Nation’s Small Businesses Could See 10% Hike in Health Insurance Costs in 2009

The National Small Business Association, SBAM’s national affiliate, reports that Mercer, a leading human resource consulting firm in New York, has released preliminary data from their National Survey of Employer-Sponsored Health Plans 2008. The data indicates that 59 percent of employers will shift their rising health costs to their employees in 2009 by raising deductibles, co-payments, coinsurances or employee out-of-pocket spending limits.

Survey findings show health care costs for workers and employers to increase 5.7 percent in 2009– the lowest increase in more than 10 years. Despite the lower rate of increase in comparison to previous years, health care costs are still growing faster than the rate of inflation and workers’ wages.

The preliminary data was collected from 1.317 early respondents, nearly half of the 3,000 employers that will participate in the survey by the end of the year. Based on the early findings, the total costs for employers to renew their current health plan – if they were to make no changes – would grow by nearly 8 percent on average in 2009. Above all, small employers – those with 10-499 employees – costs would increase at 10 percent on average in 2009.

The survey also found that 19 percent of employers will lower their 2009 costs by adding a consumer-directed health plan – a high-deductible plan with an employee-controlled spending account (health savings account (HAS) or health reimbursement arrangement). The remaining 47 percent of companies are encouraging enrollment in health plans with lower premiums and higher deductibles.

New Law Extends Net Operating Loss Carryback for Small Businesses; IRS To Ensure Refunds Paid Timely

The Internal Revenue Service (IRS) announced that small businesses with deductions exceeding their income in 2008 can use a new net operating loss tax provision to get a refund of taxes paid in prior years.

To accommodate the change in tax law, the IRS updated the instructions for two key forms — Forms 1045 and 1139 — that small businesses can use to make use of the special carryback provision for tax year 2008. These forms are used to accelerate the payment of refunds.

The new provision, enacted as part of the American Recovery and Reinvestment Act of 2009, enables small businesses with a net operating loss (NOL) in 2008 to elect to offset this loss against income earned in up to five prior years. Typically, an NOL can be carried back for only two years. The IRS released legal guidance today in Revenue Procedure 2009-19 outlining specific details. Some taxpayers must make the election to use this special carryback by April 17, 2009.

“The new net operating loss provisions could throw a lifeline to struggling businesses, providing them with a quick infusion of cash,” said IRS Commissioner Doug Shulman. “We want to make it as easy as possible for small businesses to take advantage of these key tax benefits.”

With the economic downturn and the new law, the IRS expects record numbers of small businesses to be eligible for the refunds. The IRS is putting in special steps to ensure timely processing of these refunds to help small businesses during this difficult period.

Small businesses with large losses in 2008 may be able to benefit fully from those losses now, rather than waiting until claiming them on future tax returns.

The normal two-year carryback remains available if the small business does not elect the special carryback provision. If the loss exceeds the income for the carryback period, the taxpayer can continue to carry forward the remaining balance of the NOL for up to 20 years.

For small businesses that use a fiscal year, this special carryback may be used for an NOL in either a tax year that ends in 2008 or a tax year that begins in 2008. Once a taxpayer makes this election, it may not be changed.

To qualify for the new five-year carryback provision, a small business must have no greater than an average of $15 million in gross receipts over a three-year period ending with the tax year of the NOL. Businesses with more than $15 million in gross receipts still qualify to carry back their 2008 NOL for two years.

There are several methods that a small business uses to elect the new provision as detailed in the Revenue Procedure.

If a small business previously elected to waive the carryback of 2008 NOL but now wants to elect this special carryback, the small business may revoke its previous election to waive the carryback. The election revocation must be made on or before April 17, 2009.

Generally small businesses that are not corporations (including sole proprietorships filing schedule C with their Form 1040) may accelerate a refund by using Form 1045, Application for Tentative Refund.

Corporations with NOLs may also accelerate a refund by using Form 1139, Corporation Application for Tentative Refund.

The IRS will be closely monitoring these filings and will provide additional staff as needed to process these forms. The IRS will work to issue refunds within 45 days or even earlier to the degree possible.

In addition, questions and answers have been posted on this Web site. Small businesses that file Form 1040 can also call 1-800-829-1040 with NOL questions. Corporations can contact 1-800-829-4933 with NOL questions.

Form 1045 or Form 1139, whichever the taxpayer uses, generally must be filed within one year after the end of the tax year of the NOL. In addition, the current year’s tax return must be filed by the date the Form 1045 or Form 1139 is filed. Form 1045 and Form 1139 are filed at the same place the taxpayer’s

SBAM Opposes Expansion of Unemployment Benefits to Part Time Workers

In this week's Small Business Champion podcast, SBAM's Vice President Communications Michael Rogers talks with SBAM’s Director of Government Relations Mike Batterbee about a legislative proposal to make part time workers eligible for unemployment benefits – and how that would be costly to employers, who are the ones who pay for the unemployment compensation system. The weekly Small Business Champion podcast is the place where you can get the scoop on what’s really happening in Lansing and what it means to your bottom line.

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New Survey Shows Small Businesses Interested in "Going Green" But Having Trouble Affording It

The National Small Business Association (NSBA), SBAM's national affiliate, today released data showing that cash flow is the number one reason small-business owners are unable to make their firms more energy efficient. Despite restricted cash flow—likely due to the economic downturn—more than a third of small-business owners have invested in energy efficiency for their business in the last 18 months, however. This data is part of an NSBA survey released on Earth Day to spotlight the important relationship between energy efficiency and small business.

“We are seeing a trend among small-business owners who are looking to improve not just their bottom but the environment as well,” stated NSBA President Todd McCracken. “One-third of survey respondents said their business is currently offering energy saving products or services, and nearly a quarter actively strive to do business with “green” companies.”

Although just 18 percent reported that they plan to invest in energy-efficiency improvements in the coming year, nearly half said they would do so if provided with increased information, technical assistance, grants and/or rebates. Additionally, 67 percent said they would consider investing in alternative energy sources if provided with increased information, technical assistance, grants and/or rebates. Sixty-one percent said they would consider investing in alternative-fuel or hybrid vehicles for their business if it was accompanied by a tax credit.

“Given the extremely difficult economic challenges small businesses have been facing over the last nearly two years, the fact that there are still a significant number investing in energy efficiency is a testament to the important leadership role small businesses can take in any green movement,” said NSBA Chair Keith Ashmus of Frantz Ward LLP in Cleveland, Ohio.

NSBA has long held the belief that energy efficiency and entrepreneurial growth can go hand-in-hand. Ninety percent of businesses surveyed have been negatively impacted by rising and/or volatile energy prices, and they are actively looking for ways to minimize the harm.

Please click here view the full survey results.