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Washington Watch - March 30, 2011

Budget Talks Continue With White House, Senate, House

As fiscal appropriations talk threatens to drag on into April, the 2011 budget has yet to be decided. The main point of contention continues to remain finding budget cuts agreeable to both parties. The GOP has proposed $61.5 billion in cuts, which many Democrats have flatly rejected. The White House came forth recently to propose, in addition to the already $10 billion on the table, another $20 billion in cuts. This plan has not been well received by Republicans.

Currently, temporary budget resolutions (CRs) have been passed 6 times for the 2011 budget. The current CR is set to expire in early April.

Soon, the debt ceiling issue will arise in Congress, and if the CRs are any example, the fight on whether or not to raise the debt ceiling will be no easy matter, either.

The NASE is hopeful that Congress will resolve the stalemate, so that important small-business issues, such as the repeal of the increased 1099 reporting requirement and making permanent the self-employment tax deduction on health insurance, can once again return to lawmakers' minds. 

IRS Joins NASE In Publicizing Self-Employment Tax Deduction

The NASE has a powerful ally in publicizing the self-employment tax deduction for health insurance premiums - the Internal Revenue Service. You may be able to deduct premiums paid for medical and dental insurance and qualified long-term care insurance for you, your spouse, and your dependents if you are one of the following:

  • A self-employed individual with a net profit reported on Schedule C (Form 1040), Profit or Loss From Business, Schedule C-EZ (Form 1040), Net Profit From Business, or Schedule F (Form 1040), Profit or Loss From Farming.
  • A partner with net earnings from self-employment reported on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc., box 14, code A.
  • A shareholder owning more than 2% of the outstanding stock of an S corporation with wages from the corporation reported on Form W-2, Wage and Tax Statement.

The insurance plan must be established under your business.

For self-employed individuals filing a Schedule C, C-EZ, or F, the policy can be either in the name of the business or in the name of the individual.

For more information see IRS Publication 535, Business Expenses, available at or by calling 800-TAX-FORM (800-829-3676).

Senators Fight Fraud In Small Biz Contracting Programs

Senators Olympia J. Snowe (R-Maine), Mary Landrieu (D- La.), Scott P. Brown (R-Mass.), Jeff Merkley (D-Ore.), and Mike Enzi (R-Wyo.), have introduced bipartisan legislation to combat contracting fraud at the U.S. Small Business Administration (SBA). Their initiative comes on the heels of several vulnerabilities and abuses in nearly all of SBA’s contracting programs, as identified in multiple reports by the nonpartisan Government Accountability Office (GAO).

“Exercising thorough oversight to ensure SBA’s contracting programs are efficient, effective, and accountable is a top priority,” said Senator Snowe, Ranking Member of the Senate Small Business Committee. “This legislation is a critical step towards ensuring all of our nation’s small businesses compete fairly in the federal market place.”

Citing a March 12 Washington Post report that “government officials were not monitoring contracts for compliance with rules,” Senator Snowe called SBA’s current oversight efforts deficient. “As I told the Deputy Administrator of the SBA at a recent Small Business Committee hearing, the ultimate authority for monitoring fraud lies with the SBA when it comes to government management of hard-earned taxpayer dollars.”

“When ineligible firms are awarded federal government contracts through fraudulent means, this reduces the number of opportunities available to honest, qualified small businesses,” said Senator Landrieu, Chair of the Senate Small Business Committee. “Government contracts are perhaps one of the easiest and most inexpensive ways the federal government can help immediately increase sales for America’s entrepreneurs, giving them the tools they need to keep our economy strong and create jobs. This legislation gives the SBA and the Inspector General the tools necessary to combat fraud. We intend for the SBA to hold firms accountable.”

Specifically, the Small Business Contracting Fraud Prevention Act (S. 633) would provide a comprehensive oversight framework within SBA to execute effective certification, surveillance and monitoring, and robust enforcement of its entire contracting portfolio. The bill would also increase criminal penalties for businesses awarded contracts through fraudulent means.

House Works To Modernize the Regulatory Flexibility Act

Today, the House Small Business Committee is holding a full committee hearing entitled, "Reducing Federal Agency Overreach: Modernizing the Regulatory Flexibility Act"

The purpose of the hearing is to examine the Regulatory Flexibility Act (RFA) which requires federal agencies to review the small business impact of proposed regulations prior to implementation. This hearing will lay the foundation for future Committee consideration of RFA reform and agency compliance with the Act.

Stay tuned to Washington Watch next week for more information on the hearing.

To read the official hearing memo, click here.

Washington Watch Online

Visit NASE Advocacy to view archived editions of Washington Watch. While you’re there, read the latest updates from the Washington, D.C. office, write your Congressperson, and find out how you can join the fight for micro-business.

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