.
Reducing unnecessary regulatory burdens for small business has been a priority of Chairman Graves’ tenure at the Committee. In January 2013, the Small Business Committee launched the "Small Biz Reg Watch" initiative, which encourages small businesses to participate in the federal rulemaking process by regularly highlighting new agency proposed rules that may have a significant effect on small firms and encouraging business owners to submit comments to agencies.### Read More
House Small Business Committee Chairman Sam Graves (R-MO) today introduced legislation that will streamline and simplify the loan application process at the Small Business Administration (SBA) by requiring the agency to permit the use of e-signature and electronic records. The Small Business Loan Simplification Act of 2014 (HR 5599) would statutorily bring the SBA up-to-speed with technology already being used by private lenders and other federal agencies. Rep. Steve Chabot (R-OH), Rep. David Schweikert (R-AZ), Rep. Richard Hanna (R-NY), Rep. Tim Huelskamp (R-KS), and Rep. Chris Collins (R-NY) are original co-sponsors.
“Access to capital continues to be a major issue for many small businesses and people trying to start new companies,” said Chairman Graves. “A lengthy and complicated loan application process is often a great impediment for many small businesses to secure the capital they need to get their products or services to market. The majority of the time spent during the SBA loan application process consists of lenders collecting required documentation and having to seek out the ink signatures of borrowers. The Small Business Loan Simplification Act of 2014 will employ widely used and proven e-signature and records technology to reform the SBA loan process. This will likely cut the application process by an average of 2 to 3 days.”
The Electronic Signatures in Global and National Commerce Act (ESIGN) of 2000 made valid the use of e-signatures on binding documents, but the SBA has not yet permitted their use during the application process for its array of financing programs.
General bank lending to small businesses still has not returned to pre-recession levels. According to the Federal Deposit Insurance Corporation, at the end of the first quarter, banks held $585 billion in loans to small businesses, which is 18% lower than in 2008. And the number of loans for $1 million or less held by banks is down about 14% from 2008.
The bill is widely supported by industry, including the leading providers of electronic signature and record technology, the banking community, and a number of organizations representing various types of SBA lenders.
Small Business Loan Simplification Act of 2014 (HR 5599):
• Permits participants in SBA financing programs, both borrowers and lenders, to use electronic signatures and records in the certification and transmission of documents.
• Requires the SBA to accept electronic signatures and records associated with the management of its financing programs.
Bloomberg BNA: Lawmaker Wants E-Signatures for SBA Loans; Says Proposal Would Cut Application Time
September 18, 2014
Sept. 18 (BNA) -- The Small Business Administration would have to accept electronic signatures in its financing programs under a proposal that the sponsor says would cut the loan application process an average of two to three days.
A 2000 law, the Electronic Signatures in Global and National Commerce Act, made valid e-signatures on binding documents, but their use is not universal. Rep. Sam Graves (R-Mo.) says his bill, the Small Business Loan Simplification Act of 2014, permits participants in SBA financing programs — borrowers and lenders — to use electronic signatures and records in the certification and transmission of documents. The legislation also requires the SBA to accept electronic signatures and records associated with the management of its financing programs.
Graves said a long, complicated loan application process “is often a great impediment for many small businesses to secure the capital they need to get their products or services to market.”
Reform SBA Loan Process
“ The majority of the time spent during the SBA loan application process consists of lenders collecting required documentation and having to seek out the ink signatures of borrowers,” said Graves, who chairs the House Small Business Committee. “The Small Business Loan Simplification Act of 2014 will employ widely used and proven e-signature and records technology to reform the SBA loan process. This will likely cut the application process by an average of 2 to 3 days.”
A committee press release says general bank lending to small businesses hasn't returned to pre-recession levels and cites Federal Deposit Insurance Corporation figures showing that at the end of the first quarter, banks held $585 billion in loans to small businesses, 18 percent lower than in 2008.
The Small Business Subcommittee on Health and Technology, under the chairmanship of Rep. Chris Collins (R-NY), today conducted a hearing to examine the ongoing problems with the Small Business Health Option Program (SHOP) exchanges, exchanges and to seek answers on behalf of America’s small businesses. During the hearing, Chairman Collins specifically asked the Centers for Medicare and Medicaid Services (CMS) witness, Director of State Exchange Group, Mayra Alvarez, about the SHOP enrollment data, however, the administration was again unable to provide the information, despite repeated claims of transparency.
From the very beginning, the SHOPs program has created more uncertainty and confusion for small businesses by delaying rules at least five separate times. A June 2013 GAO report requested by House Small Business Chairman Sam Graves (R-MO) confirmed the administration was ill-equipped for the implementation of the SHOPs, and the program’s record has since confirmed that prediction. SHOPs were meant to simplify the process of purchasing health insurance, expand employee choice and reduce the cost of health coverage for small businesses, but those goals have come nowhere close to being met. Chairman Graves has repeatedly pressed the administration to provide data on the enrollment and updated compliance timeline of federal or state SHOPs, but the requests have gone unanswered.
All of these challenges regarding SHOPs have occurred while small businesses are grappling with rising health insurance costs that are increasing for nearly two-thirds of small businesses that provide health insurance to their employees. And the National Federation of Independent Business found that 64 percent of small business owners paid more per employee for health insurance in 2013 than in 2012.
“Uncertainty and confusion are a recipe for disaster for small businesses,” said Chairman Collins. “The ability to plan ahead is key for small companies, especially since they don’t have large staffs to deal with tax, regulation, employee benefits and government mandate compliance. So, for the Small Business Health Options Program to be implemented so poorly is a major headache for the nation’s small business community. I’m pleased that CMS sent an official to testify today, but questions still remain about the viability and data collection for this program moving forward. It’s shocking that, after the billions of taxpayer money that has been spent on Obamacare, there was no process created for recording and measuring the SHOP enrollment data on a regular basis. HHS and CMS need to do a better job of operating and tracking the exchanges and communicating what lies ahead for the program.”
The Committee’s first hearing on this topic took place in December 2013. Materials from this hearing are available on the Committee’s website HERE.
Dr. Roger Stark, Health Care Policy Analyst at the Washington Policy Center in Seattle, WA said, “Although the employer mandate is a critical part of the ACA, the SHOP marketplace for small businesses seems to be almost an afterthought in the law. There is no clear evidence of interest on the part of small companies to provide health insurance through a marketplace with tax credits.
The paperwork and regulatory burden in the SHOP exchange are definite hurdles for a small business employer. There is no real free market in the individual exchanges or in SHOP. Proponents will claim that competition exists, yet all insurance plans offered in the exchanges must contain the ten government-mandated essential benefits. Insurance premium prices must be approved by the government. Consequently, individuals and employers only have government-approved plans and not meaningful choices or real competition.”
Adam Beck, Assistant Professor of Health Insurance at The American College of Financial Services in Bryn Mawr, PA said, “The Small Business Health Options Program, or SHOP Marketplace, was designed by the 111th Congress to lower health costs for small business, increase competition and therefore choice for business owners, and simplify the process of offering health coverage. These are laudable goals, however it is my opinion that the SHOP Marketplace as it is currently structured and presented falls short of these goals. I believe the SHOP Marketplace will remain inadequate and continue to enroll relatively few companies so long as three factors remain: the existing tax incentives, the lack of engagement of agents and brokers, and shortcomings in information technology infrastructure.”
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