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Small Business Hardship Relief Act

While our state legislators here in California regulate businesses to a great extent, the federal government also passes laws that affect small businesses, especially those that do business in multiple states. Therefore, when you start a small business of your own it is important to keep track not just of the goings on in our state legislator, but of those of Congress as well. One relevant bill Congress is considering now is the “Small Business Hardship Relief Act.” The bill is sponsored by Rep. Raul Ruiz from California’s 36th congressional district.

What is the Small Business Hardship Relief Act?

The name of the bill certainly makes it sound good, but it is not all that descriptive. This can be fairly common in federal legislation as well as legislation in some states. In the case of this bill, the hardship relief in question actually has to do with the Affordable Care Act, also known as Obamacare. The bill, if passed, would amend the Internal Revenue Code. It would exempt businesses that have no more than 100 full-time employees and are experiencing a “hardship” from the Obamacare mandate that they provide minimum essential health care coverage for employees. In other words, such businesses would not face a tax penalty for failing to provide the required health care to their employees. “Hardship,” however, does not just mean any sort of difficulty. A “hardship” is defined by the bill as a situation where:

  • A small business has missed two or more consecutive loan payments;
  • A small business owner is a debtor in a Chapter 11 bankruptcy;
  • A small business has received a notice of termination of utility services or a notice of eviction;
  • A small business has experienced a fire, flood, or other disaster; or
  • A small business has experienced another hardship as determined by the Secretary of the Treasury (The Department would be required to do a study and would have to determine what other hardships should be added to the list within six months).

A business would not qualify for this exemption if it had already received such an exemption at some point in the previous five calendar years. Requesting such an exemption would not be allowed to be the sole basis for the IRS conducting an audit, but it could be considered as one of many factors. If this bill were to become law it would not provide a way for employers to permanently skirt their Obamacare obligations, but it would allow for a break from those obligations for businesses that face extraordinary circumstances.

What is the Status of the Small Business Hardship Relief Act?

This bill is currently in the United State House of Representatives. It was referred to the Committee on Ways and Means on September 18, 2014. In order for it to become law it would have to make its way out of committee, be passed by the House, be passed by the Senate, and then survive the possibility of a presidential veto.

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