• New at the SBA

• IRS Compliance Audit Recommendations

• In the News: Office of Homeland Security

• Attention Minnesota NASE Members

New at the SBA

The U.S. Small Business Administration (SBA) Office of Advocacy has been busy the past few weeks. Below is a sampling of some of the efforts they have undertaken recently on behalf of the self-employed and micro-businesses. For more information on these initiatives and everything the SBA Office of Advocacy does for micro-businesses, visit www.sba.gov/advo/.

Memorandum of Understanding: The SBA Office of Advocacy and SBA Ombudsman signed a Memorandum of Understanding with the Occupational Safety and Health Administration (OSHA) regarding new OSHA ergonomic guidelines. The Office of Advocacy and OSHA agreed to work together to inform small businesses of these guidelines. The agreement makes clear OSHA and the Ombudsman's roles in listening and responding to the concerns of small-business owners.

Executive Order Compliance Guide: This new guide will assist federal agencies in implementing new procedures that will decrease burdensome regulations. President Bush’s recent Executive Order 13272 directed his administration to do a better job protecting small business from the destructive effects of one-size-fits-all federal regulations. The over 100-page SBA guide provides federal agencies with a comprehensive blueprint for consideration of their impact on small business when they issue new regulations.

Auditing Recommendations: See the article below for the SBA Office of Advocacy recommendations if your business is subject to an IRS audit – following these guidelines could save you a lot of time and money.

SBA Open House: The SBA held an open house last week and NASE Board Member David Alders attended. Alders has recently been appointed as the NASE Regulatory Affairs Liaison. He met with Chief Counsel Tom Sullivan and other key members of the SBA Office of Advocacy staff.
 

IRS Compliance Audit Recommendations

In the November issue of “The Small Business Advocate,” the SBA Office of Advocacy released these recommendations to businesses subjected to an IRS Compliance audit. We have reprinted the article in full, because the NASE feels this information is important for you and your business. To read the entire issue of “Small Business Advocate,” visit http://www.sba.gov/advo/.

“Over the next few months, 50,000 taxpayers (including some 30,000 small business owners who file Schedule Cs) will be audited by the Internal Revenue Service to compile information for the agency’s audit selection system. These audits are part of the National Research Program (NRP), a comprehensive effort to measure payment, filing, and reporting compliance for different types of taxes and various sets of taxpayers. The NRP purpose is to help the IRS build better compliance programs to more effectively catch tax cheating and help ensure everyone pays a fair share.

Although the primary purpose of the NRP discretionary audits is to gather information, their effects are as real as any enforcement audit. Any disparities that are uncovered during these audits may result in additional taxes, fines, and penalties. Revenue agents will be using federal and private databases to collect as much information about the taxpayer as possible prior to the face-to-face audit. This means that the agent will already know a formidable amount about you and your business before the audit even starts.

If you are selected for an audit we recommend you do the following:

• Read all materials carefully. The IRS materials should inform you of your rights, the scope of the audits, and the materials and process they will use to get the information they need.

• Familiarize yourself with your current and past returns. Take time and be thoroughly familiar with your recent returns. By doing your homework before the audit, you can anticipate questions that might arise and reacquaint yourself with the facts and decisions that support your return.

• When in doubt, seek professional advice. Unfortunately, any audit will cost a business owner time and, quite likely, money. The IRS is using computerized information to compile as much of your data as possible. If you are uncertain about items on your return, consult a professional or have them represent you at the audit. Remember that information that may appear insignificant to you may be a “red flag” for an experienced tax auditor. A professional tax advisor will know exactly what the revenue agent is looking for.

• Stop, look, and listen! The Office of Advocacy met several times with the IRS in an effort to minimize the imposition of the NRP on small businesses selected for audits. The IRS acknowledged that a taxpayer involved in a NRP audit may want to stop the audit if he or
  she feels that the questions are unclear or beyond the original scope indicated. Consequently, the IRS has agreed that a taxpayer who becomes uncomfortable for any reason during the NRP audit can stop the audit, leave, and schedule another appointment. This will allow the taxpayer time to review the facts more closely or seek the needed help and information as appropriate.

For more information, contact Russell Orban, assistant chief counsel for tax policy, (202) 205-6946 or russell.orban@sba.gov.

If Audited, Know Your Rights
The Office of Advocacy has met repeatedly with the IRS to ensure that the impact of NRP audits on the taxpaying small business is minimal. Although the primary purpose of these discretionary audits is to gather information, their effects are as real as any enforcement audit. Disparities that are uncovered during these audits may result in additional taxes, fines, and penalties. If a small business owner feels that the questions are unclear, beyond the original scope indicated, or uncomfortable for any reason, the IRS has agreed that the taxpayer can stop the audit, leave, and schedule another appointment. This will allow the business owner time to review the facts more closely or seek the needed help and information.”
 

In the News: Office of Homeland Security

President Bush signed legislation this week to create a new Department of Homeland Security. The new Cabinet department is expected to employ 170,000 workers and combine 22 existing agencies, making it the most extensive reorganization of the Federal Government since the 1940s. Bush named current homeland security chief Tom Ridge to head the new department. For more information, visit the White House Web page at www.whitehouse.gov.
 

Attention: Minnesota NASE Members

U.S Department of Health and Human Services Secretary Tommy Thompson will host a health care Town Hall meeting in Minneapolis, Minn., and wants you attend. The goal of the meeting is to further explore what consumers, employers, health care providers, large and small-business owners and others can do to help Americans purchase their own health insurance and better control their coverage and cost. “Affordable Health Care: Promoting Choice and Controlling Cost” will be held on December 10, 2002, at the Marriott Minneapolis Southwest.

For more information about the Town Hall or to register, visit: http://www.publicforuminstitute.org/hhs2002/.
 

Do any of these issues affect you? Do you want to be proactive in helping the micro-business community? Visit the NASE's Legislative Action Center and “Tell Your Small Business Story.” This will help the NASE understand - on a personal level - how key legislative issues are affecting your business and your bottom line.

For more information about any of the articles in Washington Watch, contact Maureen Petron, NASE public affairs manager, at (202) 466-2100 or mpetron@nase.org.