Businesses that depend on mail delivery urged the Postal Regulatory Commission to reject a proposed increase in postal rates.

The U.S. Postal Service has asked the commission to approve a series of rate increases, including raising the price of a first-class stamp from 44 cents to 46 cents. The increases, which would go into effect in 2011, are needed to help address the Postal Service's projected $7 billion budget deficit next year, according to the agency. The increases would generate an estimated $2.3 billion.

The Affordable Mail Alliance - a coalition of businesses, nonprofit organizations and consumers - contends the rate hikes would make the agency's financial problems even worse by causing more customers to stop using mail.

"This proposed rate increase amounts to another tax imposed on Americans at a time when the economy can least afford it," said spokesman Tony Conway, executive director of the Alliance of Nonprofit Mailers. "Consumers everywhere will pay more for the letters and packages they need to send; struggling businesses - large and small - will suffer and even more jobs will be lost."

Publishers, printers, paper manufacturers and marketers would be hit the hardest by postal rate hikes, the alliance contends.

Instead of raising rates, the Postal Service should instead focus on cutting costs, the alliance contends. The agency's labor costs are too high, and it is moving too slowly in consolidating facilities, according to the coalition.

"USPS needs to stop avoiding the difficult decisions and stop taking out their problems on the customers they desperately need," Conway said.

The agency counters that it cut expenses by more than $6 billion last year and eliminated 65,000 jobs through attrition and early-retirement offers. But these cost-cutting efforts haven't kept up the nearly 13 percent drop in mail volume, as more Americans communicate electronically.

To limit the need for rate increases, the Postal Service has asked the Postal Regulatory Commission to allow it to eliminate Saturday delivery and offer additional products to the public. It also hopes Congress will let it restructure prepayments into its employee retirement fund.

Flood insurance restored; long-term solution sought

Realtors and insurers welcomed a short-term extension of the National Flood Insurance Program, but they want Congress to get to work on a long-term solution to address the program's financial problems.

Before leaving for its weeklong Fourth of July break, Congress reauthorized national flood insurance through the end of September. The program's authorization had expired June 1, forcing a halt in the issuance of new or renewed policies. This delayed an estimated 1,400 real estate closings a day.

"Thousands of property owners seeking flood insurance policies will now be able to close on their transactions," said Vicki Cox Golder, president of the National Association of Realtors and owner of Vicki L. Cox Real Estate in Tucson, Ariz.

"I'm sure news of this extension is welcomed, especially during this time of year when floods are prevalent," said Leigh Ann Pusey, president and CEO of the American Insurance Association.

Floods are not covered under standard homeowners insurance policies. The National Flood Insurance Program provides this protection to 5.5 million property owners.

The short-term extension of the program, however, doesn't carry the program through hurricane season, which runs through the end of November.

"This three-month extension threatens to leave communities vulnerable again," said David Sampson, president and CEO of the Property Casualty Insurers of America.

"Short-term patches are dangerous for home and business owners and add uncertainty to the marketplace," he said. "We urge Congress to consider a long-term solution for the flood insurance program."

The program is $18 million in debt, but legislation to reform the program and restore its financial health through higher premiums has languished.

"Congress must not let the program lapse again, but that's just the minimum," said Jimi Grande, senior vice president of the National Association of Mutual Insurance Companies.

IRS wants input on new 1099 reporting burdens

The Internal Revenue Service invited businesses to suggest ways to minimize the burden of a new law that requires them to file annual reports for every corporation that receives more than $600 from them in payments for goods and services.

The new requirement, which is designed to make sure corporations don't hide any of their income from the IRS, goes into effect in 2012. It was included in the health-care reform law as a way to raise money to help pay for the legislation.

Business groups have complained the new requirement will force some small businesses to file dozens or even hundreds of additional 1099 forms a year. Many support legislation that would repeal the provision.

The IRS and the Treasury Department have announced plans to ease some of this burden by exempting purchases made through credit cards or debit cards from the 1099 reporting requirement. That's because the IRS already will receive reports on these payments from banks and card payment processors. That regulation is expected to become final later this summer, according to the IRS.

Now the agencies want comments "on additional circumstances in which duplicative reporting might otherwise occur," according to a notice published July 1. "Specific comments are also requested regarding the burden associated with implementing the new reporting requirements for different types of taxpayers and businesses."

The deadline for submitting comments is Sept. 29.

For more information, see www.irs.gov

Kent Hoover: khoover@bizjournals.com