NSBA Immediate Past Chair Paul Hense to Testify Before House Panel

April 26, 2007

Washington, D.C. -- National Small Business Association Immediate Past Chair Paul Hense will testify before the U.S. House Committee on Small Business today at 11 a.m. during a hearing entitled, "Closing the Tax Gap Without Creating Burdens for Small Businesses." Hense is president of Hense and Associates, a certified public accounting firm in Grand Rapids, Mich.

Hense's testimony arrives two weeks after NSBA launched an initiative aimed at defeating Internal Revenue Service plans to narrow the so-called "tax gap" by targeting the small-business community.

The "tax gap" includes both deliberate and illegal tax evasion but also non-payment that occurs for more innocent reasons, such as taxpayer error or the simple inability to pay. Even Nina Olson, the IRS' taxpayer advocate, told Congress that IRS auditors have found that an estimated 94 percent of noncompliance is the result of honest mistakes by tax filers who simply don't understand the 17,000-page beast of a tax code.

A recent nationwide poll conducted by NSBA shows that 61 percent of small-business owners do not even know about the "tax gap." However, once informed of the IRS proposals, the majority of respondents believed the proposals would increase burdens on their businesses.

New regulations advocated by the IRS would require small businesses to withhold payroll taxes on independent contractors and report payments in excess of $600 to corporations of all sizes, even if a business owner is purchasing goods from a major retailer. The IRS also proposes gaining direct access for the organization to all business credit card and checking account records.

"The number one NSBA priority for the 110th Congress is working to address the root causes of these unpaid taxes and find a solution without placing excessive and intrusive burdens on honest small-business owners," said Hense, who also chairs NSBA's "tax gap" initiative. "We believe efforts to close the 'tax gap' must focus on overall simplification, eliminating inequities within the tax code, and enhancing taxpayer education and outreach."

The complete text of the testimony will be available at nsba.biz following the hearing. More information about the initiative can be found at preventirsabuse.org.

For 70 years, NSBA has been an advocate for the interests of small business throughout the country. The organization, which reaches more than 150,000 small businesses, is the nation's oldest small-business advocacy organization.