More Taxes? No Taxes? How About Fair Taxes

By: John Stanford

WIPP recently submitted testimony to the House Small Business Committee on comprehensive tax reform. This blog gives an overview of WIPP’s advocacy efforts. For more details, I encourage you to read the testimony. Our government relations team strives to make official communications as easy-to-read as possible, but should you have questions please reach out to WIPP.   

Women entrepreneurs deserve a tax system that rewards the effort, tenacity, and risk it takes to start and grow a business. Moreover, they deserve a system of revenue collection (because that’s what taxes are) that is simple and fair.

In testimony submitted to the House Small Business Committee, WIPP said just that. Citing reports from the IRS National Taxpayer Advocate as well as the SBA Office of Advocacy, the testimony documents what women business owners already know: the tax system is broken, failing under the weight of complexity, uncertainty and outdated policies. But more importantly, the testimony addresses the impact of possible reforms – and the need for any overhaul to be comprehensive.

What does that mean? It means that the idea to lower the corporate tax rate, favored by the White House and some in Congress, must not happen independently of adjusting individual rates in a similar manner. This distinction matters because so many businesses, including almost 9 in 10 women-owned businesses, are structured as “pass-through” entities paying taxes as individuals (including S-Corps, Sole-proprietorships, partnerships, and LLCs).  

Corporate-only reforms would be unfair to these businesses – and for that reason WIPP has always supported comprehensive (corporate + individual) reform. The testimony underscored this important point.

In addition, WIPP identified tax policies that, absent major reforms, would benefit women entrepreneurs. This includes making more small business tax credits and deductions permanent. In recent years, these tax “extenders” have been extended (hence their name) at the last minute, or even retroactively – not a good way for business owners to plan their budgets.

WIPP also asked Congress to consider tax credits that benefit new businesses, helping offset the costs of launching a new company. Another policy request was to avoid changing the Employee Stock Ownership Plan (ESOP) provisions in the tax code, as these have proven to be both popular and good tools to incentivize productivity and long-term business health.

In agreement with the idea that simple businesses (sales – costs = income) should have simple taxes, WIPP also supports simplifying the cash accounting method and expanding its optional use to more small businesses. Finally, with healthcare costs an always-growing burden on employers, WIPP continues its support of expanding the Small Business Health Care Tax Credit so more women entrepreneurs minimize the cost of providing healthcare to employees.

More ideas for reforming the tax system to incentivize entrepreneurship and innovation are out there. WIPP will continue working to identify policies that let women business owners focus more on their business and less on complex tax requirements. At the end of the day, all of these decisions should be made with the basic principles of simplicity and fairness in mind. And that’s exactly what we asked Congress to do. 

You Need to Know: WOSB Program Update

The WOSB procurement program website is undergoing a facelift. A new website, called SBA ONE, will allow for the electronic submission of SBA forms, as well as a streamlined location to monitor all certifications for your company including the repository. With the change, there are three things you need to know:

1.     All WOSBs will need to create a new login for the new system. The new website is actually an entirely new system and as such all WOSBs will need to create a new account and login (but not reload all documents – see next). The SBA is also asking that after creating a new account, all WOSB/EDWOSB companies submit new Form 2413 (WOSB certification) and/or Form 2414 (EDWOSB certification) electronically. Businesses should do this as soon as possible.

2.     The repository is being migrated, but is currently closed. This is important for two reasons: 1) your documents previously submitted should move to your new account and not require resubmission (except as mentioned above a new electronic Form 2413/2414); and 2) Contracting officers will not be able to view your repository documents for WOSB awards. Instructions for you to provide to a CO about how they can confirm your eligibility is available at the end of this document. This only impacts WOSB/EDWOSBs about to win EDWOSB or WOSB set-aside or sole source awards.

3.     The new site supports self-certification. Self-certification for WOSB/EDWOSBs remains an option until SBA finalizes new certification requirements. The website supports companies electing this option by allowing for the electronic submission of required documents. Third-party certifications can be uploaded as well.

SBA ONE, located at certify.sba.gov, will eventually house all program certifications, but is beginning with the WOSB program. Additional programs will be incorporated onto the site on the following projected timeline: 8(a) Business Development Program (Fall 2016), HUBZone Program (Spring 2017) and Dynamic Small Business Search (DSBS) (Spring 2017).

If you have any questions about the certification program, or comments on improving the site, please email certify@sba.gov. More details on the transition of repository documents are available at www.sba.gov/wosb.

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Information for Contracting Officers (Direct from SBA)

Due to the system upgrade, access to the WOSB Federal Contract Program Repository will be temporarily unavailable for contracting officers (CO), starting on Wednesday, March 23 at 1:00 EDT.  This may be down for several weeks.   During this time, in order to comply with the WOSB Program requirements at 13 CFR 127.301 and FAR 19.1505(e) (specifying that a CO shall verify that an apparent successful offeror has provided all the required documents set forth in 127.300(e) to the WOSB Repository), SBA will review the Repository on behalf of a CO.

A CO may request that SBA review the Repository on their behalf by sending an email to wosb@sba.gov (link sends e-mail) with the following in the subject line:

"PENDING AWARD UNDER FAR 19.505(e) VERIFICATION REQUEST- SOLICITATION NUMBER [insert solicitation number]."

In the body of the email, the CO should provide the following: provide the apparent successful offeror’s DUNS, EIN, FIRM NAME, OWNER NAME; indicate whether the pending award is a WOSB or EDWOSB set-aside or sole source award; specify the NAICS code assigned to the procurement; and identify the State where the CO is located. Within 2 business days, SBA will perform the necessary check to determine whether the apparently successful offeror has filed all the required eligibility documents and provide the CO with an email response which either: (a) notifies the CO that all required documents have been provided or (b) identifies which documents are missing in order to allow the CO to file a status protest in accordance with SBA regulations and the FAR.

Emails for this information will be processed only for Contracting Officers.

Costs & Benefits: Paid Sick Leave For Federal Contractors

By: Jake Clabaugh, WIPP Government Relations 

Federal contractors have been hit with a bevy of new regulations over the past few months – everything from increased reporting of labor and safety violations, a raise in minimum wages and increases in mandatory overtime pay. The next shoe will drop in January 2017, when ALL Federal contractors, primes and subs, will have to provide paid sick leave benefits to workers. The Department of Labor (DOL) proposed rules that would implement this change last month.

Contracts issued January 1, 2017 will require all Federal contractors to give employees 1 hour of paid sick leave per 30 hours worked. This rule will only apply to time spent on Federal contracts, so if an employee performs some work for a private sector client, those hours would not count toward sick leave accrual. Additionally, earned sick leave will carry over from one year to the next.

Why just contractors? The President issued an Executive Order to make the change. Like other new regulations pertaining to contractors, the President can make these decisions for his workforce. Congress has been unable to decide if or how to move forward on these issues so the President decided to act on his own. As the Commander in Chief, he can determine procurement policy – including requirements for contractors – without Congress having to pass a law. 

While WIPP members support worker benefits in practice, we don’t believe that the DOL gave enough consideration to how this rule will affect small businesses. Without an exception for small businesses, the vast majority of women-owned business will be compelled to provide the same benefits as multi-billion dollar firms.

WIPP’s comments to DOL on the proposed rule can be read in full here.  

Confusion Over WOSB Certification: Answers to FAQs To Assist Your Business

By: Ann Sullivan, WIPP’s Chief Advocate

When speaking to groups of women business owners, regardless of where or when, they express confusion on the state of the certification process for the Women-Owned Small Business (WOSB) procurement program.  Women often say that they receive conflicting information and differing opinions from SBA district offices, vendors who offer third party certification, organizations and OSDBUs at the agencies.  That doesn’t necessarily mean that anyone is deliberately trying to deceive women business owners, it means that those unfamiliar with the way things work in Washington are giving inaccurate information.

The information given in this article is based on our intimate knowledge of the law and the regulatory process with respect to this program.  After all, we have been responsible for moving this program forward and making it work for fifteen years—so we are claiming credibility on this issue without hesitation.

Fact:  Self-certification and third-party certification remain options in the program until SBA changes its regulations.  Since the program was implemented in 2011, women can either self-certify by submitting the proper documentation to the SBA repository or choose to certify through a third party.  SBA approved four vendors for third-party certification:  the Women's Business Enterprise National Council (WBENC), the National Women Business Owners Corporation

(NWBOC), the US Women’s Chamber of Commerce, and the El Paso Hispanic Chamber of Commerce Women’s Business Border Center. 

Why the confusion?  Because the law that allowed for sole source contracts also included a requirement that at some point in the future, SBA must create a certification program that does not allow for self-certification.  You can read the language of the law here.

As you can see from the law, the SBA can choose to go a number of different directions, such as accept state certifications, certifications from other federal agencies, keep third party certification or decide to start their own SBA WOSB certification. 

What is the status of the change?  Congress passes laws—agencies implement them through regulation.  So, even though Congress passed this particular change to the program in 2014, the SBA has to implement it in order to take effect.  The regulatory process looks like this: 

1. The SBA issues an ANPRM (Advanced Notice of Proposed Rulemaking), which it did on December 18, 2015.  This means the agency is gathering more information from stakeholders before it proposes a regulation.        
2. The agency reviews this information, circulates it internally and government-wide for comments and prepares a Proposed Rule.  The proposed rule puts forward a suggested path of action and asks the public to comment on it.  Generally speaking, there is a comment period of 60-90 days.
3. The agency then reviews the comments and issues either a request for more comments or proceeds to a Final Rule.  The Final Rule usually has 30-60 day waiting period before it goes into effect. 

The SBA issued an ANPRM on this program change in December, but, since the law does not specify a timetable for when the agency needs to push forward, there is no projected date on when the SBA will finalize this change.   

What does this mean for certified WOSBs currently in the program?  No change.  WOSBs that are certified, either self or 3^rd party, are still consider certified. The possible grandfathering of these firms into any new system is a topic of the ANPRM (step 1 above).

What does this mean for WOSBs not currently in the program? The two options – self-certification or 3^rd party certification with the vendors listed above – remain open to WOSBs.

Besides certification, are there any new changes to the WOSB program?  Yes.  The SBA is creating a new portal, called “SBA One” for all small business certifications. Women and the first small business group to be added to the new portal and is now where all women will go through to certify.  Eventually, the other certification programs will be added to use this portal. 

The SBA has closed the repository for this new upgrade.  When it reopens as SBA One, all women will have to create a new account for the portal.  For more information on this change, go to www.sba.gov/wosb. 

Important to note:  Women in the program who are in the process of winning opportunities should tell agencies who need to check their EDWOSB/WOSB status to contact the SBA at:  wosb@sba.gov.  SBA will verify the information during this time period.  Be sure to go to the website above for detailed information.