Most Republicans and Democrats agree that Congress needs to repeal or scale back a requirement in the health-care law that will force businesses to file 1099 tax forms anytime they spend more than $600 with a particular business for goods and services.

During its consideration of the Small Business Jobs Act, the Senate couldn't agree, however, on how to fix this new paperwork requirement, which goes into effect in 2012.

Instead, the bill added another tax-reporting mandate by requiring taxpayers who receive rental income from real property to file information returns with the IRS and service providers anytime they spend more than $600 on rental property expenses.

"Astonishingly, this bill slaps a new paperwork mandate on certain property owners at a time when we have a depressed rental market and a slew of foreclosures," said Sen. Mike Johanns, R-Neb., sponsor of the unsuccessful amendment to repeal health-care reform's expanded 1099 reporting requirement. "This is just one more example of how tone-deaf this Congress and administration have been to the concerns of our job creators."

For more information, see http://johanns.senate.gov

Regulatory compliance burden heaviest for small businesses

The cost of complying with federal regulations is a much bigger burden for small businesses than it is for large businesses.

That's according to an updated study by the Small Business Administration's Office of Advocacy, which found that small businesses pay $10,585 per employee to comply with regulations, compared with $7,755 for large businesses.

This large disparity "is an unfair burden to place on American small business," said Winslow Sargeant, the office's chief counsel.

The disparity is greatest with environmental regulations, which cost small firms nearly four times as large businesses. The per-employee cost of tax compliance is three times higher in small businesses, the study found.

Small manufacturers are at a particular disadvantage - their per-employee regulatory compliance costs are more than double the compliance costs for larger manufacturers. Regulatory costs also are particularly high for small firms in the health-care sector, according to the study.

The SBA's Office of Advocacy issued a similar report, with slightly different numbers, five years ago. The new report was released at a symposium celebrating the Regulatory Flexibility Act, the law that requires federal agencies to analyze the impact of regulations on small businesses. If a rule has a significant economic impact on a substantial number of small businesses, agencies are supposed to consider less-burdensome alternatives.

The SBA's Office of Advocacy is in charge of making sure federal agencies follow this requirement. Some agencies, however, tend to ignore the office's input. That could change, due to a provision in the Small Business Jobs Act, which will soon become law. It requires agencies to respond to the office's comments when it issues a final rule. It also provides a separate line item for the office in the SBA's budget, enhancing the office's independence.

For more information, see www.sba.gov/advo

SBA awards funds to boost 10 regional economic clusters

The Small Business Administration has awarded a total of $6 million to 10 initiatives promoting regional economic clusters around the nation.

The winners were selected from 173 applicants. The SBA funds will be used to promote opportunities for small businesses in these clusters.

Clusters are regional collaborations among businesses, local governments, universities and economic development organizations focusing on an area's strength in a particular industry or field.

Before joining the agency, SBA Administrator Karen Mills got a firsthand look at the benefits of clusters when she worked on an initiative in Maine to boost the boat-building industry there.

"Maximizing a region's economic assets is one of the best ways to create long-term job growth," Mills said.

That's why the SBA is funding a pilot program called Innovative Economies. The 10 initiatives selected for funding range from the Carolinas' Nuclear Cluster, which aims to help grow businesses in North Carolina and South Carolina that serve the nuclear energy industry, to the Defense Alliance of Minnesota, which aims to match high-tech innovations with defense industry opportunities.

NorTech, which focuses on technology-based economic development in 21 counties in Northeast Ohio, also was one of the winners.

"The funding could not have come at a more opportune time," said NorTech President and CEO Rebecca Bagley.

The company will use the funding to help small businesses develop partnerships with larger businesses in advanced energy and flexible electronics.

"We really have all of the elements coming together to be able to commercialize product and create jobs in this sector," Bagley said.

For more information, see www.sba.gov

 

Kent Hoover is Washington bureau chief for American City Business Journals. He can be reached at (703) 258-0845. E-mail: khoover@bizjournals.com