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ADVOCATEVolume 21, Number 3 May/June 2007

NSBA Celebrates 70 Years In StyleOrganization hosts special event as part of annual Washington Presentation

Inside the AdvocateNSBA Chair Looks Back (p. 4).An All-Star Advocate (p. 6).More Photos from the Gala (p. 8).

Anniversary celebrations provide agreat venue for myriad activi-ties—catching up with old

friends, learning more about an orga-nization’s recent activities, getting achance to become more involved,and enjoying a wonderful eveningfull of good food and entertainment.

The 70th anniversary celebrationof NSBA and the small-business move-ment, held May 9 at the NationalMuseum of Women in the Arts, pro-vided such an opportunity for thepacked crowd that included invitedguests, past chairs, returning attendees,and even a group of small-businessowners that were attending their firstNSBA event. The gala began with areception, where attendees could viewthe museum’s special exhibit entitled,“Italian Women Artists fromRenaissance to Baroque.” Additionally,there were two monitors screening avideo about the organization’s distin-guished history.

“The presence of 14 past chairsshows just how much we care aboutsmall-business issues and this organi-zation,” said Joy Gay, an event co-chair and NSBA past chair. “We alllook forward to another 70 years asan organization working for the bet-terment of small business.”

The program began with openingremarks by the event’s master of cer-emonies, NSBA Vice Chair ofCommunications Chris Holman.NSBA President Todd McCracken

said NSBA Vice Chair ofMembership Phyllis Shearer Jones,who served as the gala’s co-chair.“Seventy years of active involvementin the small-business movement is asignificant accomplishment.”

continued on p. 3

then presented alifetime achievementaward to DavidVoight, who is retir-ing after a stellarcareer working onbehalf of small businesses.

NSBA ChairGrafton “Cap”Willey posthumous-ly honored two pio-neers who only canbe described as theepitome of small-business advocacy.The first honoreewas Milton Stewart,who was appointedby then-PresidentJimmy Carter to bethe nation’s firstchief counsel foradvocacy at the U.S.Small BusinessAdministration.Stewart’s widow,Joan, accepted aplaque on behalf ofthe family’s surviv-ing members.

Willey subse-quently honoredLewis Shattuck, thefather of the SBA’sOffice of Advocacyas well as what hasbecome NSBA’sWashington Presentation.Additionally, Willey announced thatthe NSBA board had decided toname its Small Business Advocate ofthe Year award in Shattuck’s honor.

“It is important that we take timeto celebrate milestones in our life,”

ALL PHOTOS BY GARY HUTZELL/CELEBRATION PHOTOGRAPHY

ABOVE: NSBA Chair Grafton “Cap” Willey honors the late MiltonStewart for his work on behalf of small business by presentinghis widow, Joan, with a plaque.BELOW: A group of former NSBA chairs gathered during theWashington Presentation. Pictured with Willey (back row, thirdfrom left) are (back row, l-r) Brad Roller, John Hexter, PaulHense, Malcolm Outlaw, Jack Gardner, (front row, l-r) RaymondArth, Richard Herring, Joy Gay, and Ronald Cohen.

By Rob YunichDirector of Communications

ChairGrafton H. “Cap” Willey, IV

First Vice ChairMarilyn D. Landis

SecretaryLois Riske

TreasurerKeith Ashmus

Immediate Past ChairPaul Hense

PresidentTodd McCracken

EditorRob Yunich

WritersMolly BroganKyle Kempf

Jody Milanese

PrintingDigiLink, Inc.

HOW TO REACH US

National Small Business Association1156 15th Street NW Suite 1100

Washington, DC 20005Phone: 202-293-8830

Fax: 202-872-8543Internet: nsba.biz

The NSBA Advocate, published bimonthly by the National Small

Business Association, is one of thebenefits of an NSBA membership.Notification of address changesshould be sent to NSBA, 115615th Street NW, Suite 1100,

Washington, DC 20005.

MISSION STATEMENTNSBA is a volunteer-led associa-tion. Our primary mission is to

advocate state and federal policiesthat are beneficial to small busi-ness, the state, and the nation—and promote the growth of free

enterprise.

ADVOCATEMay/June 2007

Volume 21, Number 3

©© 22000077 NNaattiioonnaall SSmmaallll BBuussiinneessss AAssssoocciiaattiioonn

2 May/June 2007

In This Issue

LOOKING BACK AT A MEMORABLE GALA

NSBA Chair Grafton “Cap” Willey takes his own look back at the 70thanniversary celebration of NSBA and the small-business movement.

AN ALL-STAR ADVOCATE

NSBA honored its 2007 Small Business Advocate of the Year during theWashington Presentation—and this year’s winner is a true all-star.

A SPECIAL CELEBRATION

Take a photographic journey down memory lane with a special collection ofimages from the Washington Presentation and anniversary gala.

MORE NSBA NEWS

11 SBTC calls for Tibbetts Awards nominations… 12 NSBA launches “taxgap” initiative…14 NSBA at work… 15 NSBA calendar… and more.

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PHOTO BY GARY HUTZELL/CELEBRATION PHOTOGRAPHY

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May/June 2007 3

NSBA Celebrates 70 Years In Style (continued from p. 1)

The evening’s events concludedwith a performance by the CapitolSteps comedy troupe, who made sureeverybody at the museum was laugh-ing emphatically throughout their 45-minute show.

PRESIDENTIAL OUTLOOK

The gala was part of a very spe-cial edition of the WashingtonPresentation, which began on themorning of May 9 with a sessionentitled “2008 Elections and SmallBusiness: The Presidency andBeyond.” The session’s speaker wasAmy Walter, senior editor of theCook Political Report, who deftly guid-ed the assembled crowd through aninformative and sometimes humor-ous look at the 2008 presidentialrace.

Attendees then were briefedabout NSBA’s priority issues and pre-sented a summary of the organiza-tion’s recent comprehensive small-business survey. Speakers includedMcCracken, WashingtonPresentation Chair Mark Deion,Immediate Past Chair Paul Hense,Health and Human ResourcesCommittee Chair Thomas Pitrone,and Government Affairs DirectorKyle Kempf.

The next item on the agenda was“Cracking the Procurement Code:Make the Most of GovernmentContract Opportunities,” which wasmoderated by Shearer Jones. Panelistson the topic were Major Clark, theOffice of Advocacy’s assistant chiefcounsel for acquisition policy; JaneNavarria, an executive from Citibank;and Paul Thompson, principal atPremier Tax and Accounting.

During the luncheon that fol-lowed, San Francisco’s Scott Haugewas honored as the 2007 SmallBusiness Advocate of the Year andNational Public Radio national politi-cal correspondent Mara Liasson pro-vided a preview of the remaining 18months of the 110th Congress. (Moreabout Hauge can be found on p. 6.)

From there, the attendees had the


ABOVE: Amy Walter (left), senior editor of the Cook Political Report, spoke during theMay 9 general session, while Mara Liasson, a national political correspondent for NationalPublic Radio, spoke during that day’s luncheon.BELOW: Naomi Baum, staff director for Senate Committee on Small Business andEntrepreneurship Chair John Kerry (D-Mass.), presented NSBA President Todd McCrackenwith a statement recognizing NSBA’s 70th anniversary from the Congressional Record.

unique opportunity to attend aWhite House Briefing in thePresidential Hall of the Dwight D.Eisenhower Executive OfficeBuilding. Speakers included JulieGoon, special assistant to the presi-dent for economic policy in theNational Economic Council and thepresident’s chief health care expert;Barry Jackson, deputy assistant tothe president and deputy to KarlRove, who spoke about immigration;and Jason Thomas, the newest spe-cial assistant to the president for eco-nomic policy in the NationalEconomic Council, who spoke abouttax issues.

On May 10, NSBA hosted itstraditional Congressional Breakfast.The event, held in the RayburnHouse Office Building’s Gold Room,featured four speakers—Reps. BruceBraley (D-Iowa), House SmallBusiness Committee Chair Nydia

Velázquez (D-N.Y.), Wally Herger(R-Calif.) and Committee RankingMember Steve Chabot (R-Ohio).

Naomi Baum, staff director forSenate Committee on Small Businessand Entrepreneurship Chair JohnKerry (D-Mass.), also presentedMcCracken with a statement recog-nizing NSBA’s 70th anniversary fromthe Congressional Record.

“The opportunity to meet withadministration officials provided anexcellent venue for small-businessowners to discuss issues of concern,”Deion said. “The ability to networkwith members of Congress providedattendees with a definitive opportuni-ty to have their voices heard.”

After breakfast, the assembledsmall-business owners had thechance to speak face-to-face withtheir representatives and senators—and pass along knowledge gainedduring a memorable event.

NSBA Thanks 70th Anniversary Gala Corporate Sponsors

4 May/June 2007

Chair’s MessageLooking Back at a Memorable GalaBy Grafton H. “Cap” Willey, IVNSBA Chair

long commitment to supportingsmall business. He was relentless inhis efforts to make the world a betterplace for small business to surviveand thrive.

I had the pleasure of workingwith Milt on a number of issues dur-ing two White House Conferences onSmall Business. He also was a fre-quent visitor to NSBA events over theyears. His widow, Joan, accepted aplaque that we presented to her in hishonor. (A picture of the presentationis on the front page of this issue.)

The second person we honoredwas Lew Shattuck. Lew was my

mentor at the Smaller BusinessAssociation of New England(SBANE) and a dear friend. Lew andhis able assistant, Phyllis Marcus,started the Washington Presentationin the 1960s.

During his 25 years as the headof SBANE, he was a leading force inthe small-business lobbying effortsand he was instrumental in the cre-ation of Small Business United(SBU) and the subsequent merger ofSBU and NSBA.

I was verypleased that theNSBA board hasdecided to nameits Small BusinessAdvocate of theYear award after

him. That action not only shows areverence for the past, but reaffirmsNSBA’s mission as America’s small-business advocate.

As the nation’s oldest small busi-ness organization, we should be veryproud of reaching our 70th anniver-sary. It is a major accomplishmentand a credit to our dedicated staff,the volunteer directors and trustees,and the grassroots membership sup-port that we have succeeded.

As your current chair, I want toexpress my thanks for your contin-ued support. Here’s to many moreprosperous years.

NSBA FILE PHOTO

By all accounts, NSBA’s 70thanniversary gala celebration andWashington Presentation, held

May 8-10 in our nation’s capital, wasa smashing success. We had recordattendance, great weather, and awonderful program.

The 70th anniversary organizingcommittee, co-chaired by past NSBAchair Joy Gay and current Vice Chairof Membership Phyllis ShearerJones, puttogether anevent thatabsolutely waselegant. Theblack-tie affairwas held at theNational Museum of Women in theArts—a facility that I had not visitedprior to this event but plan to visitagain. I did remark to Joy that hermajor accomplishment was gettingme into a tux. I also told her that sheshould be thankful that my wife anddaughter would not let me wear myboat shoes.

During the evening, I had thedistinct honor to recognize two pil-lars of the small-business family thatpassed away over the last few years.Milt Stewart, the first chief councilfor advocacy at the U.S. SmallBusiness Administration, made a life-

I was very pleased that the NSBA board hasdecided to name its Small Business Advocate of theYear award after Lew Shattuck. That action not onlyshows a reverence for the past, but reaffirms NSBA’smission as America’s small-business advocate.

Bronze LevelARR Enterprises

Council of Smaller EnterprisesHager Sharp

Lagos and LagosSmall Business Association of Michigan

SMC Business CouncilsThe UPS Store

Other ContributorsBlue Cross Blue Shield Association

Capitol BancorpCohen and CompanyGeneral Cleaning, Inc.

Immediate Temporary HelpPAETEC

Stevenson and AssociatesSunwest Mud Company, Inc.

Sungro Chemicals, Inc.

Gold Level

Silver LevelPlatinum Level

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6 May/June 2007

This summer’s Major LeagueBaseball all-star game will bestaged in San Francisco. During

the Mid-Summer Classic, the best ofthe best will travel to the City by theBay and demonstrate their variousskills. But in the world of small-busi-ness advocacy, the Golden Statealready boasts an all-star.

Scott Hauge, owner and presidentof Cal Insurance and Associates, Inc.,was named the 2007 Small BusinessAdvocate of the Year during thisyear’s Washington Presentation. Theother national finalists were DonnaChilds of New York City, ShirleyFelder-Morton of Woodbourne, N.Y.,Michael Mitternight of Metairie, La.,and John Zitzner of Cleveland.

“Scott distinguished himselffrom an exemplary field that includ-ed many extremely active and pas-sionate small-business advocates,”NSBA Chair Grafton H. “Cap”Willey, IV said. “He has workedhard on behalf of small business andNSBA is extremely proud of what heaccomplished as well as his continu-ing efforts.”

Hauge is one of the nation'sleading activists in paving the way forsmall- and medium-sized businessesand has facilitated the introduction oflegislation that has impacted busi-nesses on local, state and nationallevels. Along with the advocacyorganization he founded, SmallBusiness California, Hauge continuesto be influential on the state level—becoming one of the go-to people forGov. Arnold Schwarzenegger and theCalifornia legislature regardinggashouse emissions, health care costs,workers compensation, and energy.

“Scott Hauge has demonstratedhis commitment to small-businessadvocacy with excellent results at thelocal, state and national levels,” saidE. Dennis Trinidad, former director

of the Office of Small BusinessAdvocate/Governor’s Office ofPlanning and Research for the stateof California. “His dedication, volun-teerism and resourcefulness in sup-porting the California economy andits very diversified number of smallbusinesses have been outstanding.”

Hauge’s recent accomplishmentsinclude leading the fight against aproposal by the WorkersCompensation Insurance RatingBureau that would have cost smallbusiness millions of dollars. He alsoworked with key California legisla-tors to smooth the way for thatstate’s small-business owners andentrepreneurs, as well as creating leg-islation to assist with disaster pre-paredness.

But Hauge’s energy and enthusi-asm do not stop at small business. Atireless volunteer, he has taken thelead in California’s Healthy Kids, aresource directed at helping parents

and educators teach basic healthguidelines to children. And in 2006,Hauge was instrumental in makingsure NSBA and Small BusinessCalifornia raised $75,000 to help 230Gulf Coast small-business ownersand their employees in the wake ofHurricane Katrina.

“I advocate for small businessbecause it is my passion and I seehow much small business is under-represented when policy decisionsare made,” Hauge said. “I also thinkit sets me apart from my fellow insur-ance agents and brokers because Icare about my clients beyond justselling them an insurance policy.That is why the Cal Insurance mottois ‘always looking out for you.’”

Hauge currently serves as NSBA’svice chair for advocacy. Additionally,Hauge is a member of more than 20boards and commissions in theGolden State and has testified beforeCongress numerous times.


NSBA Chair Grafton “Cap” Willey (right) presents Scott Hauge with a crystal obelisk honoring him as the 2007 Small Business Advocate of the Year.

An All-Star AdvocateSan Francisco’s Scott Hauge named Small Business Advocate of the Year


May/June 2007 7

8 May/June 2007

A Special Celebration


ABOVE LEFT: NSBA Vice Chair of Membership Phyllis Shearer Jones, a gala co-chair, talks to her guest for the evening, Lawrence Hamm.ABOVE RIGHT (l-r): Longtime member Thelma Ablan talks with past chairs Ron Cohen and Joy Gay (the gala’s other co-chair) duringthe Washington Presentation at the Westin City Center.BELOW LEFT: NSBA Past Chair Susan Hager laughs with her husband, Eric, during the 70th anniversary gala.BELOW CENTER: Washington Presentation Chair Mark Deion speaks during the Small Business Advocate of the Year luncheon.BELOW RIGHT: NSBA First Vice Chair Marilyn Landis mingles during the gala’s opening reception.

LEFT: NSBAPresident ToddMcCracken (left)presents DavidVoight with a life-time achievementaward in advanceof his pendingretirement for hisdedicated workon behalf of smallbusiness.

RIGHT: NSBAPast Chair GeorgeAbbott mingleswith his wife,Diane, duringNSBA’s 70thanniversary gala.

May/June 2007 9


LEFT: 2006 SmallBusinessAdvocate of theYear RobertSchmidt ofCleveland networks withJack Riske ofPittsburgh duringthe WashingtonPresentation.

RIGHT: As part oftheir 45-minuteperformance,members of theCapitol Steps par-ody a presidentialdebate betweenGeorge W. Bushand John Kerry.

ABOVE LEFT: NSBA Vice Chair of Communications Chris Holman, the gala’s master of ceremonies, salutes the assembled crowd.ABOVE RIGHT: Members of the Color Guard hold the flags at the beginning of the gala as the “Star Spangled Banner” plays.BELOW LEFT: Major Clark, the SBA’s assistant chief counsel for acquisition policy, speaks during a session focusing on procurement.BELOW CENTER: Barry Jackson discusses immigration during the White House Briefing.BELOW RIGHT: NSBA Board Member Thomas Pitrone, the chair of the organization’s Health and Human Resources Committee, discusses health care reform during an issue briefing on May 9.

10 May/June 2007

NSBA Provides Testimony on Energy, Contracting

This spring, NSBA has continuedits longstanding tradition of pro-viding testimony during impor-

tant hearings. Two of the latest orga-nizational representatives wereNSBA President Todd McCrackenand NSBA member MichaelMitternight.

McCracken testified before theU.S. House Committee on SmallBusiness on April 19 at a hearing enti-tled, “Expanding Small Businesses’Access to Federal Contracts.” Thehearing coincided with the introduc-tion of H.R. 1873 (Small BusinessFairness in Contracting Act) by Rep.Bruce Braley (D-Iowa) and co-spon-sored by Committee Chair NydiaVelázquez (D-N.Y.) and RankingMember Steve Chabot (R-Ohio).

Small-business participation incontracting is crucial to a healthy andcompetitive federal procurementprocess. Unfortunately, small busi-nesses received only 19 percent offederal contracting dollars in FY2006, according to a respected pro-curement research firm. Even govern-mental statistics regarding small-busi-ness federal contracting, while moreoptimistic than those independentlycompiled, are underwhelming consid-ering the large and integral role smallbusinesses play in the U.S. economy.

“The Small Business ReauthorizationAct of 1997 established a government-wide goal of 23 percent of prime, fed-eral contracts to be awarded to smallfirms. While this was a welcome ini-tial step, it is time to enhance it,”McCracken said. “America’s smallbusinesses deserve their fair share offederal contracting dollars.”

McCracken also told the com-mittee that NSBA is extremelypleased to see that H.R. 1873 propos-es an increase of the government’ssmall-business procurement goal to30 percent of all federal contacts.

Meanwhile, Mitternight testified


planned management approach,however, because the variables aresomewhat predictable. Fuel costs thatjump three percent to six percent in amatter of days or weeks are virtuallyimpossible to endure.”

In the day-to-day operation ofMitternight’s business, he has asmany as six service trucks and threemanagement vehicles on the street atany one point. In order to carry theload of tools and equipment neces-sary to provide the service for theequipment upon which he works,most of his service vehicles are three-quarter-ton pick-up trucks.

Obviously, these trucks fall intothe category of non-fuel efficientvehicles, but unfortunately, there isno affordable alternative.

Mitternight also describedNSBA’s support of alternative-fuelvehicles, the continued expansion ofethanol utilization and the removalof the protectionist 54 cents per gal-lon tariff on imported ethanol.

A complete transcript of bothsets of testimony is available atnsba.biz/testimony.

NSBA Government Affairs DirectorKyle Kempf contributed to this story.

NSBA FILE PHOTOS

LEFT: NSBA President Todd McCracken (shown at an earlier event) testified April 19before the House Small Business Committee at a hearing entitled “Expanding SmallBusiness’ Access to Federal Contracts.”RIGHT: NSBA member Michael Mitternight, a 2007 Small Business Advocate of the Yearfinalist, testified before the House Select Committee on Energy Independence and GlobalWarming at a hearing entitled “Economics of Dependence of Foreign Oil—Rising GasolinePrices” on May 9.

before the House’s Select Committeeon Energy Independence and GlobalWarming during a May 9 hearingfocusing on “Economics ofDependence of Foreign Oil [and]Rising Gasoline Prices.”

Mitternight, owner of FactoryService Agency Inc., a family-ownedsmall business located in the NewOrleans suburb of Metairie, La., wasa finalist for NSBA’s 2007 SmallBusiness Advocate of the Yearaward.

Mitternight’s company special-izes in commercial air-conditioningservice and installation throughoutsoutheast Louisiana. He testifiedabout the impact of increased gaso-line prices on small businesses.

“Like any other business, mycompany grapples with a spate ofbusiness complications, from risingrefrigerant prices, increasing costs forconstruction materials such as cop-per, compliance costs to satisfy morestringent building codes, escalatinglabor rates due to workforce short-ages, and other ever-increasingexpenses such as health care costs,”Mitternight said. “Most of thoseproblems can be dealt with via a

May/June 2007 11

SBTC Excels With Focus on SBIR, Tibbetts AwardsBy Rob YunichDirector of Communications

The Small Business TechnologyCouncil (SBTC), a council ofNSBA, is sponsoring the Tibbetts

Awards again this year. Named forRoland Tibbetts—the personacknowledged as the father of theSmall Business Innovation Research(SBIR) program—the nationalawards are given annually to thosesmall firms, projects, organizationsand individuals judged to exemplifythe very best in SBIR achievement.

SBTC seeks nominees who showthe economic impact of their techno-logical innovation, business achieve-ment and effective collaborations,and a demonstrated state and region-al impact and proven support.

Winners will be recognized onWednesday, Oct. 10 at the WestinHotel City Center, located at 1400 MStreet NW in the nation’s capital.Nominations are due Sunday, July15, and can be submitted online attibbettsawards.org.

Tibbetts, who founded the SBIRprogram in 1977, lent his name tothe award and was a vital cog inSBTC’s ability to host the event.

Tibbetts joined the NationalScience Foundation (NSF) in 1972after 20 years in the private sector.

By 1982, the SBIR program’ssuccess resulted in congressional leg-islation that extended SBIR to the 11largest research and developmentdepartments and agencies in the gov-ernment. SBIR, and the relatedSmall Business Technology Transferprogram that must involve universi-ties, have resulted in more than $2billion annually of cutting-edge feder-al research and development fundsnow going to small technology firms.Tibbetts retired from NSF in 1996.

Today, the SBIR program hasdeveloped more than $21 billionworth of research by more than15,000 firms—resulting in more than45,000 patents.

SBIR companies employ morethan 400,000 scientists and engi-neers—making the program thelargest concentration of scientificand engineering talent in the UnitedStates, exceeding the combined totalof all American academic and non-profit institutions. Each year, 10 fed-eral agencies award $2 billion inresearch contracts as part of theSBIR program.

Current Tibbetts Awards spon-sors include Boeing, NorthropGrumman, NSF, NASA, the UnitedStates Navy, the Defense AdvancedResearch Projects Agency, theNational Institutes of Health, andthe Association for ManufacturingTechnology.

SBIR IN TRANSITION IIIFollowing the Tibbetts Awards,

SBTC will sponsor its third “SBIR InTransition” conference on Oct. 11.SBTC sponsored the first version ofthe event the day after last year’sTibbetts Awards, and hopes to offerit twice per year.

The second version of the event,held March 6 in Washington, D.C.,began with a speech by Marc G.Stanley from the National Instituteof Standards and Technology, whoserves as the director of the

Advanced Technology Program.Stanley spoke about SBIR’s PhaseIII.

The luncheon keynote speakerwas William Perciballi, chief execu-tive officer of ArmorWorks, Inc., aPhoenix-based company that pro-vides high-tech armor protection forthe U.S. military. Perciballi spokeabout “How Can SBIR Meet OurHighest Priority Warfighter Needs?”

On its frequently-asked questionspage about the SBIR program (locat-ed at ed.gov/programs/sbir/faq.html),the U.S. Department of EducationWeb site defines the program’s threephases thusly:

Phase I is a feasibility study toevaluate the scientific and technicalmerit of an idea;

Phase II is to expand on theresults of and further pursue thedevelopment of Phase I;

Phase III is for the commer-cialization of the results of Phase IIand requires the use of private sectoror non-SBIR federal funding.

Complete materials from theevent can be found in the members-only section of SBTC.org.

To register for upcoming “SBIRin Transition” events, call JereGlover at 202-785-4300 or e-mailhim at [email protected].

NSBA FILE PHOTO

SBTC Executive Director Jere Glover (left) greets Roland Tibbetts, the founder of theSmall Business Innovation Research program and award namesake, during last year’sevent. This year’s edition will be held Oct. 10 at the Westin City Center.

12 May/June 2007

NSBA Launches ‘Tax Gap’ InitiativeOrganization realizes strong chance of impending IRS strong-armed audits

About a month before NSBA cele-brated 70 years of small-businessadvocacy, it proved once again

why it is such a respected organiza-tion. Following its long tradition oflistening to the needs of its membersand small-business owners across thecountry, NSBA launched a campaigninitiative aimed at defeating InternalRevenue Service plans to narrow theso-called “tax gap” by targeting thesmall-business community.

The initiative, launched April 12,followed concern about the new bur-dens at the organization’s 2007 SmallBusiness Congress. In fact, NSBAmembers voted the “tax gap” as thetop small-business priority for the110th Congress.

New regulations advocated bythe IRS would require small busi-nesses to withhold payroll taxes onindependent contractors and reportpayments in excess of $600 to corpo-rations of all sizes, even if a businessowner is purchasing goods from amajor retailer. The IRSalso proposes giving itselfdirect access to all busi-ness credit card andchecking account records.

“Instead of outsourc-ing collection efforts tolaw abiding small-busi-ness owners, the IRSshould be conducting pointedresearch and analysis on how toimprove services, simplify taxes andcrack down on intentional taxevaders,” said Paul Hense, NSBA’simmediate past chair and head of theorganization’s “tax gap” committee.“In the last two years alone, audits ofsmall corporations have increased150 percent and the IRS would liketo see this percentage continue toincrease.”

A recent nationwide survey con-ducted by NSBA shows that 61 per-

and underpayment.The IRS claims that small busi-

nesses are to blame for a significantportion of this gap, mostly due tounderreporting (understating incomeor overstating deductions). This claimhas fueled the IRS’ hiring of moreauditors and the lobbying of Congressfor increased funding to audit more

small businesses.Additionally,

NSBA launched acomprehensive Website (preventirsabuse.org)in conjunction withthe initiative’s pre-miere. Visitors to thesite can read through

an extensive list of frequently askedquestions—covering topics such as fil-ing requirements, what to do if theyare audited, signs of unscrupuloustax preparers, and recordkeeping tips.

There also is a chance to sharestories of IRS abuse with their peers,the press and policy makers as wellas a blog, other resources, a chanceto write to members of Congress anda series of news and opinion pieces.

For more information about theinitiative, please visit nsba.biz or preventirsabuse.org.

cent of small-business owners arenot even aware of the “tax gap.”Once informed of the IRS proposals,however, the majority of surveyrespondents believed the proposalswould increase burdens on theirbusiness. (More comprehensive sur-vey results will be published in thenext issue of the Advocate and are

available now on nsba.biz.)NSBA fully supports efforts to

collect legally-owed tax revenues, butnot at the undue expense of the pri-vacy and integrity of honest, hard-working entrepreneurs.

The “tax gap” is the IRS’ esti-mate of the difference between theamount of tax owed and the amountactually collected by the governmentfor a specific tax year. Currently, IRSestimates put the “tax gap” at morethan $290 billion. The estimateincludes underreporting, nonfiling,


NSBA FILE PHOTO

NSBA hosted a seminar, featuring speakers Lawrence Hunter and Candace Ewell, focusedon the “tax gap” during its 2007 Small Business Congress in February. The organization’smembers voted the “tax gap” as the top small-business priority for the 110th Congress.NSBA subsequently launched an initiative on the issue April 12.

“Instead of outsourcing collection effortsto law abiding small-business owners, theIRS should be conducting pointed researchand analysis on how to improve services,simplify taxes and crack down on intentional tax evaders.”

— Immediate Past Chair Paul Hense

May/June 2007 13

NSBA Immediate Past Chair PaulHense testified before the HouseSmall Business Committee during

an April 26 hearing entitled, “Closingthe Tax Gap Without CreatingBurdens for Small Businesses.” Henseserves as president of Hense andAssociates, a certified public account-ing firm in Grand Rapids, Mich.

Hense’s testimony arrives twoweeks after NSBA launched an ini-tiative aimed at defeating InternalRevenue Service plans to narrow theso-called “tax gap” by targeting thesmall-business community. (Moreabout the initiative can be found onthe opposite page.)

During the hearing, Hense deftlytold the committee members—includ-ing Chair Nydia Velázquez (D-N.Y.)and Ranking Member Steve Chabot(R-Ohio)—about the impact thatpotential increased IRS scrutinywould have on small businesses.

Once such example is a proposalin the FY2008 budget that recom-mends an expansion to the form1099 filing system—which wouldmandate that a business file an infor-mation return on payments to corpo-rations aggregating to $600 or morein a calendar year.

Kevin Brown Named Interim IRS Commissioner After Everson LeavesBy Rob Yunich

Kevin Brown, who previously served as the Internal Revenue Service’s deputy commissioner and head of its small busi-ness/self-employed (SB/SE) division, has been named the agency’s acting commissioner. Brown replaces Mark Everson,who departed the IRS to serve as the president and chief executive officer of the American Red Cross. Everson’s last day atthe IRS was May 4 and he began at the Red Cross on May 29.

Brown previously was promoted to deputy commissioner for services and enforcement on Nov. 9, 2006—when hewas given the responsibility for overseeing the IRS’ four operating divisions, criminal investigation and the Office ofProfessional Responsibility. Brown spent nearly six years in the SB/SE division, the last three as division commissioner. SB/SEserves 45 million taxpayers who file personal, corporate, employment, excise, estate, and gift tax returns.

In February 2006, Brown spoke to NSBA members and staff during a board meeting in Washington, D.C. During hispresentation, Brown spoke about the IRS’ quest to recover lost tax income due to non-reporting or underreporting. Headded that auditing is currently the main avenue to accomplish this mission, but the IRS does not have sufficient audit staffto deal with the size of the problem. According to Brown, 75 percent of lost tax income comes from small businesses.However, he added that this was from a small population—as the majority of small-business owners (as with other businessowners) pay their taxes correctly and on-time.

Information from that speech still resonates with the organization today—and provided valuable information forNSBA’s recently-launched “tax gap” initiative. (You can learn more at preventirsabuse.org.)

NSBA Past Chair Paul Hense Testifies on ‘Tax Gap’By Rob YunichDirector of Communications

enacted, every small-business ownerwill face an increased paperwork andadministrative burden for each addi-tional 1099 form prepared. Increasedcosts are incurred for mailing addi-tional forms and for hiring outsideassistance to ensure that businessesare correctly complying with the law.Furthermore, if a business previouslyhas not been required to utilize theform 1099 filing system, greater diffi-culties with compliance is likely toensue.”

Hense also conveyed NSBA’s sup-port of fundamental reform and sim-plification of the tax law. Perplexed,bothered and bewildered Americantaxpayers spent $265 billion in 2006just trying to comply with the tax lawsand regulations.

Yet, even with this vast expendi-ture of money, no one—includingsmall-business owners—is sure theysuccessfully complied with the law. Infact, the U.S. Treasury Department’sown Inspector General for TaxAdministration found an 84-percenterror rate in spot audit visits to 26 dif-ferent IRS Assistance Centers acrossthe country in 2004.

A transcript of Hense’s testimonyis available at nsba.biz/testimony.

NSBA Government Affairs DirectorJody Milanese contributed to this story.

NSBA FILE PHOTO

NSBA Immediate Past Chair Paul Hensetestified before the House Small BusinessCommittee at an April 26 hearing on the“tax gap,” where he presented portions ofNSBA’s initiative to the assembled crowd.

“In practicality, this means thatevery time a small-business ownerships a package with Federal Expressor uses some other service, and theexpenses total more than $600 byyear-end, they would need to keepthe receipts, prepare a form 1099 andfile them not only with the IRS, butwith Federal Express and any othercompanies as well,” said Hense, whochairs the initiative's task force. “If

14 May/June 2007

NSBA At WorkHighlights of NSBA staff activities from the recent past

Every day, NSBA members and staffwork to ensure that small-businessowners are represented on Capitol

Hill. Recent events include:

March 7AMT HearingThe House Ways and Means

Committee held a hearing focusingon the Alternative Minimum Tax.

March 12House Staff MeetingsNSBA staff met with key House

staffers to garner interest for the rein-troduction of the Equity for OurNation’s Self-Employed Act.

March 14Coalition MeetingNSBA staff attended a meeting

of the Coalition for Fairness in TaxCompliance.

March 20IRS ForumNSBA staff attended an informa-

tional meeting with the InternalRevenue Service about small-busi-ness issues.

House ‘Tax Gap’ HearingThe House Ways and Means

Committee’s Oversight Subcommitteeconducted a hearing on the “tax gap.”

March 21, 29Senate Staff MeetingsNSBA staff met with key Senate


March 22Withholding HearingThe House Small Business

Committee conducted a hearing onthe issue of three-percent withholdingon government contracts.

April 20Energy Star TeleconferenceNSBA staff participated in a tele-

conference with the staff of theEnergy Star Small Business program.

April 22-28Cover the Uninsured WeekFor the third consecutive year,

NSBA served as a national supporterfor Cover the Uninsured Week.

April 23Coalition MeetingNSBA staff attended a Family

Business Estate Tax Coalition meeting.

April 26House ‘Tax Gap’ HearingNSBA Immediate Past Chair

Paul Hense testified before the HouseSmall Business Committee at a hear-ing on the “tax gap.”

April 30Coalition MeetingNSBA staff attended a meeting

for the Government WithholdingRelief Coalition lobby team.

May 2SBA RoundtableNSBA President Todd

McCracken participated in a SenateCommittee on Small Business andEntrepreneurship roundtable aboutreauthorization of the U.S. SmallBusiness Administration.

May 4Coalition MeetingNSBA staff attended a Family

Business Estate Tax Coalition meeting.

May 8Energy Efficiency MeetingNSBA staff met with the House

Small Business Committee staffabout small business energy efficiency legislation.

April 10Health Insurance ForumThe Council of Smaller

Enterprises hosted a special meetingof NSBA’s Health and HumanResources Committee focusing onhealth market reform and develop-ment of NSBA’s Health Policy.

April 12House Staff MeetingNSBA staff met with the staff of

Rep. Jeff Fortenberry (R-Neb.), amember of the House SmallBusiness Committee.

April 18Senate ‘Tax Gap’ Hearing The Senate Finance Committee

held a hearing on the “tax gap.”

April 19House Staff MeetingsNSBA staff met with key House


Procurement HearingNSBA President Todd

McCracken testified before the HouseSmall Business Committee at a hear-ing entitled “Expanding SmallBusiness’ Access to FederalContracts.”

Energy TeleconferenceNSBA staff participated in a tele-

conference with the staff of theHouse Small Business Committeeregarding future small business ener-gy efficiency legislation.

NSBA Supports Health InitiativeNSBA staff met with officials

from the Department of Health andHuman Services to discuss SecretaryMichael O. Leavitt’s Value-DrivenHealth Care Initiative, and become anational supporter.preventirsabuse.org

May/June 2007 15

DATE SPONSOR EVENT LOCATION REGISTRATION INFO

Aug. 26-28,2007

National Small Business

Association

Quarterly BoardMeeting

Newport, R.I. For more information, callRosa Wright, 202-293-8830or e-mail [email protected].

Oct. 10-11,2007

Small BusinessTechnology Council

TibbettsAwards/Third

SBIR Conference

Washington, D.C. For more information, callJere Glover, 202-785-4300or e-mail jglover@tibbett-

sawards.org.

October/November

2007

National Small Business

Association

Quarterly BoardMeeting/Annual

MembershipMeeting

Las Vegas For more information, callRosa Wright, 202-293-8830or e-mail [email protected].

NSBA Calendar

May 9Price of Gas HearingNSBA member Mike Mitternight

testified before the House SelectCommittee on Energy Independenceand Global Warming at a hearing enti-tled “Economics of Dependence ofForeign Oil—Rising Gasoline Prices.”

May 10Energy/Environmental MeetingNSBA staff met with the staff of

the House Select Committee on EnergyIndependence and Global Warming.

May 15Small Business IRS ForumNSBA staff attended a meeting

with the IRS to gain the latest infor-mation pertaining to small businesses.

May 16House HearingThe House Small Business

Committee held a hearing aboutenergy, veterans’ entrepreneurship,and the SBA’s EntrepreneurialDevelopment program.

SBA Reauthorization HearingThe Senate Committee on Small

Business and Entrepreneurship helda hearing to mark-up a piece of theSBA reauthorization legislation.

May 17Liability Reform HearingThe House Small Business

Committee held a hearing on liabili-ty reform and small business.

Energy Group TeleconferenceNSBA participated in a telecon-

ference of the Consumer EnergyAlliance’s board of advisors.

May 18Coalition MeetingNSBA staff attended a meeting

for the Government WithholdingRelief Coalition.

May 21-23House Staff MeetingsNSBA staff met with key House


May 22Agriculture Policy RoundtableNSBA staff participated in a

House Small Business Committeeroundtable on agriculture policy.

Minority Business Programs HearingThe Senate Committee on Small

Business and Entrepreneurship held ahearing on minority business programs.

May 23Small Business HearingThe House Small Business

Committee conducted a mark-up oflegislation regarding energy, veterans’entrepreneurship, and the SBA’sEntrepreneurial Development pro-gram.

May 24Credit Card PracticesNSBA staff met with the staff of

the House Committee on FinancialServices Subcommittee on FinancialInstitutions and Consumer Credit todiscuss abusive credit card practices.

Energy Efficiency HearingThe Senate Finance Committee’s

Subcommittee on Energy, NaturalResources, and Infrastructure of theheld a hearing on energy efficiencytax credits.

May 30Health Care BriefingNSBA staff participated in a

briefing hosted by Pfizer to discussupcoming health care initiatives withthe Health Policy Counsel for theHouse Committee on Energy andCommerce.

NSBA At Work, continued

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