House Small Business Committee
Small companies were still reeling from the recession in 2011 when Sam Graves became chairman of the House Small Business Committee. As the Missouri Republican prepares to leave his post, small business has a higher profile, partly because of the committee's legislation on issues like federal contracts and its more than 200 hearings.
"I think he's had a pretty good record," says Todd McCracken, president of the advocacy group National Small Business Association. "His is one of the most active committees in Congress."
Although the committee's primary function is overseeing the Small Business Administration, under Graves it became a forum on small business issues, McCracken says. Among them: health care, taxes, availability of bank loans and federal regulations. The committee also campaigned with other lawmakers for small business legislation.
Graves cites as one of his achievements the repeal of a law requiring businesses to report to the IRS sales of goods or services over $600, a regulation that would have sharply increased companies' paperwork. The committee was one of the first to hold a hearing about the law, says Kevin Kuhlman, director of legislative affairs for the National Federation of Independent Business.
Graves also pressured government agencies for more time for companies to comment on regulations like an Environmental Protection Agency rule on waterways, Kuhlman says.
The committee is one of several government advocates for small business, along with the Senate Committee on Small Business & Entrepreneurship and the SBA. Graves has been on the committee since 2001; his term as chairman ends Jan. 3 under limits set by the Republican majority. He'll move to the House Transportation and Armed Services committees and be succeeded by Steve Chabot, R-Ohio.
Graves spoke recently with The Associated Press. Here are excerpts, edited for brevity and clarity:
Q. What have been your biggest accomplishments on the committee?
A. The biggest by far is making the committee relevant. We came in at the height of the recession, and the Small Business Committee was in many cases taking a back seat and I think there were some out there who didn't think it was relevant. But when you have small businesses creating seven out of every 10 jobs, it's extraordinarily relevant, and we brought that relevance to the forefront with our very active hearing schedule and some very high profile witnesses including Treasury Secretary Tim Geithner.
We leveraged the Regulatory Flexibility Act in ways that hadn't been done before, forcing the administration to comply and do its analysis (of the burden regulations place on small businesses). We've been very active in contracting reform, which is one of the cornerstones of what I've been trying to do, making sure small businesses are included in government contracts.
Q. What is the biggest thing you've learned about small business from the committee?
A. Small businesses face different challenges in different parts of the country, and one of the biggest is access to capital. For some small business segments, it's very easy to get, but what I've learned is for some sectors, like service-based businesses or startups, it's very hard for them to get the capital they need. In many cases they don't have assets to use as collateral.
Q. What advice do you have for small business owners?
A. Sometimes when you're going after an SBA loan, it is so overwhelming, the amount of paperwork and the burdens. Don't give up. There is light at the end of the tunnel. We're trying to make it easier, trying to reduce that paperwork and the hoops you've got to jump through. Hang in, because it'll happen.
Q. What should Congress and the next Small Business Committee focus on?
A. Continue with contracting reform. We have to do everything we can to allow small businesses to be able to participate in these contracts. We have to continue to keep the government from (combining small contracts into larger ones) to the point where no one can compete except for the very largest businesses. My reforms led to the government finally reaching its goal for giving 23 percent of contracting dollars to small businesses. One of the things we tried to do was increase that to 25 percent. That's something that needs to continue.
House Small Business Committee Chairman Sam Graves (R-MO) issued the following statement in support of the Tax Increase Prevention Act (HR 5771):
“High taxes and a complex tax code have a devastating effect on small businesses,” said Chairman Graves. “I support extending these business-friendly tax provisions that will help our economy improve. The research credit, bonus depreciation, property expensing, small business stock exclusion, and reduction in S-corporation recognition period for built-in gain are worthy extensions that will help small businesses grow and create jobs.
“The SBA reports that the average tax compliance cost per employee for small businesses is almost three times the per employee cost for the average large firm, and small businesses spend more than 5.5 billion hours fulfilling their income tax obligations. The power of our entrepreneurial private sector won’t be unleashed until we provide tax relief for our small business community.”
Beneficial tax extenders for small businesses in the Tax Increase Prevention Act include:
• Section 111. Extension of research credit
• Section 122. Extension of 15-year cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements
• Section 125. Extension of bonus depreciation
• Section 127. Extension of increased expensing limitations and treatment of certain real property as section 179 property
• Section 136. Extension of temporary exclusion of 100 percent of gain on certain small business stock
• Section 138. Extension of reduction in S-corporation recognition period for built-in gains tax
The Committee has made small business tax issues a high priority during the past two Congresses. In April, Graves held a hearing on the challenges small businesses face with complying with the tax code. A National Small Business Association (NSBA) tax survey was released in conjunction with the hearing, showing that a majority of small businesses spend 40 hours preparing to file their taxes, while 40 percent spend a costly two full workweeks on the process. In April of 2013, the Committee held a hearing with Ways and Means Committee Chairman Dave Camp supporting tax reform.
During the 112th Congress and early in the 113th Congress, the Committee has been successful in including small business legislation that it marked up in the final NDAAs that were signed into law. Given that about 70 percent of government contracts are awarded by the Department of Defense, the Armed Services Committee and Small Business Committee have worked together to include reforms into the NDAA.
“I’m pleased that we were able to again include many of our small business contracting reforms in this year’s NDAA,” said Chairman Graves. “The included legislation will help small businesses have a better chance at competing in the procurement marketplace. Our reforms from the last several years have contributed to the federal government finally reaching the 23 percent small business contracting goal for the first time in eight years. The reforms in this NDAA will help this accomplishment become a regular occurrence.”
“Many of our federal government procurement bidding processes are unnecessarily complex and complicated, especially for small businesses,” said Subcommittee on Contracting and Workforce Chairman Richard Hanna (R-NY). “These reforms are a positive step toward giving small contractors the ability to more fairly compete for business. I am particularly pleased that we are making progress in reforming reverse auctions which actually hurt taxpayers and small contractors in industries like construction and design.”
Committee-sponsored legislation included in this year’s NDAA:
Design-Build Bidding Reform (Section 814) – Simplifies the multistep process of competing for design-build contracts with the Department of Defense. Originated as the Design Build Efficiency and Jobs Act of 2013, sponsored by Graves.
Comprehensive Subcontracting Plan Reform (Section 821) – At the request of Graves, the NDAA included provisions to increase transparency and accountability in the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans.
Contracting Data and Bundling Accountability (Section 822) – Brings more transparency to data reported on bundled and consolidated contracts. Originated as the Contracting Data and Bundling Accountability Act of 2013, sponsored by Graves, and passed by the Committee.
Export Assistance for Small Businesses (Section 823) – At the request of Committee members, the NDAA included provisions intended to help small businesses comply with complicated import and export requirements with the International Traffic in Arms Regulations and Export Administration Regulations.
Reverse Auctions Reform (Section 824) – Within the Department of Defense, this provision limits the use of reverse auctions by banning the use of single-round reverse auctions, single-bid reverse auctions absent price protections, third-party reverse auctions that include inherently governmental functions or private past performance evaluations, and reverse auctions for design-build work. Given that 95 percent of reverse auctions are for contracts of less than $150,000, improper use of this tool has been harming small businesses, limiting competition, and delivering contracts that fail to save the taxpayers money. Originated as the Commonsense Construction Contracting Act of 2013, sponsored by Hanna, and passed by the Committee.
Women-Owned Small Businesses (Section 825) – Permits sole-source contracts for Women-Owned Small Businesses (WOSBs) and Economically-Disadvantaged Women-Owned Small Businesses (EDWOSBs) if there is only one WOSB or EDWOSB who can perform the work and the value of the contract is below $ 4 million, or $6.5 million for manufacturing. This provides WOSBs and EDWOSBs with the same sole-source authority currently available to HUBZone and Service-Disabled Veteran-Owned Small Businesses firms. Originated as the Women's Procurement Program Equalization Act of 2013, sponsored by Ranking Member Nydia Velasquez (D-NY), and passed by the Committee.
The Graves’ resolution encourages people to buy goods and services locally from the small firms in their communities on November 29th, the Saturday after Thanksgiving. Again this year, Small Business Saturday coincides with the holiday weekend’s traditional surge in economic activity. Major retailers often advertise heavily for “Black Friday” shopping specials, and since 2010, Small Business Saturday has followed with a “shop local” theme. This bipartisan resolution helps raise awareness of the value of having thriving small businesses in every community and the outsized impact of small businesses on the U.S. economy.
“I’m pleased to introduce the ‘Small Business Saturday’ resolution for 2014, and express support for the small firms that serve our communities every day,” said Chairman Graves. “The Saturday after Thanksgiving is a great opportunity to simply say ‘thank you’ to a small business near you. Small businesses have a big impact on the economy, and they are built on hard work and good ideas. By employing nearly half of all private sector employees in the country, small businesses support millions of families, and we can all celebrate when they succeed.”
Rep. Collins (NY)
Rep. King (IA)
Rep. Ryan (OH)
Rep. Sanchez (CA-46)
Rep. Van Hollen
Congressional Quarterly: Graves: SBA Rule Change Would Hurt Small Businesses
November 19, 2014
By Shawn Zeller
House Small Business Committee Chairman Sam Graves and the Small Business Administration are quarreling again over a new administration move to increase the size of firms eligible for government contracts set aside for small companies.
Graves, R-Mo., wrote this month to Khem R. Sharma, the chief of the SBA’s size standards division, to protest the agency’s proposal in September to allow larger companies in 30 industries to apply for the set-asides.
It would, for instance, set the bar for book publishers seeking small business contracts at up to 1,000 employees, twice the current 500. Companies that extract natural gas or oil could employ 1,250 workers, up from 500.
Graves’ concern is over the agency’s plan to eliminate a special exemption that allows information technology firms with up to 150 workers to win large contracts to advise agencies on their hardware and software needs and to then buy and install the equipment. The SBA would do away with the 150-worker rule and limit eligible firms to $25.5 million in revenue.
SBA says it is changing the rules to adjust to changes in the business world. The IT rule change might help agencies better coordinate IT procurement to ensure government computer systems work well together, a common problem now, by ensuring better-equipped firms get the deals.
But Graves, as well as some advocates for small businesses and the IT firms themselves, say this would hurt many small companies because the cost of computer equipment would be counted against the $25.5 million. For firms with 150 employees and a $25.5 million government contract, “simply paying for supplies and the salaries of employees will cause the company to run a deficit,” Graves wrote, arguing SBA should keep the head-count standard.
The American Small Business League, a California-based group that’s long criticized the SBA for not helping more small companies win government deals, is threatening to sue the agency if the rule is finalized. Lloyd Chapman, the league’s president, says the proposal is “absurd and laughable” and that it would “devastate thousands of small businesses.”
But Sharma notes the agency is merely carrying out the mandate it received in a 2010 law (PL 111-240) to review all of its size standards for small business contracts every five years. The bill was enacted by a Democratic Congress over Republican objections. Sharma notes many of the size standards haven’t been adjusted since the 1970s and are out of step with the current contracting market.
When the SBA moved to increase some of the size standards in 2011, Graves – who’d become chairman of the Small Business Committee that year – objected on the grounds that they would hurt some small firms, and the agency scaled back its plans.
The following year, at Graves’ urging, Congress included provisions in the fiscal 2013 defense authorization (PL 112-239) aimed at making it harder for the agency to raise size standards by requiring the SBA to conduct more comprehensive reviews of the affected industries. Graves contends that the September proposed rule violates that law.
The main trade group for government contractors, the Professional Services Council, says although Graves’ concerns about the change in IT contracting rules may be legitimate, it generally supports the SBA’s efforts. “We’ve felt for a long time that the size standards do not reflect the current market realities for federal procurement,” says Alan Chvotkin, the group’s executive vice president.
House Small Business Committee Chairman Sam Graves (R-MO) today urgedthe Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (Corps) to withdraw the “Waters of the United States” proposed rule to expand the reach of the Clean Water Act (CWA), due to the agencies’ failure to examine the impacts of the proposal on small entities as required by the Regulatory Flexibility Act (RFA). The agencies certified the proposed rule as one that will not have a significant economic impact on a substantial number of small entities.
In a comment letter, Graves wrote, “Based on the testimony from the hearings and the Committee staff’s analysis, the Committee disagrees with the agencies’ certification of the Proposed Rule. Contrary to the agencies’ assertions, the Proposed Rule will increase the geographic scope of CWA jurisdiction and small entities will be directly affected. The EPA should have conducted a Small Business Advocacy Review (SBAR) panel to get input from small entities and performed an initial regulatory flexibility analysis (IRFA) assessing the impacts of the Proposed Rule on small entities as required by the RFA. Unfortunately, the agencies did not do so and instead engaged in arbitrary and capricious rulemaking.”
A particular concern is the rule’s failure to clarify what specifically are “Waters of the United States,” which is one reason the regulation was deemed necessary.
“For a large business with access to lawyers and civil engineers deciphering these terms would be very problematic. For small entities such as a rural town government, a farmer or a home builder, the determination of whether a water body is an adjacent water under the Proposed Rule will be well nigh impossible due to the inherent vagueness. This inherent vagueness portends significant civil liability if the small entity is incapable of ascertaining whether it needs a permit under §§ 402 or 404 of the CWA,” Graves continues.
“The agencies failed to comply with the requirements of the RFA and their rationales appear to be nothing more than pretexts to avoid consideration of impacts on small businesses, small governmental jurisdictions and small not-for-profits as directed by Congress.”
Graves concludes, “As it now stands, the Proposed Rule will clarify little, lead to significant litigation (including challenges that might prohibit enforcement against small entities), and ultimately undermine the agencies’ mission of protecting the waters of the United States from degradation. The only logical course for the agencies is to rescind the proposal and reissue it after fully complying with the RFA so the end result will be a logical, non-arbitrary rule that actually clarifies definitions and protects the waters of the United States.”
The Committee held a hearing on this proposed rule on May 29, 2014. Small business leaders have overwhelmingly maintained that the rule creates more confusion, would be economically detrimental on many levels, and wouldn’t improve water quality. Also in May, Graves and Members of the Committee 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 pending rule.
Congressional Quarterly: Small Business Exchanges Find Few Customers So Far, Study Shows
November 13, 2014
By John Reichard
Only 76,000 people working for 12,000 small employers were covered through plans offered by the health law’s small business exchanges as of June, the Government Accountability Office reported Thursday.
That figure – reflecting 18 state-based small business exchanges – is vastly lower than Congressional Budget Office projections, said House Small Business Committee Chairman Sam Graves, R-Mo.
The Congressional Budget Office estimated that 2 million employees would enroll in so-called SHOP coverage this year, Graves said in a press release. The health law requires each state to have a Small Business Health Options Program that is administered either by the state or through the federal government.
The Obama administration still hasn’t released enrollment numbers for the “federally facilitated” SHOP exchanges it runs in 33 states. It says, however, that they are comparable to the numbers for SHOPs created on their own by 17 states and the District of Columbia.
The low enrollment figure gives Republicans another opening to attack the health law as they prepare for the next session of Congress and a new series of attacks on the overhaul.
“Obamacare’s SHOPs have been fraught with errors and high costs from the beginning,” Graves said.
GAO detailed the slower-than-scheduled startup of the SHOPs and the features they offer.
The exchanges were supposed to open in all states by Oct. 1, 2013. In all but four states, SHOPs were accepting enrollment applications by that date but important promised features were typically not ready, including online enrollment, and “employee choice” features.
Though insurer competition in the SHOPs was supposed to drive down premiums, the GAO found prices comparable to coverage outside of the exchanges.
The typical small business owner that provides coverage also picks the plan. The idea of SHOPs, in part, is to give their employees a menu of coverage options to choose from. Many state-created SHOPs offer this feature, but none of the federally facilitititated ones do, GAO found.
The same is true of online enrollment, which exists in most of the state-run SHOPs but not at all in the exchanges operated by the federal government, the report said.
What small business owners have gained, however, is the ability to see plan information such as premiums and benefits online on web sites in all of the states.
And federal officials are preparing to implement online enrollment for federally run SHOPs for 2015, GAO said. Employee choice will be available next year in 14 states with SHOPs operated by the federal government, though 18 states took up a government offer to delay that feature until 2016.
Enrollment figures for the federally run SHOPs will be made public early next year.
Most bosses are offering their workers a menu of coverage options in states where the option is available, the study found. “Exchange officials in Kentucky and Rhode Island said that approximately 65 and 61 percent of enrolled employers, respectively, decided to offer their employees a choice of plans,” GAO said.
The added features will bring many more customers to the SHOPs, exchange backers say. So too will more aggressive marketing, closer coordination with insurance agents and the fact that employers after 2016 won’t be able to renew coverage that doesn’t comply with the health law, which will make them more likely to start shopping at the small business exchanges.
Others predict the SHOPs won’t be a big draw because the tax credits they offer small businesses end after this year. The exchanges may not be able to charge lower premiums.
The Government Accountability Office (GAO) today released a report, requested by House Small Business Committee Chairman Sam Graves (R-MO), showing that enrollment for the state-operated Small Business Health Options Program (SHOP), created by the Affordable Care Act, was significantly lower than expected. No data was released for the federally-operated SHOP, but CMS told GAO it anticipates similarly low enrollment numbers. This report’s release comes just days after the Obama administration predicted that overall enrollment for next year is expected to be 30% lower than expected.
The Committee has documented continued mismanagement with the SHOPs going back to the summer of 2013, when another GAO report requested by Graves, confirmed the administration was ill-equipped for its rollout, and cited potential for “implementation challenges going forward.” This year, Graves has repeatedly pressed the administration to provide data on the enrollment and updated compliance timeline of federal and state SHOPs, but the data has not been provided. During a September 18 Small Business Subcommittee hearing, Centers for Medicare and Medicaid Services (CMS) Director of State Exchange Group, Mayra Alvarez, was asked about SHOP enrollment data, yet the administration was still unable to provide the information. Today’s GAO report is the first federal government release of SHOP performance data.
“Obamacare’s SHOPs have been fraught with errors and high costs from the very beginning,” said Chairman Graves. “The administration touted the SHOP as a way for small companies and their employees to benefit from more health insurance competition and choice, and ultimately lower prices. Instead, we have seen that costs are increasing for nearly two-thirds of small businesses that provide health insurance to their employees and the majority of small business owners paid more per employee for health insurance in 2013 than in 2012.”
Graves continued, “The lack of specific federal SHOP enrollment data confirms that CMS initially created no mechanism to monitor or measure its performance after enrollment began. It is apparent that the Obama administration didn’t prioritize the SHOP exchange in the law. Small businesses and taxpayers deserve better.”
GAO Report Highlights:
• As of June 1, 2014, enrollment for the SHOPs was significantly lower than expected, and, at its current pace, is unlikely to reach expectations by the end of 2014.
- State SHOPs – 76,000 individuals through 12,000 employers.
- Federal SHOP – data will not be available from CMS until next year, but CMS does not expect major differences between federal and state SHOP numbers.
- In April 2014, the Congressional Budget Office estimated that 2 million employees would enroll in coverage through the SHOPs in 2014, with the number of enrollees rising to 3 million in 2015 and leveling off at 4 million enrollees by 2017.
• Most state SHOPs had multiple plans available, but some states had counties with no plans. For example, in Washington state, SHOP plans were only available in a few counties, and the state had only 8 employers enrolled.
• The average number of employees per business enrolled in SHOPs is 3.7 employees.
• Many state SHOP features were delayed and enrollment was low as of June 2014 and key SHOP features, such as online enrollment and employee choice, were delayed for all federal SHOPs and some state SHOPS.
• The primary incentive for many small businesses to enroll in SHOPS was to utilize the small business health care tax credit. But the credit is so narrow, complex and temporary that it has been an insufficient incentive to enroll. Although the President’s Council of Economic Advisors and stakeholder groups initially estimated over 4 million small businesses would be eligible for the credit, a 2012 GAO report showed only a small fraction (170,300) actually claimed it.
House Small Business Committee Chairman Sam Graves (R-MO) released the following statement in response to the President’s comments regarding net neutrality and regulating the Internet:
“The Internet was born and bred from American ingenuity and innovation and has been one of, if not the most, successful drivers of economic growth here and abroad for the past 20 years. Small businesses have come to depend on and utilize the Internet in ways not even imagined two decades ago, allowing them to compete across town and across the globe. In that time, the Internet has remained free of burdensome regulations that had the potential to curb its growth or limit its role in our economy. I was troubled by President Obama’s announcement supporting regulation of the Internet as a utility under Title II of the Communications Act. Doing so has the real potential to stifle economic growth, hurt small businesses and the jobs they have created.”
In September, the Committee held a hearing with Federal Communications Commission Chairman Thomas Wheeler on telecommunications issues that are important to small firms, including net neutrality, broadband deployment, Universal Service Fund reform efforts, and wireless spectrum availability.
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.
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.
“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.
Bloomberg BNA: CMS Needs to Provide Congress SHOP Data On Enrollments, Rep. Collins Says at Hearing
By Sean Forbes
September 18, 2014
Republican members of a subcommittee of the House Committee on Small Business insisted at a hearing on Affordable Care Act small business exchanges that the administration must provide hard data to Congress in order to have an unbiased discussion about the effectiveness of the exchanges.
Rep. Chris Collins (R-N.Y.), chairman of the Subcommittee on Health and Technology, said that the Small Business Committee sent letters in January and June to the Department of Health and Human Services and the Centers for Medicare and Medicaid Services requesting enrollment figures for the Small Business Health Options Program (SHOP), but the HHS hasn't supplied any data yet.
Collins several times asked Mayra E. Alvarez, director of the state exchange group in the CMS Center for Consumer Information and Insurance Oversight, about whether the information is available and when the Congress can expect to receive the data. Alvarez didn't have a precise date, but promised that, after the CMS collected the data from the state SHOPs, it would give the information to Congress and the public “as soon as it's available.”
“As soon as it's available,” Collins repeated.
The CMS data will take the bias out of the debate over the SHOPs, but until then people “are just talking past each other,” Collins said.
After the Sept. 18 hearing, Collins told Bloomberg BNA that, “I'm not holding my breath” for the data to arrive soon.
The 90-minute hearing was titled Update on the Small Business Health Options Program: Is It Working for Small Businesses?
Fixing the SHOPs
All the members of the subcommittee, Republicans and Democrats, agreed that the SHOPs aren't perfect and are in need of repair, but differed as to their effectiveness.
Ranking Member Janice Hahn (D-Calif.) said that Medicare, enacted in 1965, also wasn't perfect and is still being improved today, “but that doesn't mean it was bad.” The same can be said for the ACA, she said.
Other witnesses differed on how to fix the SHOPs.
Roger Stark, health care policy analyst for the Seattle-based Washington Policy Center, an independent, nonprofit think tank, said that insurance rates and benefit levels should be set by the insurance market and not by government regulations, and that the state marketplaces should be able to offer an array of insurance plans without having to include the essential health benefits required under the ACA in order to make the market more competitive.
Alvarez disputed that claim, and said that the “biggest problem” with Stark's solution is that it would lead to adverse selection, which would in turn lead to higher costs for employers and plan participants.
Jon Gabel, senior fellow at the independent research organization NORC at the University of Chicago, agreed with Alvarez and said that plans in the exchanges must at least provide a minimum benefits package. Prior to the ACA, many offered plans had very low actuarial value, he said.
Rather than setting limits on copays, coinsurance and deductibles, the ACA established four actuarial value levels of coverage on plans—bronze, silver, gold and platinum—which represent the share of health-care expenses the plan covers for a typical group of enrollees. Most plans prior to the ACA provided less than 80 percent of actuarial value, the level of a gold plan, Gabel said.
The ACA allows employers with fewer than 25 full-time equivalent employees to apply for a temporary subsidy, called the Small Business Health Care Tax Credit, under which they will only have to pay up to half of the premium for their full-time employees.
Rep. Blaine Luetkemeyer (R-Mo.) asked Alvarez for the basis upon which the CMS made its decisions on whether an employer could get the temporary subsidy.
Alvarez said the decisions are based on flexibility and responsiveness to the needs of the market.
“But what's the basis?” Luetkemeyer asked.
“I can definitely get back to you with that information,” Alvarez said.
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.”
POLITICO Pro: CMS: No enrollment numbers for SHOP
September 18, 2014
By Brett Norman
A CMS official told a House panel this afternoon that she could not provide enrollment numbers in Obmacare’s small business exchanges.
Mayra Alvarez, director of the state exchange group at CCIIO, said that the agency “is not the source of SHOP enrollment," because businesses did not have online access in the first year, requiring them to apply by paper, through an agent or broker or directly through insurers.
But CMS is “working to get that information from issuers, and as soon as we have it, we will share it with you,” Alvarez told Rep. Chris Collins, chairman of the Small Business Subcommittee on Health and Technology.
CMS has been forthcoming about individual exchange enrollment. This morning, Administrator Marilyn Tavenner told the House Oversight Committee that 7.3 million people were paying Obamacare customers through mid-August — the first update since the administration reported more than 8 million sign-ups after the end of open enrollment in April.
SHOP enrollment in many states this year was minimal. In Washington state, for instance, 11 companies with about 40 employees total enrolled, despite more than 2,000 businesses setting up accounts, according to testimony at the hearing.
Washington was not typical, however. Jon Gabel, a senior fellow of NORC at the University of Chicago, told the hearing that it was the only state with just one insurance company offering coverage through SHOP. He also said “SHOP plans cost less than the plans” outside of the exchange.
“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.###
Bloomberg BNA: Bill Calls for SBA to Use Electronic Signatures in Loan Process
September 18, 2014
Sept. 18 (BNA) - A legislative proposal unveiled Sept. 18 would require the Small Business Administration to accept e-signatures in its financing programs.
Rep. Sam Graves (R-Mo.) says 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.”
“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.”