• A Major Tax Victory for Small Business

• Economic Stimulus Negotiations Begin

• House Approves Fast Track Trade Negotiating Authority

• Small Business Administration Launches BusinessLaw.gov

A Major Tax Victory for Small Business

The Bush Administration announced this week that it is increasing the cash accounting safe harbor to $10 million. Under this new accounting rule, most small-service providers with average receipts of $10 million or less will be allowed to use the cash method of accounting rather than costly and time-consuming accrual and inventory methods.

The Internal Revenue Service estimates that more than 500,000 businesses may take advantage of significant tax simplification due to the increase in the safe harbor.

“This is a major victory for the nation’s small businesses,” said NASE President Robert Hughes. “Now more small-business owners will be able to take advantage of the easier method of accounting, leaving them more time to make their businesses successful.”

Currently, the IRS can impose the more stringent method, accrual accounting, on businesses with more than $1 million in receipts. Under accrual accounting, a business generally reports income when it has a right to receive payment and deducts expenses when it has a fixed and determinable liability for them. This can be complicated and also lead to cash flow problems for small businesses.

However, under the cash method of accounting, a business reports income and deducts expenses when the related payments occur. 

Taxpayers should be able to take advantage of the new rule as early as the 2001 tax year.

Additional details on this relief will be available in IRS Notice 2001-76. For more information visit the IRS Web site at www.irs.gov .

Economic Stimulus Negotiations Begin

Because the outcome of the economic stimulus package is crucial to small business, the National Association for the Self-Employed has been in constant contact with our nation’s legislators. The NASE will continue to work with Congress to ensure the package will have a positive effect for the self-employed and small business.

Representing the Senate in the negotiations are Majority Leader Sen.Tom Daschle (D-SD) and members of the Finance Committee including Chairman Max Baucus (D-MT), Ranking Member Charles Grassley (R-IA) and John Rockefeller (D-WV). The House will be represented in the negotiations by Majority Leader Dick Armey, Bill Thomas (R-CA), Chairman of the Ways and Means Committee and Charles Rangel (D-NY), Ranking Member. 

Proposed expansion of health benefits and unemployment for displaced workers became an early focus of stimulus talks. Rep. Bill Thomas has offered a 13-week extension of unemployment benefits, which Democrats have demanded, as well as a tax credit and voucher that unemployed people can use to obtain health insurance. Democrats are seeking even broader relief.

President Bush has indicated his support for an acceleration of income tax cuts now set to take effect in the future, approval of another batch of rebate checks, a boost in expensing and depreciation write-offs for business and also corporate alternative minimum tax relief. 

The NASE encourages you to get involved by writing your elected officials to support this legislation. To make this task easier, the NASE has composed a pre-written letter on the subject that can be found in the Legislative Action Center . 

House Approves Fast Track Trade Negotiating Authority

The House passed the Bipartisan Trade Promotion Authority Act of 2001 (H.R. 3005) by the narrow vote of 215 – 214. The bill, sponsored by Ways and Means Committee Chairman Bill Thomas (R-CA), would renew the President’s fast track authority to negotiate trade agreements until June 1, 2005. 

The measure sets forth the overall trade negotiating objectives of the United States for trade agreements and for the first time, the bill includes labor and environmental standards. Fast track trade authority renewal has been a key agenda item for the Bush administration. 

For more information, please contact Kristie Darien, NASE Director of Government Affairs, at 202-466-2100 or kdarien@nase.org.

Small Business Administration Launches BusinessLaw.gov

The U.S. Small Business Administration has launched a new Internet site, BusinessLaw.gov, to assist in alleviating the regulatory compliance burden on small businesses and self-employed individuals. The site offers small-business owners access to an array of legal and regulatory information on national, state and local levels. 

"Understanding federal, state and local laws and regulations that affect day-to-day operations is critical to small-business success. Because it provides interagency and intergovernmental information arranged by subject, BusinesssLaw.gov will simplify the way government at all levels interacts with small businesses," said SBA Administrator Hector V. Barreto in unveiling BusinessLaw.gov at the National Press Club with Mark Forman, Associate Director for Information Technology and E-Government, Office of Management and Budget.

BusinessLaw.gov also offers online links to reliable sources of information on over 39 areas of interest for small-business owners, such as e-commerce, permits, finance, etc.

For more information on BusinessLaw.gov, please contact the Small Business Administration at 1-800-827-5722 or go to www.sba.gov.

For more information, please contact Kristie Darien, NASE Director of Government Affairs at kdarien@nase.org.