ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Thursday, April 17, 1997 TAG: 9704170056
SECTION: BUSINESS PAGE: B-2 EDITION: METRO
SOURCE: MAG POFF THE ROANOKE TIMES
MEMO: ***CORRECTION***
Published correction ran on April 18, 1997.
Randy Mason of Mason Mechanical Laboratories in Salem did not mail
his payroll taxes to the government as stated in a story on Thursday's
Business page about his testimony to Congress opposing a change to
electronic filing. Mason and other small business operators take their
money and vouchers to a bank, which gives them a paper receipt. This
creates a paper trail of their payments in case of an audit. Electronic
filing eliminates the receipt at the time of payment.
Randy Mason says he'll have to pay at least $120 a year in bank fees to comply with the IRS mandate.
When Randy Mason learned last year how much it would cost his Salem business to file payroll taxes electronically, to meet a new demand of the Internal Revenue Service, he complained to his congressman.
On Wednesday, Mason got a chance to tell his story directly to a congressional subcommittee which is considering reining in the IRS.
He owns Mason Mechanical Laboratories Inc. in Salem along with his parents and a brother. Their small company, which has been in business for 19 years, sells industrial equipment.
The company has 10 employees for whom Mason deducts withholding taxes and sends the money to the government. Previously, the cost of a stamp is all it took for the money to reach the IRS. But now, the tax agency has made it mandatory for all businesses to transfer the money electronically, a process that will cost the company hundreds of dollars in bank transaction fees.
"I have two options through my bank. One would cost our business approximately $120 per year in fees; the other, $600 per year in fees," Mason told the House Ways and Means Subcommittee on Oversight.
He said the new system should be voluntary or, at the very least, limited to big businesses. Some businesses may benefit by electronic filing, he said, "but small-business owners, not the government, should be able to decide that for themselves."
He called the system "an unnecessary, unwise and burdensome mandate on small businesses."
"If each of the 1.2 million small businesses being affected this year pay only the lesser fee," he told the committee, "this would amount to an annual cost of $144 million.
Rep. Doc Hastins, R-Wash., recently introduced legislation that would make the system voluntary.
The IRS regulation, announced last June, will require any business that paid more than $50,000 in payroll taxes in 1995 to begin filing electronically starting July 1, 1997.
"I'm also concerned about the disappearance of a paper trail which could help me defend myself in an audit," Mason testified.
Mason represented the National Federation of Independent Business. He was chosen after he complained to the organization. It represents 600,000 small and independent business owners in all 50 states, including about 13,000 in Virginia.
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