By U.S. Rep. Mike Michaud
(D-Maine)
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.
And while regulations are necessary, it’s critical that we make sure they don’t adversely affect the very people and organizations that they were designed to assist or protect. To that end, in 1980, Congress passed the Regulatory Flexibility Act (RFA), which required federal agencies to study proposed regulations for the impact they’d have on smaller entities, such as small businesses and non-profits. The RFA also created an Office of Advocacy within the Small Business Administration, which to this day works to ensure that the interests of small businesses are protected in the federal rulemaking and enforcement process.
One of the RFA’s findings sums up the problems with federal regulations prior to the 1980 law taking affect: “laws and regulations designed for application to large scale entities have been applied uniformly to small businesses, small organizations, and small governmental jurisdictions even though the problems that gave rise to government action may not have been caused by those smaller entities.” What the RFA essentially sought to do was reduce the use of the “one-size-fits-all” approach to regulations that have been the target of such resentment over the years.
While the track record of the RFA’s impact on the federal rulemaking process is mixed, progress has been made over the years. But that doesn’t mean we can’t do better.
One of the federal agencies that Americans deal with the most is the Internal Revenue Service (IRS). Frustratingly, the IRS has consistently argued that they are immune from the RFA’s requirements. Congress writes the tax policies, the IRS argues, and its job is simply to enforce the law.
However, on numerous occasions, the IRS has in fact used its power to change existing law or make new rules. 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. Despite the obvious impact on small businesses, the IRS simply stated that the rule would not have a substantially negative impact on small entities. The Office of Advocacy urged the IRS to reconsider this decision and conduct an RFA assessment to ensure that the rule’s impact on small businesses was properly taken into consideration. Unfortunately, the agency refused.
The IRS should formally address the concerns of small businesses in its rulemaking process and be held to the same standard as other federal agencies. That’s why I introduced the bipartisan “IRS Rulemaking Fairness Act,” which would clarify that the IRS must comply with regulatory reviews. The bill, which is cosponsored by Congresswoman Virginia Foxx (R-N.C.), would require the IRS to convene a small business review panel and publish an RFA analysis unless it can actually prove that a proposed rule won’t place an undue burden on small businesses.
I believe 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. When small businesses have a seat at the table in evaluating the rules that affect them, the final rules are more effective and efficient, and that’s better for everyone.
While “regulation” may remain a dirty word to some, the least we can do is seek to improve them so that they accomplish their goals without unduly burdening the very people they are often designed to help.
