WASHINGTON, DC July 15 - Congressman Mike Michaud has introduced a bipartisan bill cosponsored by Congresswoman Virginia Foxx (R-NC) to provide small businesses a voice when it comes to Internal Revenue Service (IRS) rulemaking. Michaud's bill, the "IRS Rulemaking Fairness Act", clarifies that the IRS must comply with regulatory reviews as mandated by the Regulatory Flexibility Act (RFA).

The RFA was passed into law in 1980 to ensure that federal agencies studied proposed regulations for the impact they'd have on smaller entities, such as small businesses and small non-profits. Michaud's bill would require the IRS to convene a small business review panel and publish an RFA analysis unless it can actually prove that its proposed rule would not place an undue burden on small entities.

"This bill represents a commonsense reform that simply requires the IRS to do what it should have been doing all along - listening to the voices of those they are impacting," said Michaud. "While the word 'regulation' has received a bad reputation over the years, it's important to remember that regulations play an important role in keeping Americans safe and secure. They protect the safety of the food we eat, and they help keep the air we breathe and the water we drink clean. Yet the least we can do is seek to improve them so they don't unduly burden the very people they are often designed to help."

Small business review panels were first put into place by the Small Business Regulatory Enforcement Fairness Act (SBREFA) in 1996. SBREFA panels are made up of the Small Business Administration's Chief Counsel for Advocacy and representatives from the rulemaking agency and the Office of Management and Budget. During the panel process, participants must collect the advice and recommendations of representatives of affected small entities about the potential impact of a draft rule. The panel then reports their recommendations to the agency.

While the IRS is covered by both the RFA and the SBREFA, the agency has regularly argued that its rules are not covered by the laws. For example, in a recent rule, the IRS failed to address the concerns of small businesses when implementing a law that requires certain income tax preparers to file electronically. Even though there was an obvious impact on small businesses, the IRS stated that they were not required to file an RFA analysis.

John P. Graham, Jr.
Deputy Chief of Staff