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GSA Administrator Denise Turner Roth delivers keynote at 2016 BOMA International Conference and Expo

GSA news releases - Mon, 06/27/2016 - 12:00am
GSA Administrator Denise Turner Roth delivers keynote at 2016 BOMA International Conference and Expo

GSA Publishes Final Alliant 2 & Alliant 2 Small Business Requests for Proposals

GSA news releases - Mon, 06/27/2016 - 12:00am
GSA Publishes Final Alliant 2 & Alliant 2 Small Business Requests for Proposals

Side-stepping the Issue: Federal Judge Makes Unprecedented Move in Rejecting Google’s First Amendment Defense

WLF Legal Pulse - Fri, 06/24/2016 - 3:01pm
By Erin Garza, Judge K.K. Leggett Fellow at Washington Legal Foundation and a rising third-year student at Texas Tech University School of Law Business success in America not only generates increased dividends for shareholders and opportunities for consumers, but it also, regrettably, attracts litigation. Take, for instance, the constant flow of lawsuits search-engine companies face […]
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General Services Administration selects site for Federal Bureau of Investigations Central Records Complex in Frederick County, VA

GSA news releases - Fri, 06/24/2016 - 12:00am
General Services Administration selects site for Federal Bureau of Investigations Central Records Complex in Frederick County, VA

WLF’s Annual End-of-Term Review Assesses Key Supreme Court Free-Enterprise Decisions

WLF Legal Pulse - Thu, 06/23/2016 - 1:24pm
The U.S. Supreme Court: October 2015 Term Review Speakers: The Honorable Jay Stephens, Kirkland & Ellis LLP; Andrew J. Pincus, Mayer Brown LLP; Elizabeth P. Papez, Winston & Strawn LLP; Jeffrey B. Wall, Sullivan & Cromwell LLP Our speakers discussed Court rulings in the areas of class actions, arbitration, the federal False Claims Act, intellectual […]
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The First Circuit Weighs Competing Studies About Relative Risk

WLF Legal Pulse - Thu, 06/23/2016 - 1:20pm
Featured Expert Column: Judicial Gatekeeping of Expert Evidence By Evan M. Tager, Mayer Brown LLP, with Carl J. Summers, Mayer Brown LLP When does an expert witness have an obligation to weigh competing studies and explain why she chose to rely on one study rather than another? On the one hand, this decision-making process goes to the […]
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Senate Science and Technology Leaders Introduce the American Innovation and Competitiveness Act

The bipartisan bill maximizes basic research by reducing administrative burdens for researchers, enhancing agency oversight, improving research dissemination, and reforming federal science agencies to increase the impact of taxpayer-funded research.

One Size Does Not Fit All

House Small Business Committee News - Thu, 06/23/2016 - 12:00am

Layoffs, Benefit Cuts Coming Soon Due to Obama Overtime Rule

WASHINGTON – As the December 1, 2016 compliance deadline for the Department of Labor’s new overtime rule rapidly approaches, traditional small businesses, technology start-ups, and other small employers told the House Small Business Committee today that they may soon be forced to layoff workers, reduce benefits and lower wages to cover the costs of the new federally-mandated requirements.

“The DOL has heralded this rule as a long-overdue action that will provide tremendous benefits to workers,” said House Small Business Committee Chairman Steve Chabot (R-OH). “However, like so many of this Administration’s policies, this one-size-fits-all mandate will do far more harm than good.”

“Numerous small employers weighed in on this proposal and told the Department of Labor that the unprecedented salary level increase would have very negative repercussions,” Chairman Chabot noted. “They asked for a common sense rule that recognized that not all employers have the same resources or utilize the same compensation structures. Unfortunately, their pleas fell on deaf ears.”

“I want to assure the small employers here today, and those tuning in from across this great country, that while DOL didn’t listen to you, we are,” Chairman Chabot added.

Painful Choices Looming for Small Businesses

“From a personal perspective, this rule is likely to have negative consequences - not only to my company, but to my employees as well,” testified Albert F. Macre, a general partner at Payroll+ Services in Steubenville, OH.

“In addition to these negative impacts, the implementation window is very short. This rule will become effective on December 1, 2016, just over five months from now. Given that many small businesses are still struggling with the implementation of the Affordable Care Act five years after the enactment, this window of compliance seems barely cracked open,” Macre explained.

“As a small business owner with several salaried employees positioned between the current exempt overtime earnings threshold and that created by the Department of Labor’s new rule, I now find myself standing with countless other small business owners forced to swallow more government 'medication' prescribed before an accurate attempt at diagnosis has been completed,”Macre added.

Stunting the Growth of Tech Start-ups

“Looking back on when I started my company in 2010, I can tell you with 100% certainty that I would have not been able to hire my first employee had this rule been in place,” said Adam Robinson, the Co-founder of Hireology, a human resources technology business, in Chicago, IL.

“My company now has 100 employees with a median annual compensation that exceeds $70,000 a year - well above the US average. How many “Hireology’s” won’t get started as a result of this rule making that 1st employee unaffordable for an entrepreneur? Are fewer good-paying jobs created and fewer businesses launched the outcomes that are desired here?” asked Robinson.

“Like most federal regulations, the overtime rule is a one-size-fits-all policy that doesn’t distinguish among firm size, sector, location, or compensation structure. This means that companies that don’t fit the Department of Labor’s outdated model will be disproportionately hurt by the rule,” explained Robinson.

“At a time when the middle-class in this country is already being squeezed, the tech sector, sales jobs, and middle-management positions are a few areas that still provide relief. The overtime rule threatens to close those career pathways that have been paved by hard work,” he added.

Small Local Governments and Non-Profits Also Affected

“Mineral County is the very definition of a small governmental entity and we are very concerned about the potential impact of the new overtime rule on our ability to fulfill our fundamental responsibilities — many of which are mandated by the state and federal government,” testified Jerrie Tipton, the Chairman of the Mineral County Board of Commissioners in Nevada.

“Unfortunately, the new overtime rule does not adequately address the wide variations in local labor markets in counties across the country. And ultimately, please remember that the new rule will have broad consequences for taxpayers — and county services,” observed Commissioner Tipton.

“[T]he rule will drastically impact the budget and operations of nonprofits, as well as colleges and universities, health care providers, small businesses and local governments. These employers may be unable to absorb such costs without adverse impact to employee relations or fiscal operations,” testified Christine V. Walters, the Sole-Proprietor of FiveL Company in Westminster, MD.

“One of my clients provides rehabilitation services to a disadvantaged population, of which 85 percent of their clients meet the current poverty threshold. Unlike other employers, this organization cannot transfer increased costs to their lower-income consumers,” explained Walters.

You can read full testimony from today’s hearing here and watch full video of the hearing here.

BACKGROUND

  • Chairman Chabot served as co-chairman of the special House Task Force on Reducing Regulatory Burdens. Last week, Speaker Ryan, Chairman Chabot and House Republicans unveiled the work of the task force in front of the Department of Labor’s Washington DC headquarters and spoke at length about the overtime rule.
  • You can read the task force’s full report titled “A Better Way to Grow the Economy”hereand view video of Chabot’s remarkshere.
  • Chairman Chabot is a co-sponsor of H.R. 4773, the Protecting Workplace Advancement and Opportunity Act, which would nullify the rule and require the DOL do a thorough economic impact analysis of any substantially similar rule.
  • The Small Business Committee has vigorously opposed the DOL overtime rule for months. The Committee has held numerous hearings and roundtables and sent multiple letters explaining to the administration the damage that will be done to America’s 28 million small businesses and other small employers as a result of the rule.

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GSA Announces FedRAMP High Baseline Requirements

GSA news releases - Thu, 06/23/2016 - 12:00am
Release of high baseline means more federal agencies will be able to move to the cloud

Kline Statement: Hearing on “Next Steps in K-12 Education: Examining Recent Efforts to Implement the Every Student Succeeds Act”

Education & the Workforce Committee - Thu, 06/23/2016 - 12:00am
Welcome back, Secretary King, and thank you for joining us. When we last met, the process for implementing the Every Student Succeeds Act was just getting underway. We had a healthy discussion about the bipartisan reforms Congress passed and the president signed into law. Those reforms are designed to restore state and local control over K-12 schools.

That’s not just my own personal view. It’s the view held by governors, state lawmakers, teachers, parents, principals, and superintendents who recently wrote that, “[The Every Student Succeeds Act] is clear: Education decision-making now rests with states and districts, and the federal role is to support and inform those decisions.” It’s also the view of most honest observers. As the Wall Street Journal editorialized, the law represents the “largest devolution of federal control to the states in a quarter-century.”

The reason for this hearing and our continued oversight is to ensure the letter and intent of the law are followed. A critical part of our effort is holding your agency accountable, Mr. Secretary, for the steps that are taken to implement the law. When you were with us in February, you said, “You can trust that we will abide by the letter of the law as we move forward …”

That is a strong statement, and it is one of several commitments you’ve made that the department would act responsibly. But actions speak louder than words. In recent months, we have seen troubling signs of the department pulling the country in a different direction than the one Congress provided in the law.

The first troubling sign is the rulemaking process itself. There are a number of concerns about the integrity of the negotiated rulemaking committee, including the makeup of the panel, the lack of rural representation, and the accuracy of statements made by department staff. The point of the negotiated rulemaking process is to build consensus among those directly affected by the law, yet it seems the department decided to stack the deck to achieve its own preferred outcomes.

The second troubling sign surrounds the long-standing policy that federal funds are to supplement, not supplant, state and local resources. Prior to the Every Student Succeeds Act, this rule was applied differently depending on how many low-income students a school served; some schools faced more onerous requirements than others. Last year, Congress decided the rule would be enforced equally across all schools. Now, school districts must simply show that funds are distributed fairly without prescribing a specific approach or outcome. The law explicitly prohibits the secretary from interfering, yet that is precisely what your proposal would do. 

What the department is proposing would be both illegal and harmful to students and communities. It would impose a significant financial burden on states and force countless public school districts to change how they hire and pay their teachers. This regulatory effort is trying to achieve an end Congress deliberately rejected and that the nonpartisan Congressional Research Service warns goes beyond “a plain language reading of the statute.” No doubt you have good intentions, Mr. Secretary, but you do not have the legal authority to do this. I strongly urge you to abandon this flawed scheme.

The third troubling sign is the department’s accountability proposal. Let me note that there are policies in this proposal we are pleased to see, such as how states set long-term goals and measure interim progress. But in a number of ways, we also see the department’s bad habit for making decisions that must be left to states.

This is especially troubling given the law’s explicit prohibitions against federal interference, including how states compare school performance and identify schools for support. For years, states grappled with a rigid accountability system imposed by Washington. The Every Student Succeeds Act turns the page on that failed approach and restores these decisions back to state and local leaders. I urge you, Mr. Secretary, to adopt a final proposal that fully reflects the letter and spirit of the law. 

We are raising these concerns because it’s vitally important for the laws written by Congress to be faithfully executed. And just as importantly, we are raising these concerns because we want to ensure every child has the best chance to receive a quality education. We cannot go back to the days when the federal government dictated national education policy—it didn’t work then and won’t work now.

If the department refuses to follow the letter and intent of the law, you will prevent state leaders, like Dr. Pruitt from Kentucky, from doing what’s right for their school districts. You will deny superintendents, like Dr. Schuler of Arlington Heights, Illinois, the ability to manage schools in a way that meets the needs of their local communities. And you will make it harder for teachers, like Cassie Harrelson from Aurora, Colorado, to serve the best interests of the students in their classrooms.

Later, we will hear from these individuals because they represent the people we want to empower. Every child in every school deserves an excellent education, and the only way to achieve that goal is to restore state and local control. That’s what the Every Student Succeeds Act is intended to do, and we will use every tool at our disposal to ensure the letter and intent of the law are followed.

Damaging Repercussions: DOL’s Overtime Rule, Small Employers, and their Employees

House Small Business Committee News - Thu, 06/23/2016 - 12:00am
Chairman Steve Chabot has scheduled a hearing of the Committee on Small Business titled, “Damaging Repercussions: DOL’s Overtime Rule, Small Employers, and their Employees.” The hearing is scheduled to begin at 10:00 A.M. on Thursday, June 23, 2016, in Room 2360 of the Rayburn House Office Building.

Attachments
1. Hearing Notice
2. Witness List

Witnesses
Mr. Adam Robinson
Co-founder/CEO Hireology
Chicago, IL
*Testifying on behalf of the Job Creators Network
Testimony

The Honorable Jerrie Tipton
Commission Chair Mineral County
Hawthorne, NV
*Testifying on behalf of the National Association of Counties
Testimony

Mr. Ross Eisenbrey
Vice President
Economic Policy Institute
Washington, DC
Testimony

Foxx Statement: Markup of H.R. 3178

Education & the Workforce Committee - Wed, 06/22/2016 - 11:30pm
Each year, families across the country face difficult decisions about where they can afford to send their children to college and what institution is the best fit for them. Students must wade through massive and often conflicting amounts of information in order to make an informed choice.

While the federal government has long provided students with financial assistance to pursue a postsecondary education, for many, the college selection and financial aid process is complicated, burdensome, and confusing. Taking time to fully understand the available data can be an aggravating task that may get put off and ultimately ignored, often with disastrous consequences

In 2008, Congress attempted to make information about colleges and universities more transparent with the reauthorization of the Higher Education Act. That bill directed the secretary of education to collect and report on information from every college and university receiving federal student aid, including cost of attendance, the percentage of students receiving financial aid, and college completion rates. As a result, information from 7,000 colleges across the nation is now available to help students and their families plan for the future. But there is more that can be done.

Much of the data available because of the 2008 reforms does not take into account large numbers of students enrolled in higher education or fails to capture crucial information that students and families need. To make matters worse, many of the federal government’s efforts to increase transparency in higher education since 2008 have only added to the confusion and uncertainty many prospective students face.

That’s why I—along with my colleagues Mr. Messer and Mr. Sablan—introduced the Strengthening Transparency in Higher Education Act. This bill will improve the information students and their families need to make smart decisions about their education, providing a more complete picture of student populations on our nation’s college campuses. It will also begin to streamline the overwhelming maze of information currently provided to students and families at the federal level.

More specifically, the bill requires the secretary of education to create a consumer-tested College Dashboard. This dashboard will provide students with the key information they need to decide what school to attend—such as the completion rates of all students at that college or university, not just those attending college full time and for the first time.

To ensure students know this information is available to them, the bill also instructs the secretary to actively provide links to the College Dashboard pages of each institution that a student lists on his or her application for federal student aid. By improving and making more students aware of the information available, we can better assist them in making financially responsible decisions that will help them achieve the dream of obtaining a college degree.

Furthermore, this legislation will streamline many of the federal government’s existing transparency efforts—requiring better coordination between federal agencies and eliminating unnecessary initiatives.

It’s crucial that we continue to increase transparency in the country’s higher education system. The Strengthening Transparency in Higher Education Act is a positive step forward in that effort. The substitute amendment I am offering makes small technical changes to the base bill for clarity.

I urge my colleagues to support the amendment, as well as the underlying legislation

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Thune Leads Oversight of Multi-State Lottery Association Rigging Scandal

U.S. Sen. John Thune, chairman of the Senate Committee on Commerce, Science, and Transportation, in a letter to the Multi-State Lottery Association requested information about the association’s response to a lotto jackpot rigging scandal.

Guthrie Statement: Markup of H.R. 3179

Education & the Workforce Committee - Wed, 06/22/2016 - 11:15am
I’m happy to be here today to help address several challenges facing Americans pursuing a higher education. One of those challenges is understanding the federal financial aid process.

Students and parents face a number of difficult questions when considering their higher education opportunities. Deciding how to responsibly finance and pay for their education is an important part of that process.

Unfortunately, the policies in place to promote the financial literacy of aid recipients are seriously lacking. In fact, in a survey of current students and recent graduates who are carrying a high level of student loan debt, more than 40 percent couldn’t remember ever receiving financial counseling—even though it was required before receiving their first loan.

The current system is ineffective and failing to help students make the best financial decisions for their future. Without the information and assistance they need, applicants could make a choice about financial aid that will have detrimental consequences not only in the near-term but for years to come. 

That’s why I worked with Representatives Allen and Bonamici to introduce H.R. 3179, the Empowering Students Through Enhanced Financial Counseling Act. This bill will help Americans make smart decisions when it comes to financing their higher education by improving the timing and frequency of loan counseling. First, it will require individuals to receive their counseling before signing on the dotted line, helping students understand the responsibilities they are taking on and keeping them well-informed every step of the way.

Additionally, the legislation will bolster exit counseling to help borrowers make smart financial decisions as they leave school. It’s not enough to be aware of financial options and commitments before and during school. We need to empower students to make smart financial decisions as they begin to repay their college loan commitments, as well.

H.R. 3179 will also enhance the content of financial aid counseling, ensuring it is tailored to a borrower’s unique needs and individual circumstances, and it will require the secretary of education to maintain a consumer-tested, online counseling tool for institutions to use in providing required financial counseling.

In today’s anemic economy—as college costs continue to rise—students and their families cannot afford the cost of making poor financial decisions in pursuit of a higher education. The Empowering Students Through Enhanced Financial Counseling Act will help students receive the information they need to understand their options and make financially responsible decisions as they work to achieve their goals.

The substitute amendment I am offering makes noncontroversial technical changes. I urge my colleagues to support the amendment and the underlying legislation.

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Heck Statement: Markup of H.R. 5528

Education & the Workforce Committee - Wed, 06/22/2016 - 11:00am
Early last year, I held a roundtable on higher education in my district to help better understand the issues facing students, teachers, and higher ed administrators in Nevada. Nearly everyone in attendance raised the issue of the overly complicated student aid application process, and specifically, problems with the Free Application for Federal Student Aid, better known as the FAFSA.

Like many aspects of the student aid system, the application for aid can be confusing and too complex for many students and families to complete. The FAFSA includes 108 questions requesting information on everything from the net worth of investments to complicated tax information. Many of these questions rely on data that students do not yet have or are so complicated they deter applicants from even completing the form.

As the chairman noted earlier, it’s critically important that students have the information they need to make timely, informed decisions about higher education. That includes information on what aid might be available to help them pursue a college degree and the responsibilities that come with accepting assistance. If the current process deters them from even completing the application for aid, how can students possibly get the help they need? That is why, based on the recommendation of higher ed leaders in Nevada, I began working with some of my colleagues on the committee to reform the FAFSA and improve the student aid application process.

The Simplifying the Application for Student Aid Act—which I am proud to sponsor with Dr. Roe and Representatives Polis and Pocan—is the fruit of that labor and does exactly what the title suggests. It will streamline and improve the application process through a number of commonsense measures, all of which will help students and parents access the financial aid information they need in a timely manner to better understand their higher education payment options.

First, it will allow students to use income data from two years prior to the date of application. Traditionally, the FAFSA has relied on income tax data from the previous year, but that data is not readily available when students should begin filling out their applications. While the Department of Education currently has the authority to allow students to use “prior-prior year” data, the department only recently began taking advantage of this authority.

This bill will ensure students are able to use prior-prior year data in the future. This will allow them to complete the FAFSA earlier and receive information about their aid options sooner. It will also provide aid administrators more time to verify the income of applicants, both strengthening the integrity of the federal student aid system and enabling administrators to provide students with accurate aid information as soon as possible.

Additionally, the legislation will require the Department of Education to allow more applicants to easily import their available income data through the IRS, helping them automatically populate answers to many FAFSA questions with information from their tax returns, making it easier on students and parents to accurately complete the form. The bill will also require the FAFSA be available on a mobile app and require the online and paper versions to be consumer-tested. Both of these measures will make the application process easier and more user-friendly.

By improving the application for student aid, we can help more students make smart decisions about college and realize that a college degree is within reach.

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Heck Statement: Markup of H.R. 5529

Education & the Workforce Committee - Wed, 06/22/2016 - 10:45am
Like many states, Nevada has a severe doctor shortage. While the number of patients is steadily increasing, there continues to be too few qualified health care providers to meet this growing demand for care. Additionally, while the Hispanic population is growing throughout the country, especially in Nevada, there continues to be a disproportionately low percentage of Hispanic physicians. In fact, according to the National Hispanic Medical Association, while the Hispanic population has increased to 17 percent of our total population, the number of physicians that identify as Hispanic is only five percent.

In an effort to help close this diversity gap and address our nation’s doctor’s shortage, last year I joined with Dr. Ruiz from California to introduce H.R. 2927. That bill allowed Hispanic Serving Institutions to utilize existing grant funds to create programs that support, encourage, and mentor prospective physicians as they navigate the necessary requirements to be accepted into medical school.

Congress originally created the Developing Hispanic-Serving Institutions Program in 1992. This program helps promote education opportunities for Hispanic students and allows the institutions serving them to make improvements that increase the quality of the education they offer.

Today, there are more than 400 HSIs across the country, and many other institutions are on the verge of becoming HSIs. In my state, the College of Southern Nevada, UNLV, and Nevada State College, are among many other schools that either are or are on the verge of becoming an HSI. Additionally, the number of young Hispanic undergraduates enrolled full-time at a two- or four-year college has more than tripled in the past 23 years.

It is clear Hispanic students have greater access to education opportunities than they did before the Developing HSIs Program was created. Still, as I mentioned before, the Hispanic population remains underrepresented in various parts of the workforce, particularly in health care.

After meeting with local health care and education leaders in Nevada, and working with the chairman and other members of the committee to address this issue, I am happy to offer H.R. 5529, the Accessing Higher Education Opportunities Act, with Congressman Hinijosa and Dr. Ruiz.

H.R. 5529, expands on the bipartisan work of H.R. 2927 by allowing HSIs to use funds to support students preparing for all health care-related doctoral programs. Additionally, I want to thank Congressman Hinojosa for joining with me and Dr. Ruiz on this bill and adding an important provision that allows HSIs to work with local school districts to start or enhance dual enrollment opportunities and early college programs at high schools.

These programs not only help students get into college, but they also enable students to earn college credits earlier in their academic career. As a strong supporter of dual enrollment programs I want to thank Congressman Hinojosa for strengthening the bill with this important provision.

Ultimately, this bill will help us address a growing doctor’s shortage and close the diversity gap among physicians by helping students at HSIs achieve the dream of higher education.

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Kline Statement: Markup of Higher Education Legislation

Education & the Workforce Committee - Wed, 06/22/2016 - 10:40am
Today, the committee will consider a number of bipartisan bills. Each bill has a different focus, but all share a common goal: strengthening America’s higher education system.

Our country’s higher education system offers students from all walks of life opportunities to acquire the knowledge and skills they need to achieve a lifetime of success. It has helped countless individuals pursue rewarding careers, accomplish personal goals, and earn a living to provide for their families.

Unfortunately, too many Americans are struggling to realize the dream of a higher education or believe the dream of a college degree could never become a reality for them. That’s because, as I have noted before, our current system is too costly, too bureaucratic, and outdated.

Since 2005, average tuition and fees have increased by 40 percent at four-year public institutions and by more than 25 percent at four-year private nonprofit institutions. Meanwhile, a dizzying maze of student aid programs discourages students from pursuing a degree, and complex federal rules impede innovation and prevent state and institutional leaders from deciding what’s best for their students.

In the end, many students are either unable to complete college, or they graduate saddled with debt and lacking the skills they need to compete in the workforce. It shouldn’t be this difficult to earn a degree, and students and families deserve better.

That’s why reforming and improving the Higher Education Act remains a leading priority for this committee, and we’ve made significant progress in achieving that goal. While there is a lot of work still to be done to complete the reauthorization process, that doesn’t mean we shouldn’t take steps now to deliver important reforms students, parents, and taxpayers need.

The bills under consideration today will help us do just that. They are all bipartisan reforms that adhere to the principles we laid out last Congress—reforms that will empower students and families to make informed decisions; simplify and improve student aid; promote innovation, access, and completion; and ensure strong accountability with a limited federal role.

These proposals will help students and parents better understand their higher education options. Choosing where to go to school and how to pay for it can be a daunting task, but having the right information—and having it early—can help students make smarter, more timely decisions. These are decisions that will have a significant impact on their lives for years to come, and it’s critically important for students and families to get them right.

The bills will also enhance existing support for institutions serving minority students and hold those institutions accountable for how they are using that support. These reforms will help more students access a postsecondary education and ensure taxpayer dollars are being well spent.

Together, they will help more Americans acquire the knowledge and skills they need to compete and succeed in the workforce. Yes, they are only part of a broader solution, but they will make a real difference and provide the help students and parents need now.

I want to thank my Republican and Democrat colleagues for their work in developing these proposals. By working together, we are delivering the kind of positive, commonsense reforms that will strengthen our higher education system, and more importantly, help make a postsecondary education not just a dream but a reality for more Americans.

I look forward to advancing these reforms and to the work we have ahead of us to further strengthen higher education for students, families, and taxpayers.

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GSA Acquisition Rule Captures Transactional Data, Drives Savings and Eliminates Burdensome Reporting

GSA news releases - Wed, 06/22/2016 - 12:00am
New Access to Data and Analysis will Help Government Save Millions

“FEAR FACTORS" : IRS Audits Used to Intimidate Small Businesses

House Small Business Committee News - Wed, 06/22/2016 - 12:00am

 

WASHINGTON – Today small business owners and advocates told a key Congressional subcommittee that increasingly aggressive audit tactics by the Internal Revenue Service (IRS) have been used to intimidate small companies, creating an atmosphere of fear and uncertainty in the small business community.

“In the administration of the tax code, the IRS has dual roles: collection and enforcement,” said Subcommittee on Economic Growth, Tax and Capital Access Chairman Tim Huelskamp (R-KS) in his opening remarks. “Small businesses have a right to be treated fairly on both counts. Unfortunately, that isn’t always the case.”

“The Small Business Committee has heard from a number of small businesses that have been harmed in one way or another by the IRS. In at least two cases, aggressive audits have resulted in these companies closing their doors.” Subcommittee Chairman Huelskamp added.

National Taxpayers Union Speaks Out

“To this day, taxpayers and advisers continue to report on troublesome developments in IRS audits that range from isolated cases to broader policies,” testified Pete Sepp, the President of the National Taxpayers Union (NTU).

“From the view of the small business person immersed in an audit, such matters of policy seem academic. What, therefore, are the more palpable “fear factors” foremost in business owners’ minds when undergoing this process?” asked Sepp.

“Based on NTU’s review of research literature, statistical analysis, oversight reports, and hundreds of anecdotes over the past several decades, we believe the following are most pertinent,” said Sepp pointing to “uncertainty” and “intimidation tactics.”

“A September 2014 report for the National Association of Manufacturers calculated that the regulatory cost per worker for all tax compliance activities in firms of any size was a whopping $960 (using 2012 data and expressing in 2014 dollars). For companies with fewer than 50 employees, the tab was much worse – over 50 percent more, at $1,518 per worker. Unfortunately, these considerable outlays and resources do not buy peace of mind for small business owners who, as Ranking Member Velázquez stated, often operate in fear of vague laws being used against them,” Sepp added.

“Time Consuming,” “Expensive” and “Devastating”

“If Federal Express can manage millions of packages all over the world, it seems that the IRS could come up with some sort of bar code or other tracking system that would allow both the IRS and the taxpayers to track correspondence responding to notices and the status of their cases," testified Roger Harris, a franchise owner based in Athens, Georgia.

“The vast majority of small business audits are correspondence audits. While they are intended to cover only simple issues, because of the IRS’s focus on efficiency, they can be frightening to small business taxpayers, as well as being time consuming and expensive. In some circumstances when things go wrong, they can be devastating to a business,” Harris added.

A Lack of Transparency

“Aligned with this issue is a lack of transparency with the IRS,” said Lee Davenport, a Member of the Electronic Tax Administration Advisory Committee (ETAAC). “For most taxpayers, the information the IRS has about them is a mystery. It’s not easy for taxpayers to access and understand their tax information on file with the IRS, their previous tax-related interactions or their tax compliance obligations.”

“For small-business taxpayers, this issue is even more critical, because small businesses are more likely to complete multiple year-round transactions with the IRS. In many cases, when there is a compliance issue, small-business taxpayers find out with a surprising IRS notice after they file, or – even more stressful – an audit that can take months or years to resolve. For all types of taxpayers, accessing and using their tax information to proactively comply is almost entirely out of the question in the current system,” Davenport noted.

You can read full testimony from today’s hearing here and view video from today’s hearing here.

BACKGROUND:

  • Today’s hearing represents the latest part of the House Small Business Committee’s ongoing oversight of mistreatment of small businesses by the IRS.
  • Last month, National Taxpayer Advocate Nina Olson told the full Committee that the failure of the IRS to help answer basic questions from taxpayers was “beyond unacceptable” and “absurd.”
  • In April, Full Committee Chairman Chabot and Members pressed IRS Commissioner John Koskinen on a myriad of problems with his agency’s treatment of small businesses ranging from lax cybersecurity to complying with the complexities of the tax code.

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