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FEDERAL REGULATIONS 101

By Cindy Stark-Jones, CMA, and Jim Kuba, CMA
October 30, 2015
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The burdens of regulatory compliance can be tough for small businesses. Comment letters and advocacy organizations provide opportunities to impact the rules process.

 

Small businesses aren’t immune from worrying about regulations. We all deal with them and likely all complain about them. While regulations aren’t laws that are passed by Congress and signed by the President, they still have the force and effect of law. With the limited time and resources available to most small businesses, ensuring compliance with each new regulation adds yet another difficult challenge that needs to be managed.

 

Many people (including the authors of this column) believe regulations are needed. But over and over again, they’re promulgated without regard for the unintended consequences, particularly for small businesses. All businesses pay a portion of the costs of federal regulations, but, according to the Small Business Administration (SBA), small businesses are hit harder. Firms with fewer than 20 employees pay an average annual regulatory cost of $10,585 per employee—compared to $7,755 for those with 500 or more employees.

 

For small businesses, the situation might seem overwhelming and hopeless. But you can do something about it. Legally, you have a voice, and you can participate in the process!

 

INCREASE YOUR AWARENESS

 

First you need to know what’s happening. The U.S. government maintains a website that details upcoming regulations (www.regulations.gov). The site breaks down the process into several stages: PreRule, Proposed Rule, Final Rule, Long-term Action, and Completed.

 

You have the best chance of impacting the regulation during the Proposed Rule stage when an agency issues a proposed rule for public comment. A quick search shows 2,662 regulations (or changes) with comments due within the next 90 days. Another 69,065 rules were posted within the last 90 days. Many of these regulations are innocuous or very narrowly targeted. Sift through the abstracts and find the ones relevant to you or your business.

 

SHARE YOUR THOUGHTS

 

Once you discover a regulation that seems to have a high impact, you need to read the details. Regulations.gov has links that will point you in the right direction, often toward the Federal Register (www.federalregister.gov), the unofficial daily legal newspaper of the U.S. federal government. It’s written in legalese, so be prepared. A recent daily edition contained 357 pages, which isn’t unusual.

 

Once you find the applicable reference in the Federal Register, you can itemize your concerns, roll up your sleeves, and draft a comment letter. Submission instructions are often buried in the text. By law, agencies are required to respond to comment letter requests, so your voice can be heard. Both the comment letters and the agency responses become a matter of public record.

 

STRENGTH IN NUMBERS

 

If this seems difficult, that’s because it is. But it isn’t the only way. Other good resources are professional associations and trade groups. Get on their notification lists. If you are notified about a proposal because of your location or industry, be sure to share it with your colleagues and associations, too.

 

The SBA is also a wealth of information, particularly its Office of Oversight and Advocacy (SBA-OA), which has both national and regional contacts. You can find more information at www.sba.gov/about-sba/oversight-advocacy. The SBA-OA posts regulatory alerts, publishes newsletters, and occasionally conducts regional roundtables. It’s also great at sending update e-mails about issues it’s monitoring and commenting on.

 

Also consider getting involved with IMA’s Small Business Financial and Regulatory Affairs Committee (SBFRC). The SBFRC engages with standards setters and regulatory agencies on behalf of IMA® members, offering comments and suggestions from a small business perspective. Aside from one IMA staff member, who also acts as the Committee’s liaison, the SBFRC is composed of volunteers with a background in small business. It’s organized into two subcommittees: Emerging Issues and Research. As issues arise, working groups are formed to draft comment letters or work on research projects.

 

Recently, the SBFRC has written comment letters to the Internal Revenue Service (IRS) on safe harbor regulations for repair and maintenance expenses and to the Department of Labor on the proposed change to the overtime rules in the Fair Labor Standards Act. The full text of these comment letters is available at http://bit.ly/IMASBFRC.

 

THE LATEST ISSUE

 

In response to an SBA-OA regulatory alert, the SBFRC formed a working group to draft a comment letter addressing REG-132075-14, which is listed on Regulations.gov under the innocuous title, “Extension of Time to File Certain Information Returns.” According to the SBA-OA alert, “The IRS requires employers to report wage and salary information for employees on Form W-2. Currently, employers who file Forms W-2 can receive an automatic 30-day extension with the IRS. Then, a second 30-day extension may be requested. In the proposal, the IRS warns that it would grant a non-automatic extension only in limited cases involving extraordinary circumstances or catastrophe.” The deadline for comments on this proposal is November 12, 2015.

 

It might be too late to get involved with this issue by the time this article is published, but we intend to use future columns to keep you posted about SBFRC’s work. In the meantime, if you see an issue with a proposed regulation that you think should get some notice, please let the SBFRC know by sending an e-mail to Linda Devonish-Mills at lmills@imanet.org. Better yet, ask to get involved.

 

THE DOWNSIDES TO REGULATION

 

  • 55% of independent business owners in the United States say they wouldn’t start a business today given the current environment. Government regulations and red tape have been listed as one of their top three concerns every year since 2009.
  • The estimated cost of proposed and final regulations published in 2014 is $181.5 billion–yes, that’s billion, not million.
  • The cost of existing regulations as of 2012 is $2.028 trillion.
  • There are 3,415 federal regulations currently awaiting implementation (or about 10 new regulations finalized every day).

Source: National Federation of Independent Businesses, 2015 Small Business Playbook, www.nfib.com/pdfs/playbook.

 

SF ADVICE

 

This column is published quarterly by the Research and Education Subcommittee of the IMA Small Business Financial and Regulatory Affairs Committee. If you have knowledge of an issue pertaining/of interest to the small business community and/or would be interested in writing about such an issue, please contact Linda Devonish-Mills, IMA director of advocacy, at lmills@imanet.org.

 

Cindy Stark-Jones, CMA, works with her husband in the family business, B.R. Jones Roofing Company. She’s a long-time member of IMA’s New Hampshire Chapter and serves on IMA’s SBFRC. You can reach her at cindyasj@rcn.com.
  Jim Kuba, CMA, is a semi-retired management accountant who works for several entrepreneurial SME companies, including Ross Valve Manufacturing and Metweld International. He is a member of IMA’s Tech Valley Chapter and a member of IMA’s SBFRC. You can contact him at jimkuba@nycap.rr.com.
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