Off The Hook Proposed bill gives small business a break for first-time paperwork violations.

It could happen to any small-business owner: forgetting tosubmit a crucial piece of federal paperwork. Whether it's aform permitting the IRS to automatically withdraw taxes from anemployee's checking account, COBRA insurance information oranother federal form, an error of omission can mean hefty federalfines.

That could change, though, if the Small Business PaperworkReduction Act passes. The bill (S.1867) would take small businessesoff the hook for first-time federal paperwork violations if theysend in the missing paperwork up to six months after they'refound out of compliance. The bill, which at press time was headedfor the Senate Committee on Governmental Affairs, is sponsored bySen. Susan Collins (R-ME); the House version (H.R. 3310), sponsoredby Rep. David McIntosh (R-IN), passed in March.

To qualify for the six months of breathing room, a company mustmeet the SBA definition of small, which is generally a company withfewer than 500 employees or less than $5 million in annual revenue.The six-month reprieve would only apply to one violation percompany, not one per federal statute. And it wouldn't apply ifthe violation relates to a tax matter, impedes the detection ofcriminal activity, or causes or poses a threat of serious harm tothe public.

The exemption from first-time civil penalties will undoubtedlybe an issue when the Senate takes up the bill. But there areseveral other noncontroversial provisions. For example, the WhiteHouse Office of Management and Budget would have to publish anannual list of paperwork rules applicable to small business, andevery federal agency would have to establish a liaison to discusswith entrepreneurs that agency's information requirements.

The bill's fate in the Senate may hinge on the contents ofthe federal agencies' reports, which will be reviewed by theSenate Committee on Small Business. The reports detail"concessionary" fine policies for small businesses thatwere developed per a provision in the 1996 Small BusinessRegulatory Enforcement Fairness Act. Some of those policies maytouch on leeway for paperwork violations.

Staffers who have seen the reports from the EnvironmentalProtection Agency and the Occupational Safety and HealthAdministration say they are woefully lacking in detail. What may beworse, according to Committee on Small Business chairman Sen.Christopher S. Bond (R-MO), is that 23 departments andagencies-including the SBA and the IRS-have ignored the requirementto submit reports. Says Bond, "This makes me wonder whetherthese agencies are also ignoring the plight of small businessesearnestly looking for help in understanding and complying withcomplex federal regulations."

Stephen Barlas is a freelance business reporter who coversthe Washington beat for 15 magazines.

Heard On The Street

By Debra Phillips

• Pillow talk: It's hardly a sleepy market for pajamas nowthat the TV series "Ally McBeal" has showcased its titlecharacter wearing-and dancing in-whimsicalsheep-and-cloud-patterned PJs. The sleepwear-a product of the NewYork City-based label NICK & NORA Sleepwear-is rousingmainstream America's interest in nighttime duds."Sleepwear is a respected category now," says Steven M.Abrams, who co-owns NICK & NORA with Linda Rae Tepper (bothpictured at left). "It's nice we're getting somerecognition."

• Big Blue is getting bigger: Microsoft may be grabbingheadlines, but IBM isn't exactly resting on its microchips.With an eye toward plugging into a greater share of the databasemarket (and, not incidentally, overtaking current market-shareleader Oracle), IBM reports it will increase its team ofdatabase-software salespeople by 1,000 within the next twoyears.

• Not just kidding around: Children's apparel and accessoriesretailer Gymboree Corp. is making a play for pre-teens with a newchain of clothing stores. Although details were sketchy at presstime-even the name of the chain had yet to be announced-we'reinterested to see if pre-teens cotton to this newest fashionoutlet.